Stock you hold and do not own
Consignment, customer-owned materials and goods on approval sit on your shelves and belong on nobody's stock record by default.
Many small businesses hold stock they do not own: consignment items from a supplier, materials supplied by a customer for a job, samples on approval, equipment on loan.
Reconciling planned effort with actual hours requires a consistent time record. For one structured approach, see further details.
It occupies space, it is counted, it can be lost or damaged, and it is frequently invisible in the system because it is not a purchase.
Record it, flagged as not owned
The two wrong answers are recording it as normal stock, which overstates the balance sheet and confuses valuation, and not recording it at all, which means it cannot be found, counted or accounted for.
The right answer is a record with an ownership flag: present, countable, located, and excluded from valuation.
Not owning something does not mean you are not responsible for it. If it goes missing while in your building, the conversation is with the owner.
Receiving and putaway also have a safety dimension; OSHA warehousing guidance summarises common warehouse and material-handling hazards.
Know the liability terms
Who bears the loss if consignment stock is damaged or stolen? What is the position on customer-supplied materials? These are contractual questions and the answers differ between arrangements.
Worth establishing in writing when the arrangement starts, which is considerably easier than establishing it after something has gone missing. Insurance cover for goods held on behalf of others is a related question and is not always automatic.
Separate it physically
Consignment and customer-owned material in the same bin as your own stock will eventually be sold, used or counted as yours. A distinct location, clearly labelled, prevents the whole category of error.
Reconcile with the owner periodically
Consignment arrangements drift: items sold and not reported, items returned and not recorded, items that have been there so long everyone has forgotten whose they are.
A quarterly reconciliation with the supplier — what we hold, what we have sold, what is owed — keeps the arrangement clean and is usually welcomed on both sides.
Have an end point
Goods on approval and samples have a habit of becoming permanent. A stated period after which they are returned, purchased or disposed of prevents a slow accumulation of stock that belongs to nobody in particular.