October 29, 2021– Memo goods… Those are two words that a lot of traders in polished diamonds would rather not utter or hear. After all, once you give goods out on memo, they are out of your available stock, out of your control, and often for a longer period than anticipated – all with an unpredictable likelihood that a sale will, in fact, result.
In practice, however, most traders will give goods on memo, especially to clients they already know and with whom they have a good track record. At the same time, almost every diamond dealer can tell you a horror story or two about memo experiences gone sour. And still, we keep doing it because memo has become an accepted – and expected – part of doing business, and, in the overwhelming majority of cases, the potential reward warrants the risk.
The United States of America is still the largest market for polished diamonds. Therefore, most of our members will have had business dealings with clients in the downstream market and consequently have memo-ed out goods.
So, with the holiday season business heating up day after day, should you give out goods on memo? How can you mitigate the risks? What happens when something goes wrong, like a client abusing the memo privilege, or, heaven forbid, going bankrupt while he has memo goods in his possession?
This past week the Jewelers Board of Trade (JBT), the US jewelry industry’s leading provider of key business, credit, and trade data, hosted a webinar entitled “Understanding and protecting memo transactions.”
The webinar was held in cooperation with the Jewelers Vigilance Committee (JVC) and CLAS, a specialist in these types of commercial transactions. Together they explained the risks with memo goods and how to protect consignors.
For those who missed the webinar, the JBT has issued a guide entitled “The Essential Guide to Memo Transaction,” available for download. It is a free service, and IDMA commends the JBT, better known to many as the organization that publishes the “Red Book,” for making this valuable document available to the market.
To download the guide, go to https://www.jewelersboard.com/industry-knowledge/education.