What is Consignment?

To consign means to allocate some money to the payment of expenses or debts. It also refers to contracts whose goods are paid for after the sale. Consignment may also mean placing money on the hands of a third party who will pay debts, set a budget or register an opinion in legal regulations. This word is synonymous with deposit, assets, remittance or delivery.

How Does Consignment Work?

The Consignment contract is an agreement in which two parties, the consignor and consignee, get into the faculty of sale without the consignor losing ownership of merchandise. In the field of accounting, this activity is referred to as consignment in accounting. The consignee has the obligation to sell the merchandise they receive from the consignor after they have agreed on the percentage each party will receive for the sale. If the consignee cannot sell the merchandise, it is returned to the consignor. Each party gains some advantage from the Consignment. The consignor does not need to invest in storage merchandise and the consignee benefits when the consignment sells fast to avoid stagnating capital.

Payment consignment

Consignment of Payment occurs when the consignor declines receiving money from the consignee for some reasons. If the consignee tries to pay directly to the consignor in vain, payment has to be made in a court. This is known as a judicial Consignment.