What consignment inventory is
In a consignment arrangement, a supplier (the consignor) places stock at a retailer or distributor's (the consignee's) location, but retains ownership of it until it actually sells. The retailer displays and sells the stock on the supplier's behalf, then pays the supplier an agreed share once a sale happens—unsold stock can typically be returned.
This is common in retail categories with unpredictable sell-through (art, specialty foods, apparel, books) and in distribution relationships where a supplier wants shelf presence without the retailer taking on inventory risk upfront.
Why consigned stock needs to be tracked separately
Consigned stock physically sits on the same shelf as owned inventory, but it is not the same asset on the books. For the consignee (retailer), consigned stock should not count toward owned inventory value or cost of goods sold until it sells—recording it as owned inventory overstates assets and understates the eventual payable to the supplier.
For the consignor (supplier), that same stock is still their asset even though it has left their own warehouse—it needs to stay on their books as inventory-at-a-third-party-location, not be written off simply because it changed physical location.
- Tag stock by ownership status (owned vs. consigned-in vs. consigned-out), not just by location
- Only convert consigned-in stock to a recorded sale (and supplier payable) at point of sale
- Track consigned-out stock at a customer location as still-owned inventory, not written off
- Reconcile consigned stock counts periodically—consignment stock is easy to undercount since nobody 'owns' the count responsibility as clearly as owned stock
Tracking consignment stock in StockFlow
StockFlow tracks stock by location and lets you record which items at a given location are consigned rather than owned, so a retailer can see consigned and owned stock side by side without conflating the two in a single inventory value. Suppliers running consignment programs can use multi-location tracking the same way, treating each consignee's shelf as a location their stock still counts against until sold.
When a consigned item sells, record it as a sale from that location the same way you would owned stock, which is what triggers the payable back to the supplier and moves the item out of consigned status.
To make ownership explicit per product, add the consignor as a contact and set it as the stock owner (client) on the consigned products. The Client Inventory report then lists consigned stock per owner, warehouse and bin, and the receipts and sales of that owner's products for any period, which is the basis for the consignment settlement. The stock owner is a reporting field: standard valuation reports still include every product, so leave products owned by others out when valuing your own stock.
Trusted by small businesses
What our customers say
“Super Kind! Quick replies from their support and very easy fixes, changed the dashboard a bit and customized it. Also gave me 450 items extra on the free plan just for me. Highly recommend and again great service!”
“Best customer service! Stockflow's customer support is fast and extremely helpful. They assisted me with customization of the software to improve my experience as a user.”