A memo transaction is essentially a consignment, where a supplier sends their goods to a merchant, and they agree to pay the supplier after they sell the item.
Selling on memo can benefit both the supplier and merchandiser because a supplier can get their goods into a desirable store while the merchandiser can test out a new line without any financial commitment.
These transactions also come with potential downsides. If the memo is not documented correctly, it could lead to legal disputes and negatively impact both parties - especially the supplier, who is technically lending out their merchandise.
If not properly protected, you may be at risk for:
It is important you consider and include different scenarios in your memo, so that if one of these situations did happen, you would know who is responsible.
Some laws cover these types of transactions, and it’s important to understand how they function to protect you and your goods.
Consignment transactions are governed by the Uniform Commercial Code (UCC), which considers consignment a loan. JBT understands how important it is not to lose value through Memo transactions and we have multiple tools available to help protect you. As always, it is wise to consult a professional or seek advice from legal counsel before engaging in any new legal process.
Some of the tools JBT Members can take advantage of include:
Tune into JBT’s UCC Filing webinar, hosted by our president Erich Jacobs, to learn more about how you can utilize our new online UCC filing tool and protect your memo transactions.
JBT’s membership program offers you resources to stay informed about your Jewelry Business partners. We offer four types of membership tiers that include sales & marketing tools, risk management tools, debt recovery, and more. Discover how we can help you make informed business decisions.