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:

• Loss, Damage, or Theft of Merchandise

• There are many scenarios you should consider when exchanging jewelry with other members of the industry, like:
• If there is a robbery
• If merchandise is lost during shipment
• If there is damage to your item

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. 

• Terms of Payment

• • Having jewelry out on memo for a long period could increase the risk of:
    • One of the above scenarios happening. 
    • Your jewelry loses value the longer it is out on memo. 
    • Your jewelry is being sold, and the memo holder forgot to pay you.

• Swapped Merchandise

• • You must consider the inventory of the memo holder you plan to lend your jewelry.
    • • If they have a lot of similar pieces to the ones you have, there is a higher chance that they will be mistaken for each other when sold or shipped.  

• Bankruptcy

• Merchandise may be ordered to be sold by a bankruptcy court to satisfy higher priority debt, and that this is part of why being a “secured creditor” by filing the UCC is important -- it will put you in line ahead of any unsecured creditors and establish a date and facts on the record of your consignment.

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:

• • Credit Rating Lookups
    • To ensure you are not consigning your goods to anyone with bad credit, use JBT’s credit rating lookup tool to find out who has a bad credit history.   This can be accessed via our website or via our new API.
    • Members get 25 free lookups each year, with additional lookups available for a small fee.
  • Credit Reports
    • Go the next level and get information about company history, the Principals currently active at the company, and any outstanding trade debt and claims.
    • Members get 25 free credit reports each year, with additional credit reports available for a small fee.
  • Online UCC Filing
    • Online UCC filing is an important risk management tool available through through JBT's membership program. This filing tool protects your memos goods and allows you to file a UCC online in minutes at less than half the normal cost.

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.