Memo Deals: How Watch Dealers Lend Watches to Each Other
What 'on memo' means in the watch trade, how memo deals between dealers work, typical terms, the risks for the dealer who lends, and how to protect yourself.
By Dejan Zoric
5 min read
The short answer
In the watch and jewelry trade, a memo deal means one dealer hands a watch to another to show or sell for a set period. The receiving dealer either pays the agreed price if it sells or returns the watch. Memo lets dealers sell stock they don't own without paying up front, but most of the risk sits with the lender, so memo runs on trust, clear written terms and short timeframes.
Key takeaways
- 'On memo' means you hold another dealer's watch to show or sell, and pay only if it sells.
- Terms vary widely: a few days to 30 days is common, longer for trusted partners.
- Most of the risk sits with the dealer who hands over the watch.
- Put it in writing: the watch, the price, the term, who carries the risk and when payment is due.
- Memo only works between people whose track record you can check.
On this page
Ask a dealer how they sold a watch they never owned and the answer is often two words: "on memo." A friend down the street had the watch, you had the client, so you took it on memo, showed it, sold it and paid your friend. Nobody had to wire money for a watch that might not sell.
Memo is one of the quiet engines of the watch and jewelry trade. It's also where some of the trade's worst losses happen. Here's how it works and how to do it safely.
What "on memo" means
A memo is a document that goes with goods one business lends to another. In the jewelry world it's sometimes described as an open-ended invoice: the goods are with you, but they aren't yours until you pay.[3] The Jewelers Vigilance Committee's counsel describes it as "a memo transaction, also known as consignment": you hold the supplier's goods for a set period, pay only if they sell, and return them if they don't.[1]
In the watch trade, it usually looks like this:
- Dealer A has a watch. Dealer B has a client who might want it.
- A gives B the watch on memo at an agreed trade price, for a set time.
- B shows it, and sells it at whatever price they can get.
- B pays A the agreed price, or returns the watch by the deadline.
B's profit is the difference between what the client pays and the memo price. A sells a watch without finding the buyer. Nobody pays up front.
Why dealers use memo
- Sell without buying. You can offer a client a watch you don't own, without tying up your cash.
- Move stock faster. The lender gets more eyes on their watch through other dealers' clients.
- No bank needed. One accountant writing in Rapaport called memo "often a long-term, interest-free arrangement," built "largely" on "time and trust."[3]
- Relationships. Dealers who memo to each other become each other's sales force.
Memo vs consignment
The trade often uses the words for the same thing.[1] In everyday watch dealing, though, there's a useful difference:
| Memo | Consignment | |
|---|---|---|
| Usually between | Dealer and dealer | Owner and dealer |
| Typical length | Short: days to weeks | Longer: often weeks to months |
| How the holder earns | The difference between the memo price and the sale price | A commission on the sale price |
| Paperwork | A memo listing the goods, price and terms | A consignment agreement |
If you take watches from private owners to sell, see our full guide to watch consignment.
Typical memo terms
There's no standard. Suppliers interviewed by Rapaport described terms of three days to two weeks for new relationships, 10 days, or net 30, with long-standing clients sometimes getting months.[2] In the watch trade, where prices move and clients decide fast, memos between dealers are often short: long enough to show the watch, not long enough for it to disappear.
As one supplier put it, the dealer holding the goods "doesn't have any money invested," so if they get paid, the supplier should too.[2] In other words: when it sells, pay right away.
Who carries the risk
Mostly the lender. The JVC's counsel is blunt: "Most of the risk falls on the supplier."[1] And the longer a piece stays out on memo, the greater the risk.[3]
What can go wrong:
- The watch isn't paid for or returned. Memo fraud often starts small: pay promptly on a few early pieces to build trust, then take bigger goods and disappear. In one US case, a jewelry store owner who ordered goods on memo under false names was sentenced to 41 months after defrauding 12 wholesalers of at least $400,000.[5]
- The dealer holding it goes under. If the business holding your watch fails, its other creditors may try to claim what's in its safe.
- It's lost, stolen or damaged while it's out.
- It's sold twice. The lender sells the same watch to someone else while it's out on memo.
How to do memo safely
Trade guidance for the jewelry industry lines up on a few basics:[4][1]
- Put it in writing, every time. The parties, a detailed description of the watch (reference, serial, set, condition) with photos, the agreed price, the deadline and the payment terms.
- Get it signed by the dealer receiving the watch.
- Say who carries the risk of loss, theft and damage, including in transit.
- Check insurance on both sides.
- For larger, ongoing memo relationships, some suppliers also make a UCC filing so their goods stay protected if the other business fails. The Jewelers Board of Trade publishes a guide to memo transactions with the Jewelers Vigilance Committee.[6]
And the dealer rules:
- Start small with anyone new, and keep terms short.
- Never memo to someone you can't verify. A good story and a few quick payments are exactly how memo frauds start.
- Take the watch off the market while it's out. Don't sell it twice.
- Pay the day it sells, or return it on time. Memo is a favor, and favors run on reputation.
The same rules of respect apply as in any deal. See the unwritten rules of watch dealing.
Memo is trust, so check the track record
Every memo comes down to one question: will this dealer pay me or bring it back? In group chats, the answer is a feeling, maybe a few screenshots. That's a thin basis for handing over a five-figure watch.
On Soda, every dealer is a verified business with a real name and company, and every profile shows their completed deals, completion rate, ratings, vouches and strikes. You can see how someone has dealt with everyone else before you let a watch leave your hands.
When the deal is done, it's done properly: a buyer commits with Mark as Sold, the deal gets its own page with shipping terms and documents, and both sides see each other's secure, verified payment details inside the deal.
The bottom line
Memo lets dealers sell watches they don't own and lets lenders reach more clients, with no money up front. But most of the risk sits with the lender, so memo only works with clear written terms, short timeframes, signed paperwork and, above all, people whose record you can check.
Lend to dealers you can check
Soda is a trade-only network where every dealer is verified and every track record is visible, so you know who you're trusting before the watch leaves your hands. See all features, then apply for access or book a demo.
Questions dealers ask
What does 'on memo' mean for watches?
It means a dealer has given you a watch to show to a client or sell for a set period. You don't pay for it up front. If it sells, you pay the agreed price; if not, you return it.
What's the difference between memo and consignment?
In the trade the words are often used for the same thing. In everyday use, memo usually means dealer-to-dealer and short-term, while consignment often means an owner leaving a watch with a dealer to sell for a commission.
How long are memo terms?
There's no standard. Suppliers quoted by Rapaport described terms from a few days to two weeks, 10 days, or net 30, with trusted clients sometimes getting months.
Who is responsible if a watch on memo is lost or stolen?
Whatever the memo says. Many memos put the risk on the dealer holding the goods, but terms vary, so agree it in writing before the watch changes hands.