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Consignment stock is stock legally owned by one party, but held by another, meaning that the risk and rewards regarding to the said stock remains with the first party while the third party just keep them . This is also know as consignment inventory.
Ownership of consignment stock is passed only when the stock is used (issued or sold in the case of a shop). Unused stock in a warehouse may be returned to the supplier[disambiguation needed] when it concerns standard manufactured products. With customer specific items, agreements concerning returning products, should be negotiated.
As ownership of consignment stock is not transferred untily use, invoicing is not immediate. To account for a replenishment of consignment stock at a customer site, a manufacturer must credit inventory and debit customer consignment stock. Only after a customer actually uses the consignment stock may an accounts receivables be created.
- Consignment agreement
- Logistics, Transportation
- Just in time
- Vendor-managed inventory
- Scan-based trading
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