[Jewelry making - Article 00017] - Re: [Orchid] Consignment Vs. Memo

[John Donivan]

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    In a diamond bourse, if you need an 8 ct., $75,000 stone, you go to
    someone you possibly have never met, negotiate the deal, shake hands
    and walk away with the stone.  The understanding is that you will
    either return the stone or present the dealer with the cash equivalent
    (diamonds=cash), not just in 10 days, but as soon as your deal is
    consummated.  It is merely a way of having the end-buyer pay for the
    stone, and to keep the deal streamlined - one payment instead of 2 or
    more.  Also the understanding is that the portion of the money that
    is the $75,000 is not your money to begin with - it goes to the
    dealer ASAP, because it is his.    The Memo (memorandum) process is
    just a formalization of that process.  "I agree to either return the
    product or deliver the cash value to you." Consignment (pardon my
    cynicism)  is a way for a store to get you, the manufacturer, to
    finance his business and stock his cases.  You are, in effect, making
    a loan to the store in question, often open ended. Plus, if you read
    the agreements, there are often (usually) clauses that absolve the
    store of responsibilities, and insurance, and more.  I would guess
    that probably every single Orchidian who has done consignment
    business has at least one horror story.  


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