Date: Jul 28, 2014

When a shipper consigns product to a receiver, the receiver is acting as agent for the shipper and is required to furnish the shipper with a detailed account of sales indicating what each carton sold for and reflecting gross sales less applicable expenses.  As I have discussed in a previous blog “Price after sale vs. consignment”, the only time a detailed accounting is required to be submitted by the consignee is in a consignment transaction and not in a price after sale transaction even though it is the best method of demonstrating the Fair Market Value of the product shipped. 

A consignment, unlike a price after sale, is not a sale.    A consignment creates an agency relationship between the shipper and the receiver.  As the shipper, you remain the beneficial owner of the product, until the receiver sells the product on your behalf.  Following the completion of the sale of the product, the receiver is only permitted to deduct usual and customary expenses directly connected to the sale, along with any commissions agreed to.  Now the question that always arises what are the components of a detail account of sale?

Components of a Detailed Account of Sales

  1. Date product physically received at receivers facility
  2.  lot numbers must be assigned to the product received
  3. The date and the amount sold on a given date along with the gross prices received must be reflected
  4. For any discarded product a dump certificate, dump slip or donation receipt must be reflected
  5. Reasonable and customary expenses by the receiver should also have all corresponding documents, including copies of the paid freight bill, donation receipts and dump slips, as well as any other expenses incurred in the handling of the product.

If any of these elements are missing from the accounting, then the receiver has failed to properly support and document the sale of the shippers’ commodity and could be responsible for the Fair Market Value utilizing Federal State Market News Quotes.

In any event, it is imperative to carefully scrutinize the detailed accounting supplied to you by the receiver and make sure all the documents correspond accordingly.  If you question the returns and deductions of a consignment sale, you, as the shipper, can require the PACA to audit the records.

 As always should you have any quesitons concerning the required documentation and consignment transaction or the components that make up a detail account of sales, please do not hesitate to contact me at 949 885-2269.

WG Staff Contact

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