Consignment Invoice: What It Is and How to Create One

Quick answer: A consignment invoice bills for goods that a consignee, such as a shop or overseas agent, has sold on the owner's behalf. Ownership stays with the consignor until sale, so you invoice only for units sold in the period, after a sales report, with any agreed commission deducted. Deliveries themselves are documented with a consignment note.

Consignment is common for artists and makers selling through galleries and boutiques, for wholesalers placing stock with retailers, for secondhand and resale shops, and for exporters who send goods to an overseas agent to sell. In all of these, the usual invoicing rhythm breaks: you hand over goods, but nobody owes you anything yet. A consignment invoice is how you bill once the goods actually sell.

This guide explains the documents involved, who invoices whom, how to calculate the amount with a worked example, what fields to include, and how the export version of a consignment invoice differs. It is general information; tax and accounting treatment depends on your country and agreement.

How consignment works

There are two parties:

• Consignor: the owner of the goods, such as a maker, brand or wholesaler.
• Consignee: the business that holds and sells the goods, such as a shop, gallery or agent.

The consignor delivers stock to the consignee but keeps ownership. The consignee displays and sells the goods to end customers. Periodically, the consignee reports what sold, and money flows back to the consignor, less a commission or at an agreed wholesale price. Unsold goods can usually be returned or collected.

This differs from a normal wholesale sale, where the retailer buys the stock outright, receives an invoice on delivery and carries the risk of not selling it. With consignment, the consignor carries that risk, which is why the consignor's cash arrives later and depends on sell-through.

The documents in a consignment arrangement

Document	Issued by	When	Purpose
Consignment agreement	Both parties sign	Before any stock moves	Commission or price, reporting cycle, payment terms, insurance, returns
Consignment note or delivery note	Consignor	Each delivery	Lists items and quantities transferred; not a request for payment
Sales report	Consignee	Each period (often monthly)	Units sold, selling prices, returns, remaining stock
Consignment invoice or settlement statement	Consignor or consignee, per the agreement	After the sales report	Amount due to the consignor for units sold
Return note	Consignee	When unsold stock goes back	Reduces the stock held on consignment

The delivery document is often modeled on a delivery note; our delivery challan format guide shows the layout used in South Asia, where challans are the standard document for goods sent without a sale. Some consignors also send a proforma invoice with the stock to show its value, clearly marked as not a demand for payment.

Two ways to bill on consignment

Model 1: Consignor invoices the consignee at a fixed price

The agreement sets a price per unit that the consignee pays the consignor for each unit sold, regardless of what the consignee charges the end customer. After the sales report arrives, the consignor issues a normal-looking invoice to the consignee for "units sold" at that price. The consignee keeps the difference between its selling price and the agreed price.

Model 2: Commission on sales

The consignor sets the retail price, and the consignee keeps a percentage commission. Either the consignor invoices for the net amount, showing gross sales and the commission deduction, or the consignee sends a settlement statement with its payment. Galleries and resale shops usually use this model.

Both models are valid. What matters is that the agreement says which one applies, who issues the document, and when payment is due after the period ends.

Worked example: a maker's monthly consignment invoice

A ceramicist places 60 handmade mugs with a gift shop on October 1. The agreement uses a commission model: retail price $28.00 per mug, shop commission 35%, monthly sales reports by the 5th, payment within 15 days of the report.

The shop's October report shows 22 mugs sold at full price and 1 mug damaged in the shop, which the agreement says the shop pays for at the consignor's net price.

• Gross sales: 22 × $28.00 = $616.00
• Commission: $616.00 × 35% = $215.60
• Net due for sold mugs: $616.00 − $215.60 = $400.40
• Damaged mug at net price: $28.00 × (1 − 0.35) = $18.20
• Total due to the consignor: $400.40 + $18.20 = $418.60
• Stock remaining on consignment: 60 − 22 − 1 = 37 mugs

The ceramicist's consignment invoice, dated November 6, shows:

Description	Qty	Unit price	Amount
Handmade mug, speckled glaze, sold October 2026 (per sales report SR-10)	22	$28.00	$616.00
Less consignee commission at 35%	1	−$215.60	−$215.60
Damaged unit charged at net price per agreement clause 7	1	$18.20	$18.20
Total due by November 20, 2026			$418.60

The notes field records "Goods supplied on consignment under agreement dated September 25, 2026. Stock remaining with consignee: 37 units." Sales tax on the retail sales was collected by the shop from its customers, so it does not appear on this invoice; check how your own state or country treats consignment before copying that approach.

Under Model 1, by contrast, if the agreed price were $17.00 per mug sold, the invoice would simply be 22 × $17.00 = $374.00, plus the damaged mug at whatever price the agreement sets.

What to include on a consignment invoice

• The words "Consignment invoice" or "Consignment settlement" as the title.
• A unique invoice number and the invoice date; keep consignment invoices in your normal invoice numbering system.
• Consignor and consignee names, addresses and any tax registration numbers.
• The sales period covered and the sales report reference.
• A reference to the consignment agreement and its date.
• Each product sold with quantity, price and amount.
• Commission, if applicable, as a separate deduction line.
• Charges for damaged or lost stock, if the agreement allows them.
• Tax lines, if your jurisdiction requires them on this invoice.
• Payment terms, due date and bank details.
• Stock remaining on consignment at period end.

The export version: goods shipped on consignment

In international trade, "consignment" often means shipping goods to a foreign agent or distributor who will sell them after arrival. No sale exists when the goods cross the border, yet customs still needs a commercial invoice with a value. The invoice should:

• State clearly that the goods are "shipped on consignment, no sale" or similar wording your broker recommends.
• Give a value per item that reflects the goods' market value, since there is no transaction price.
• Include all usual export fields: exporter, consignee, description, quantity, weight, country of origin and the HS code on the commercial invoice.
• Show delivery terms if relevant, and the currency.

Each country has its own rules for what an import invoice must contain and how goods are valued when there is no sale. In the US, the required invoice contents are set out in 19 CFR 141.86. Ask the importer's broker before shipping. Later, when the agent sells the goods, the consignor invoices or settles with the agent much as in the domestic models above. Our commercial invoice template guide covers the standard export layout.

Consignment vs other ways to sell through retailers

Arrangement	Who owns stock at the shop	When the supplier invoices	Who carries unsold-stock risk
Consignment	Supplier (consignor)	After goods sell, per sales report	Supplier
Wholesale (outright sale)	Retailer	On delivery or shipment	Retailer
Sale or return	Usually the retailer, with a right to return unsold goods	On delivery, with credit notes for returns	Mostly supplier, through returns

The labels are not always used consistently, and the legal and tax treatment depends on the actual terms, so the agreement matters more than the name. If your contract lets the retailer return unsold goods but you invoiced on delivery, returns are handled with credit notes; if ownership stays with you until sale, the consignment invoicing described above fits better.

Accounting for consignment stock

For the consignor, goods at a consignee's premises are still inventory. Many businesses track them in a separate location, such as "Stock at Gift Shop", so the balance sheet shows what is on other people's shelves. When the sales report arrives, the consignor records the sale, the commission expense and the receivable, and moves the cost of the sold units out of inventory.

Using the mug example, if each mug cost $9.00 to make, the October figures would show revenue of $616.00 for the 22 mugs sold, a commission expense of $215.60, and a cost of goods sold of 22 × $9.00 = $198.00. The damaged mug charged to the shop adds $18.20 of income, and its $9.00 cost also leaves inventory. Gross profit for the period: $616.00 − $215.60 + $18.20 − $198.00 − $9.00 = $211.60. Some businesses instead record revenue net of commission; ask your accountant which presentation applies to you.

For the consignee, consignment goods are not its inventory and should not appear on its balance sheet, although it should still count and safeguard them.

Checklist for consignors

• Signed consignment agreement covering price or commission, reporting dates, payment terms, insurance, damage and returns.
• Delivery note for every shipment, signed by the consignee.
• Your own running stock record per consignee.
• Sales report requested on a fixed date each period.
• Invoice issued promptly after each report, with the report referenced.
• Periodic physical stock check against your record.
• Unsold stock collected or rotated after an agreed time.

Common mistakes

• Invoicing on delivery. Billing the full stock value when it goes to the shop treats consignment as a sale and confuses both parties' books.
• No written agreement. Without one, disputes over commission, damage and unsold stock are hard to resolve.
• Losing track of stock. If you do not reconcile what you delivered, what sold and what remains, missing items are easy to overlook.
• Mixing commission into the unit price. Show gross sales and commission separately so both sides can check the arithmetic.
• Ignoring tax rules. Sales tax, VAT and GST treatment of consignment varies; get it confirmed.
• Using "consignment" wording on export invoices loosely. If there is actually a sale, say so; misdescribing the transaction can affect customs valuation.

Creating a consignment invoice

Use the free invoice generator to build the PDF: add a line for units sold, enter the commission in the discount field as a fixed amount (the generator does not accept negative prices), and put the agreement and sales report references in the notes. A simple layout such as the minimal invoice template keeps the deductions easy to read. If you need to correct an invoice after a late return, issue a credit note rather than editing the original. The generator does not track stock held by consignees, so keep that record separately. For more fundamentals, see the invoicing basics articles.