A memo is goods sent out on approval: a dealer gives stones to a buyer or broker, who may sell them, buy them or return them by an agreed date. Until then the stones still belong to the dealer, so they stay in the dealer’s stock — just “out on memo”. Tracking memo means knowing what is out, with whom, for how long, and for how much.
What is a memo in the diamond business?
A memo (also “memorandum” or “consignment”) is the paper that goes with stones handed over without being sold. A wholesaler lends a parcel to a jeweller to show a customer, a manufacturer sends goods to a broker in the bourse, an Antwerp office sends stones to Mumbai for a week. Nothing is invoiced yet.
The memo lists each stone — reference number, weight, shape, colour, clarity, certificate — and the price it would be sold at. It also says when the goods must come back. The holder may return them, buy them (the memo becomes a sale), or keep them longer if the owner agrees.
Are stones on memo still part of your stock?
Yes. Ownership has not changed, so the stones are still your capital and still count in your stock value — they are simply in someone else’s hands. A good system shows them as “on memo” rather than in the safe, and never lets the same stone be sold to a second customer while it is out.
The reverse is a memo in: stones you hold on someone else’s memo are not yours. They can be shown and sold, but they are not your capital until you buy them.
What is memo ageing, and why does it matter?
Memo ageing is how long each memo has been out, and how far past its return date. A stone that has sat with one buyer for ninety days is capital that is not working, and often a sign the buyer has no customer for it.
Dealers look at memo ageing in buckets — up to 30 days, 31–60, 61–90, over 90 — and chase the oldest first. The question each week is simple: what is overdue, with whom, and for how much?
How do credit limits work with memo?
A memo is credit: you are trusting the holder with goods worth money. So each party gets a limit, and what they hold on memo counts against it together with what they owe on invoices. A new memo that would take them over the limit should need someone with the authority to allow it — not just a warning on the screen.
What happens when stones come back, or are sold?
- Return: some or all of the stones come back; they are in stock again, and the memo shows what is still out.
- Sale: the holder buys some or all; those lines become a sale to that same party, at the memo price or a new one, and leave the memo.
- Part of a parcel: with a parcel of many pieces, the holder may return or buy only some pieces and carats — the rest stays out.
A worked example
On 1 March you send a buyer a memo with three stones: a 1.01 ct round at $6,200 a carat, a 0.70 ct oval at $3,900 a carat and a 2.5 ct parcel of 10 pieces at $800 a carat — $10,992 in all ($6,262 + $2,730 + $2,000), due back in 15 days.
On 10 March the buyer buys the 1.01 ct round: that line becomes a sale of $6,262, and the memo now holds $4,730. On 20 March they return the oval and 6 pieces (1.5 ct) of the parcel. On 1 April, 4 pieces (1.0 ct, $800) are still out and 16 days past the return date — that is the line your ageing report should put at the top.
How Avirat tracks memo
In Avirat a memo out takes the stones off the shelf but keeps them in your stock as “on memo”, so a stone out on memo cannot be sold to anyone else. The party can return part or all, or the memo becomes a sale for the same party in one step, and parcels can be split by pieces and carats. The memo ageing report shows what is out, for how long, what is past its date and each party’s exposure against their credit limit — a memo over the limit needs a person with that permission to allow it. Memo in is kept apart: those stones are not counted as yours until you buy them.
See how Avirat handles this: Diamond software