a) Non-recurring and Recurring Expenses

Expenses: Expenses relating to consignment of goods are divided into two categories viz

1. Non-recurring Expenses: All the expenses which are incurred for bringing goads to the godown of the consignee are non-recurring in nature. Such expenses are generally incurred on the consignment as a whole, The non-recurring expenses will be incurred partly by the consignor and partly by the consignee. The consignor usually incurs expenses on sending the goods to the consignee such as packing, cartage, loading charges, insurance, freight, etc. The consignee usually incurs expenses on receiving the goods from the consignee such as dock dues, customs duty, clearing charges, petrol, etc.
2. Recurring Expenses: These expenses are incurred after the goods have reached the consignee's place or godown. They are recurring in nature because they may be incurred repeatedly by the consignor and the consignee. The examples of recurring expenses incurred, by the consignor are: advertising, discount on bills, commission on collection of cheques, travelling, expenses of salesmen. bad debts etc. The examples of recurring expenses incurred by the consignee are godown rent, godown insurance, sales promotion, etc.

b) Ordinary Commission and Del Credre Commission

Commission: It is the remuneration paid to the consignee by the consignor in consideration of the services rendered by the former in selling the goods consigned. This commission can be divided into two types:

a) Ordinary Commission: It is a commission usually paid as a fixed percentage on gross sale proceeds. The terms commission normally denotes ordinary commission, unless specified otherwise. The consignee is not responsible for any bad debts and he does not guarantee the payment from all those who buy on credit so long as he is getting ordinary commission only.

b) Special Commission: This is the commission which the consignee gets over and above the ordinary commission. It can be sub-divided into two categories:

1. Over-riding Commission: This is an extra commission allowed over and above the normal commission and is generally offered when the agent is required to put in hard work either in introducing a new product in the market or where he is entrusted with the work of supervising the performance of other agents in a particular area. This commission is also given for sales at prices higher than the price fixed by the consignor.
2. Del Credre Commission: Usually, all the losses are borne by the consignor. Sometimes the consignor expecting that the consignee should also be responsible for recovering the debts and bear the loss on account of bad debts if any. In order to compensate him for this responsibility he is given some extra commission called 'Del Credre Commission'. Such commission is calculated on the total sales unless there is a special agreement to the effect that it is to be paid only on the amount of credit sales. Payment of this commission imposes extra liability on the consignee and induces him to deal in a prudent and cautious manner.

c) Account Sales and Invoice

Account Sales: As the consignee is an agent and is selling the goods on behalf of the consignor, he has to furnish the details of sale proceeds, expenses, commission, etc. to the consignor. He furnishes all these details by means of a statement called 'Account Sales’. This shows the quantity and description of goods sold, sale proceeds realized, the expenses incurred by the consignee, commission due to him, and the balance amount payable by him to the consignor. While preparing an Account Sales the consignee will deduct all expenses incurred by him in relation to the consignment and the commission due to him. The remittances made in advance, if any, are also to be deducted from the balance so obtained. The consignee will send a bank draft or his acceptance for the balance due to the consignor

Proforma Invoice: Since the goods sent on consignment cannot be treated as sales, the consignor does not prepare proper invoice. He simply prepares a Proforma Invoice and sends it to the consignee, along with the goods dispatched. This is prepared with a view to inform the consignee about price of goods, expenses incurred, mode of transportation and the minimum sale price at which the goods are to be sold.