To settle (with a consignor) means to pay him or her the amount of money owed for his or her share of sales proceeds. An essential feature of a consignment software app is the automation of this process, making it quick and easy for stores to calculate the amount due, add bonuses, deduct fees, and make disbursements.
Consignment Settlement Records
Each time a consignment sale is completed, a 'settlement document' is prepared in the background, meaning that the software has recorded the sale and has credited the consignor's account and the shop's account for their respective shares of the sales proceeds.
A separate record exists for every consignor who has sold something and has not been paid. Settlements can be made individually or in 'batch' (groups), grouped by method of payment. For example, all consignors who are to be paid by check can be processed as a group (known as a batch settlement).
The Consignment Settlement Process
Settling with one consignor at a time allows adjustments for bonuses and fees.
For example, a bonus might be awarded for accepting store credit as payment. with Best Consignment Software the bonus can be based upon the amount of the sale or the amount of the consignor share.
Fees might be deducted for cleaning, repairs, shipping/delivery and so on. An advanced feature of BCSS is to automatically deduct set fees, like a percentage for sales that were paid for by credit card.
A good consignment program will allow for:
- Payment to be split, typically between cash, store credit, check and/or gift certificate. If payment is by check, the next available check number should be offered by the software.
- Editing of a completed settlement, allowing changes in the date, additions, deductions, amount and notes.
- Settlement for one or more items but not all items.
- Inclusion of layaways in settlements.
- Printing of the settlement with settled items listed.
- The printing of two settlements per page.
- Settling for $0 to remove old settlement records.
- Correction or void of incorrect settlements.
- Test print prior to finalization.
- User-defined fees to be deducted.
Best Consignment Shop Software includes all of these features.
An 'aged batch settlement' is a settlement for prior months. A regular settlement is for the current month.
Settling with Consignors for Credit
Conventional (or simple) consignment software programs usually provide settlement payment options of cash, check or gift certificate.
There are several advantages to settle with consignors for store credit:
- Sales proceeds are kept 'in house' to be used for future purchases.
- It's convenient to keep track of amounts outstanding.
- The amount of paper work is reduced.
- Cash does not need to be kept on hand for settlement purposes.
- Checks do not have to be written and distributed.
- The administrative complexity of gift certificates can be avoided.
- Having the ability to offer this form of compensation (and keeping it all straight) adds a degree of professionalism.
People often prefer 'cash in hand' to balances scattered here in there in various places where they shop. It does require a certain amount of trust to forego immediate gratification in favor of a store credit (that may become an issue of controversy if seller and store records one day disagree, or we simply forget about it - because many store owners don't provide reminders that balances are on hand).
Sellers may be willing to ignore the additional 'risk' of settling for credit if they are given an added incentive, like a 'bonus' yielding a greater settlement amount over cash - for accepting store credit.
Dynamic Software Options
The better resale software programs include an option to add an additional amount to a settlement for payment by credit. The bonus is expressed as a percentage and is set in the program's setup configuration. When store credit is selected as the method of payment for settlement, the program knows to add the bonus amount.
A dynamic option in BCSS gives the store the options of basing the bonus on total sales or the settlement amount.
For example, if the consignor % for cash settlement is 50%, the consignor's share of $100 in sales proceeds is of course $50.
However, a 10% bonus for store credit could be $10 (if based upon total sales) or only $5 (based upon the settlement amount).