Trade-Ins from Customers |
Go Back to List of FAQs Previous Next |
Handling Trade-ins with The Jewelry Shopkeeper
A trade-in is where a customer buys merchandise from your store and pays (partially or fully) with old goods or materials.
Often the trade-in merchandise is of lesser value than the value of the merchandise being purchased and the difference has to be made up with some other form of payment. Sometimes the trade-in merchandise is of equal value and you agree to an even swap. Other times the trade-in merchandise is of greater value and the customer is to be issued cash, check, credit slip or store credit to make up the difference. In the Jewelry Shopkeeper, any of these types of sales transaction is handled much like a customer return or exchange.
There are three basic types of trade-in merchandise:
1) Scrap gold. The simplest type of trade-in is if the item has only one type of valuable component, like a man's nugget ring, and is to be scrapped.
2) Resalable items. If the item is something you will in turn sell as a finished piece as-is, then you will need to add the item to inventory and assign it a new sku number. This is very common for diamonds (since you can't melt them down) but may also be done with estate-quality jewelry.
3) Trade-in of items you sold the customer. This is handled just like a returned sale except that you might adjust the trade-in price compared to the original selling price. Here you just enter the original sku with a minus one quantity.
Or you might have a combination of the above. The trade-in might contain some gold that is to be treated as scrap and a stone which is to be assigned a stock number as a resaleable item. In this case, record two trade-ins.
Note: Some people like to show the trade-in of scrap gold (or anything else) as a type of payment instead of a negative Sku line. This has the effect of keeping the sales figures higher. See this help topic for adding payment methods - including a scrap "payment"
Create A Major Class Code for Scrap Items
(Note that is a one time step. Once a scrap gold major class code(s) is created, you won't have to repeat the step each time a trade-in is made.)
If you accept scrap, before you begin a sales transaction you must create a major class code called "Scrap Gold". Use the Major Class Codes feature from the Maintenance Menu to create the "Scrap Gold" major class code. You may want to create more than one scrap gold class code for different types of trade-ins. For example, you might choose class 890 for '10 karat scrap gold', 894 for '14 karat scrap gold' and 898 for '18 karat scrap gold'. Or, to keep things simple, you may want to create only one major class code for all scrap metal.
Four things are important to remember for the sales transaction. The first is how the cost and price of merchandise in the scrap categories is calculated; by piece or by weight. In almost all cases, even in the case of scrap gold, it's much easier to choose to value by piece, not weight. You must also remember the dummy sku number created for this trade-in category. For instance, in the above example, major class code 890 will be assigned the dummy sku number '890-00001'. In order for the sale total to come out correctly, make sure the 'Charge Sales Tax' question is entered as N for No.
If you pay commissions, be sure to enter the commission percentage as zero and answer the question "Does this Override Sales Clerks' Commissions?" with a Y for Yes. This will ensure that clerks don't get negative commissions on trade-ins of scrap.
How to Record a Scrap Gold Trade-in
1. Make a new sale.
Continue through the sale as usual, entering the sale date, department and sales person's initials, until you are prompted for a sku number.
2. On the second line, type the scrap gold dummy Sku number. In the above example the dummy Sku number would be 890-00001. Make sure the price is entered as the per-gram price if the scrap gold category is set up as 'Price by Weight' instead of piece. If the major class code is setup to calculate 'Price by Piece', the retail price is the simply amount to be credited the customer. Type the price as a positive number.
3. Make sure the quantity is entered as a negative number (ie. -1). If a weight is prompted for, that too must be entered as a negative number (ie. -10.4). By typing a negative quantity (and weight if needed), you are adding that weight or quantity to inventory. At this point the number quantity and weight for this scrap gold dummy Sku number has already been increased.
You may want to adjust the cost (wholesale value) of the trade-in. To do that, choose the Options button in the Sku line and choose Cost then type the cost value that will be stored in the sales records You could type a value that is lower-than, the same, or higher than the retail credit you're offering.
Finally, be sure that the taxable check boxes on the right of the Sku line are not checked. This is because you are not (likely) giving tax credit for the trade-in.
4. Check the Total Sale figure and sub-total. This is the net of the sale total and includes both the item being purchased and the trade-in. If the number is positive, the customer owes you money and can be tendered in the regular payment screen. If it's zero, no money is owed by either party and the sale is complete. If the number is negative, the store owes the customer money and the negative number is the refund amount. In this instance, you will have the option of issuing a credit slip, company check, paying with cash or crediting the customer's in-house charge account.
5. Later when you disperse the materials you can manually adjust the quantity and/or cost of the trade-in Sku via Inventory Status.
How to Accept a Resaleable Item as a Trade-in
1. To accept a resaleable and Sku'd item as a trade-in, start by following Step 1 of the "How to Record a Scrap Gold Trade-in" section above.
2. On the second sku number line, choose the Options button in the Sku line and choose Trade-in
Next you will be prompted for all the information needed to create a new Sku'd inventory item.
For the vendor, brand and style number and major and minor code you can either use a real value in each case or you may want to designate a special manufacturer code or minor class code for trade-ins for reporting purposed.
In the 'Cost' entry field type the value that you will credit the customer.
After these entries you will be returned to the sales screen. The new Sku number and description will automatically be filled in on the sales screen. The quantity will be set to minus-one.
If commissions are paid, be sure to choose Options (in the Sku Line) then Clerks and Commisisons to remove the sales clerk's commission percentage. Otherwise the clerk's commission report will reflect a return against their sales total instead of a trade-in.
Finally, be sure that the taxable check boxes on the right of the Sku line are not checked. This is because you are not (likely) giving tax credit for the trade-in.
3. Follow steps 3 and 4 from the "How to Record a Scrap Gold Trade-in" section above.
How Trade-ins Affect Sales and Sales Tax Reports
Trade-ins will show as negative sales (or returns) on all sales reports. If you need to see sales reports without trade-ins reducing the report total, using the Itemized Sales Reports screen [6-2-3] type a specific minor class code range or manufacturer range excluding the trade-ins. For example if you entered all trade-ins with a minor class code of 999, you could type the minor class code range as 1 through 998. Or if a manufacturer code of 'ZZZ' is always assigned to trade-ins, then the manufacturer code range as ' ' through 'ZZY' will exclude the ZZZ's.
Since you always make trade-ins non-taxable, they won't affect your sales tax report. E.g. if you sell a $500 ring and accept a $50 trade-in, the sales tax report will only reflect the $500 taxable ring and won't deduct the $50 trade-in.
Note: if you handle trade-ins like a payment type, then they will not affect the sales totals. However, the cash register reports will show additional payments received that cannot be deposited in the bank. However, perhaps at a later date you'll receive a payment from a refiner that you can deposit in the bank.
Click Here to see this help topic for adding payment methods - including a scrap "payment"
|