Inventory Returns 2873



  • Hello Everybody,
    I am a new poster here but I must say I love the forum. I have found it to be an excellent resource.
    My question is elementary and I am new to this so please bear with me.
    Some material received is not put into inventory but rather segregated in the computer system as QI (quality inspection), and requires inspection before it can be used. After inspection, if it passes, it is then moved in the system to receiving and from there into the supply crib’s inventory. Is this material still considered our company’s inventory or is it still technically the supplier’s until fully received. It is put into the system when it arrives and it is on our loading dock but technically it may still be returned to vendor if not up to code.



  • I think what you are describing is a fairly common practice, but I think it should be on a case by case and not the rule for every purchase. In our business, we often do this for custom orders or for equipment that is special ordered to our specs. It makes sense to me that we would need to inspect these items before accepting. This is also written into our contracts or purchase orders with the vendors for these types of orders. But for routine or non-custom orders (office supplies is a great example) we would go ahead and receive them into inventory (and properly accrue for them) as soon as they arrive.



  • I fully agree with you and that is our practice. Only certain items are inspected. But are they considered company property and thereby part of our financial report or would they be considered the supplier’s inventory still and not part of our reports?



  • Your question may be more of a legal question. It probably depends on the wording in your Purchase order or your contract with the vendor. At our company, if we order a high dollar piece of custom or semi-custom equipment, we may specify in the contract that ownership transfers upon inspection and acceptance. If both parties agree to these terms, then the equipment could be on your receiving dock, but still technically owned by the vendor until you give notice to them that you have accepted.


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