Consignment
Consignment is an arrangement in which a seller places goods at a customer's or dealer's location while keeping ownership and control until the goods are used or sold on.
Billing
Explanation
The party holding the goods (the consignee) does not take control at delivery. ASC 606 and IFRS 15 list indicators of a consignment arrangement: the seller controls the product until a specified event, such as the consignee's sale to an end customer; the seller can require return or transfer of the goods; and the consignee has no unconditional obligation to pay. In these cases, shipping to the consignee does not trigger revenue. Revenue is recognized when control passes – typically when the consignee sells or consumes the goods.
In SAP SD, consignment is mapped through dedicated processes: consignment fill-up (stock moved to the customer site but still owned by the seller as special stock), consignment issue (the point of transfer, which is billed), consignment pick-up, and consignment returns.
Why It Matters
Billing and revenue only line up if the consignment issue – not the fill-up – drives the invoice and revenue recognition, for example in SAP RAR. Incorrect process setup leads to premature revenue and inventory that is missing from the seller's balance sheet.
Related Terms
ASC 606 · Performance Obligation · Bill-and-Hold · SAP SD · Billing Document
Related Articles
• Deliveries and Goods Issue: Fulfillment Events and Revenue Timing
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