Walk into almost any established jewelry store and a meaningful share of the colored stones in the safe are not owned by the store. They are held on memo — a trade arrangement where a supplier ships goods to a buyer who pays only for what sells. It is one of the oldest mechanics in the gem business and one of the least understood by newer brands, so here is how it actually works.
What Memo Actually Is
A memorandum, universally shortened to memo, is a consignment agreement specific to the gem and jewelry trade. The supplier ships stones to the jeweler along with a memo document listing each item, its description, and its price. Title to the goods stays with the supplier. The jeweler holds the stones for an agreed period — commonly 30, 60, or 90 days — and either returns them, or notifies the supplier that a stone has sold and converts that line into an invoice.
The critical legal distinction is that memo is not a sale. Nothing has been bought. The jeweler is a bailee holding another party's property, responsible for its safekeeping and for returning it in the same condition. This is why a memo document reads so differently from an invoice: it is closer to a custody receipt than a purchase order.
Memo exists because colored stones are slow-moving, high-value, and highly individual. A retailer cannot realistically stock a representative range of sapphires across every colour, size, and price band using their own capital. Memo lets them show a client six stones when they have paid for none.
Why the Colored Stone Trade Runs on It
Diamonds have rate sheets and interchangeable grades. Sapphires and rubies do not. Two stones with identical certificate language can differ substantially in face-up appeal, which means colored stone selling is almost always a side-by-side comparison in the client's hand. Photographs sell a fraction of what a tray of three stones under daylight-balanced lighting sells.
Memo solves this. A designer with a client wanting an unheated Ceylon blue in the 3-carat range can call three suppliers, get nine stones on memo within a week, and present a curated selection. The client picks one, the designer invoices, and the other eight go back. Without memo, that designer would either lose the sale or have to buy nine stones speculatively.
For suppliers, memo is a distribution cost. Stones sitting in a retailer's safe in Chicago are not earning anything, and some come back scratched or, occasionally, not at all. What memo buys is placement — a stone in front of a real buyer beats a stone in a Bangkok vault.
What a Memo Document Must Say
A vague memo is where trade disputes start. Any memo you send or accept should state the following without ambiguity:
- Full itemised description — species, weight to two decimals, dimensions, shape, treatment status, and certificate number where applicable
- Memo price for each line, and whether that price is firm or subject to change on conversion
- Return date, stated as a calendar date rather than "30 days"
- Retention of title — explicit language that ownership does not pass until payment is received in full
- Risk of loss — who insures the goods while in transit and while held, and at what value
- Restrictions on use — whether the stone may be set, shown off-premises, or sent onward to a third party on sub-memo
That last point causes more trouble than any other. A stone that has been set into a mounting cannot simply be returned, and a stone passed on to someone else's client has left the chain of custody the original supplier agreed to. Both require written consent first.
How New Buyers Earn Memo Terms
Memo is extended on trust, not on paperwork. A supplier handing over six figures of unset goods to a business they have never met is taking an unsecured position, so expect the first few transactions to be outright purchases.
What shortens the runway: trade references from other suppliers, a verifiable business address and registration, proof of jewellers block insurance, and prompt payment on your early invoices. Start by buying two or three stones outright, pay before terms expire, and ask for memo on the fourth. Most suppliers will start you with a modest ceiling and raise it as the record builds.
Expect memo to arrive in stages — a single stone against a named client first, then small parcels, then open terms. At Thai Gems we have been supplying the trade from Bangkok since 1963, and the pattern is consistent: the buyers who get the widest memo access are rarely the largest, they are the ones who return goods on the date they said they would.
Practical Discipline on the Buyer's Side
Treat memo goods as a liability on your books, because that is what they are. Keep a log with return dates, reconcile the safe against open memos weekly, and never let a memo lapse silently — if a client needs another two weeks, call and get an extension in writing. Confirm your insurance covers property of others at full memo value, since standard policies often do not.
Ship returns the way you received them: fully insured, signature required, and with the memo number referenced so the supplier can close the line cleanly. Suppliers remember this. It is the single cheapest way to build credit in a trade that still runs largely on reputation.
Thai Gems works with manufacturers, designers, and retailers worldwide on both outright and memo terms. Browse our current inventory of unheated sapphires and ruby solitaires, or explore calibrated sapphires for production work — contact us for trade pricing and to discuss memo arrangements.