Inventory - Taking trade in on sale

mtc1234mtc1234 Posts: 1Member
We are a bike shop that occasionally takes in a bike as trade for partial payment towards a new bike. Was curious if anyone else does this and how do they manage it. We pay some of our sales people commission off of total amount of sales and others off of profit gained.

Where it really makes it difficult is when the trade is enough money that it makes the profit of the sale a negative amount..

Mainly though is anyone taking in trades and how do you enter it into the system??? 

4 comments

  • JasonSrJasonSr Posts: 1Member

    we have a store trade payment option set up as a payment option. So instead of taking a return on an item during the sale, we accept a store credit as payment and then the balance on whatever tender they use. We then add the traded equipment into inventory.

  • MillRiverMusicMillRiverMusic Posts: 2Member

    Jason, the trouble with that method for us is that a trade in should be a pre tax calculation. I wish that we could do it as a store payment method that would do a tax reduction. Right now we have a product called "Trade In" for any trade in items that we take in that are not already a sku in our system and we write a negative dollar amount. The problem with this is that we have to add the Trade IN deductions back into our totals to get a full report for our sales totals. Lightspeed really needs to make a proper trade in function with proper accounting.

  • RideABikeNCRideABikeNC Posts: 1Member

    Each used bike we either take in on trade or buy has it's own SKU prefaced with a sequential number (IE, 762 - Raleigh Talus 1 [I like the sequential numbering because at a glance I know it's a used bike and I know roughly how long we've had it]). Here's how we do it:

    1. Create SKU for used item and categorize it as "Bicycles - Used"
    2. Put purchase price as sale and cost.
    3. Open a new sale, attach customer, and then REFUND that new SKU. Be sure to uncheck tax.
    4. Apply the refunded money to the current sale OR the customer's store account. You could also refund the store account money as check, cash, etc as needed for your situation. We do store credit or check only.

    The SKU for the used bike you just purchased now shows 1 in stock, the customer has their money, and we have good records of what we bought.

    When you have the used bike ready to sell, change the SKU's price to your new retail price and you're done.

    If the bike needs any kind of work, we create a workorder under the owner's name. We put all parts and labor on the WO just as if they were going to keep the bike. We pay for the repairs out of what we refunded to the customer's account above and they get the remainder. If the repairs exceed the wholesale value of the bike we either don't buy or buy as a parts bike.

    I still have to pay my people to fix the used bikes so we do charge normal labor on used bikes. If they kept the bike it would need that work and (usually) they were the ones that rode the bike into that condition.

  • abacusabacus Posts: 4Member

    I'm about 90% done building an app that handles trade ins with Lightspeed. I've built it for my buy/sell/trade used instrument company Evolution Music. We've been successfully using it for almost 2 years but I'm almost done making it a fully fledged SaaS.

    The app handles pre tax calculation for trade in value, treats any remainder similarly to @RideABikeNC issuing a refund to be paid in whatever tender you prefer (we always do Check, Store credit or Gift Card). It also lets you simply buy inventory in from a customer whether or not it is a trade.

    It also automatically creates listings on our Shopify driven website evolutionmusicstore.com and Reverb.com (basically Ebay for music gear) and syncs inventory levels every minute.

    The only drawback is that reporting becomes skewed because buy-ins and trades register as "refunds" as @MillRiverMusic mentioned.

    I built this to scratch my own itch but if you guys are interested let me know. I've become very fluent with the Lightspeed API and could create custom solutions for you as well.

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