Jewellery Workshop and Making Charge Accounts

Workshop and making charge accounts are two linked ledgers kept for the same jewellery workshop: a gram account for metal issued, metal returned, and the loss between them for each karat, and a money account for making charge accrued and making charge paid. Keep only the money side and the metal disappears. Keep only the metal side and the making charge becomes a figure agreed by conversation at month end. Both have to be written down, and every batch needs its own numbered document.

TL;DR. Every batch of gold leaving for the workshop needs a dated, numbered job order carrying the weight, the karat, the piece count, the type of work, the agreed making charge and the expected return date. On receipt, weigh the finished pieces and the returned filings in front of the workshop's representative, then compute loss = issued weight − (finished weight + returned scrap weight) for the same karat. The workshop's running account stays open in grams and money together until the batch is closed. And an acceptable loss percentage is not a figure from the internet — it is one you derive from your own recent batches with the same workshop and the same type of work.

Why a workshop needs its own kind of account

A workshop is not an ordinary supplier you buy from. You hand over your own raw material and receive work back, and the weight on the two sides is not equal. Filing, cutting, soldering and polishing all remove metal. Treat the workshop as a purchase invoice and you will pay the making charge and forget to ask where the metal went.

There is a second complication. What comes back can be a different karat from what you issued, if the craftsman melted and alloyed it. The World Gold Council explains that fineness is written in parts per thousand: 18 karat is 750, 24 karat is 999. So comparing 100 grams issued at 21 karat with 100 grams returned at 18 karat is wrong from the start, because the pure metal inside each is different. A sound workshop account compares like karat with like karat, or converts both sides to fine gold before comparing — the same arithmetic we set out in gold shop accounting.

The job order: the paper the whole account rests on

Most disputes with workshops are not fraud. They are the absence of a document. The job order is written in two copies, one for you and one for the workshop, and it carries:

• A number and a date for the batch. Every later conversation refers to that number.
• The workshop's name and the craftsman who took delivery.
• Weight in grams and karat per line, plus the piece count if you are issuing finished items rather than bullion.
• The type of work requested: forming, repair, polishing, stone replacement, melting.
• The agreed making charge and its basis — per gram or per piece.
• The allowed loss, as a share of the issued weight, written before the work starts and not after.
• The expected return date, because metal parked at a workshop is capital standing still.
• Both signatures on the weight. The weight that was signed is the weight you settle against.

If the batch includes stone-set pieces, record the stone weight separately from the metal weight. The workshop settles on metal; stones are counted, not weighed in with the gold.

Loss: how to calculate it, and how to derive your own range

The formula for one batch and one karat:

Loss = issued weight − (returned finished weight + returned scrap and filings weight)

Loss percentage = loss ÷ issued weight.

There is no single "normal" percentage that fits every workshop and every kind of work, because it moves with the work itself, the craftsman's skill, and whether the filings come back to you at all. So the only figure worth settling against is the one your own records produce. Derive it like this:

1. Gather your recent closed batches for the same workshop and the same type of work, each karat separately.
2. Compute the loss percentage for each batch using the formula above.
3. Take the average, the highest and the lowest across those batches. The average gives you an expectation; the range gives you an alert threshold.
4. Agree a written ceiling with the workshop near the top of your own normal range, not at the average, so you are not disputing every single batch.
5. Revisit the figure periodically, and change it when the type of work or the craftsman changes.
6. Keep a separate range per type of work. Melting is not forming, and forming is not repair; holding them to one ceiling makes no sense.

An illustrative calculation, on numbers of my own choosing purely to show the arithmetic rather than any market norm: a batch of 250 grams at 21 karat is issued; 243 grams of finished pieces and 5 grams of filings come back. Loss = 250 − 248 = 2 grams, and the percentage is 2 ÷ 250. Run the same formula over your real batches and your own range will appear.

One detail matters more than people expect: returned filings and scrap are part of the formula. If a workshop does not return filings, the agreed loss ceiling has to be higher, and that is a negotiated term written on the order rather than a surprise on receipt. And loss that repeatedly sits above your range at one workshop while the same work stays inside the range at another is a signal worth a question.

Making charge: a cost to you and a price line to the customer

"Making charge" is one phrase describing two different numbers, and conflating them makes a break-even month look like a profitable one.

	Making charge as a cost	Making charge as part of the sale price
Who sets it	The workshop, agreed on the job order	You, by item type and market
Calculated on	Issued weight, or piece count	The weight of the piece being sold
Recorded where	The workshop's money account	The invoice, separate from the metal value
What it affects	Your cost per piece	Your sale price and your margin
Paid or collected when	At workshop settlement	Collected at the point of sale
Keeping them apart tells you	What the workshop actually costs	What you earned on making charge

Making charge margin = (making charge per gram charged to the customer − making charge per gram paid to the workshop) × weight of pieces sold. That margin is a profit line independent of movements in the gold price, and it belongs on your reports on its own. Many shops close the month with a single number, which makes it impossible to say whether the profit came from making charge or from the metal price — and therefore impossible to say whether the making charge is set correctly. Setting the customer-facing charge per gram or per piece, and the discount floor, is covered in how to price gold jewelry.

On the invoice, show the metal value separately from the making charge. It is clearer for the customer, more accurate for you, and easier to audit later. Invoicing and record-keeping obligations depend on your activity and its size; the Egyptian Tax Authority runs the e-invoice and e-receipt systems, so ask your chartered accountant what applies to your shop.

The running workshop account: grams and money side by side

A workshop account stays open and moves in two directions at once.

In grams: the workshop owes you the issued weight per karat; you credit it the weight of finished pieces and returned scrap; the remainder is the outstanding balance plus the approved loss. That outstanding balance is the number that has to enter your stocktake, as described in the gold shop inventory count procedure.

In money: you owe the making charge accrued on received batches, you credit what you have paid, and the remainder is outstanding.

What matters is that both close per batch, not per period. A useful workshop statement reads: these batches are open, with weights and dates; these batches are closed, with their loss; making charge accrued is this, paid is that. A statement that says "the workshop is owed this much" without a batch breakdown is not auditable.

The issue-and-receive cycle, step by step

1. Select what goes out, from stock. Pick the pieces or the bullion, weigh them, and read the karat from the hallmark. In Egypt, hallmarking and weights fall to the Precious Metals and Weights Authority under the Ministry of Supply and Internal Trade, which is reason enough to take the karat from the stamp rather than an estimate.
2. Write the job order in two copies and have both parties sign the weight, the karat, the making charge and the allowed loss.
3. Move the weight out of shop stock and into the workshop balance. The metal is still yours; only its location changed. Do not remove it from your total assets.
4. Track the expected return date. A batch past its date is a named follow-up item, because gold standing at a workshop is a cost.
5. At receipt, weigh in front of the representative. Finished pieces on their own, scrap and filings on their own, each karat on its own.
6. Compute the loss and compare it to the written allowance. Inside the ceiling, approve the batch. Above it, do not close the batch — raise the question while it is still open.
7. Record the making charge accrued on that batch in the workshop's money account.
8. Book the returns into stock by weight and karat, with a barcode per piece, and add returned scrap to the scrap balance.
9. Close the batch with signatures, and file your copy of the job order with the receipt sheet.
10. Settle the making charge by the agreed method, and record the payment in the workshop account.

Pay the workshop in gold or in cash?

	Paying in cash	Paying in gold	Paying partly in each
Accounting	Simple: making charge in money	Harder: the charge converts to a weight at a specific day's rate	Hardest to keep, most common in practice
Rate used	None	Must be fixed on the job order: issue date, receipt date or payment date	Must be stated for each portion
Effect on your stock	Gold stock unaffected	Reduces your gram balance	Reduces it by the gold portion only
Dispute risk	Low	High if the day's rate is not written down	High without a breakdown
Suits	A new relationship, or occasional work	A long relationship with steady volume	Most ongoing relationships
Cannot work without	Nothing in particular	A written basis for the rate	A statement separating each portion

Neither method is inherently better. What matters is that any settlement in metal records the weight, the karat, the per-gram rate applied and its date. Paying in gold with no written rate is the single largest source of dispute in this relationship, because a month later each side remembers a different number.

A dispute over one gram: settle it from the paperwork

When the workshop says it returned everything and the shop says it is short, talking does not help. Work through this order:

1. Pull the job order by its number and read the weight and karat that were signed at issue.
2. Compare the issued karat with the returned karat. If they differ, convert both to fine gold before any comparison.
3. Confirm the returned scrap and filings are in the calculation, and not sitting in some other balance.
4. Review the receipt sheet: who weighed, who witnessed, and when.
5. Check whether the weight is with or without stones. A stone-set piece's gross weight is not its metal weight.
6. Check whether the batch was merged with another for the same workshop. Merging batches makes loss impossible to isolate, which is reason enough to close each batch on its own.
7. Compare the loss to the approved range for the same type of work at the same workshop, not to a general figure.
8. If all of that checks out and the gap remains, the gap is real. Settle it as a visible entry carrying its reason, signed by both parties, not as a silent balance adjustment.

The paperwork is what decides. A notebook line reading "100 grams to the workshop", with no karat and no signature, is not evidence — it is a reminder.

The gap between the making charge you pay the workshop and the one you sell at is the shop's main margin; we work it through in jewelry store profit margin.

How Tibr handles this

Per what is published on the Tibr site, Tibr treats workshops as running accounts rather than invoices:

• Issue and receipt by weight and karat, with loss calculated on each batch.
• Transfer between workshops when work is finished elsewhere.
• An account per workshop in gold and money together, so the outstanding balance and the accrued making charge sit in one place.
• Making charge calculated automatically and shown separately from the metal value on the invoice.
• Inventory by karat with a barcode per piece, so returns enter stock at their weight and karat.
• Activity log: movements are added and never deleted, and any correction is a visible reversing entry under the name of whoever made it.
• Reports: inventory value and total weight per karat, plus what you are owed and what you owe.

If you are still comparing a general system with one that understands gold, start from the gold shop management software guide and the accounting software for shops comparison. You can also run the whole cycle on sample data from the signup page.

FAQ

How do I calculate loss on a workshop batch?

Loss is the weight you issued minus (the finished weight returned + the scrap and filings returned), for the same karat. The percentage is the loss divided by the issued weight. If the return is a different karat, convert both sides to fine gold before subtracting, or the figure will be wrong.

What loss percentage is acceptable?

There is no ready figure that fits every shop, because it moves with the type of work, the craftsman, and whether filings come back. Derive your own: compute the loss percentage on your recent closed batches for the same workshop and the same work, take the average and the range, and agree a written ceiling near the top of your own normal range.

Is making charge a cost or a price?

Both, and it is recorded twice. The workshop's making charge is a cost booked in that workshop's money account. The customer's making charge is a line in the sale price, shown on the invoice separately from the metal value. The difference between them, times the weight sold, is your making charge margin, and it belongs on its own report line.

Should I pay the workshop in gold or in cash?

Both are used; the difference is in the paperwork, not the method. If you settle in metal, the job order must state the per-gram rate used for the making charge and its date. Paying in gold with no written rate is the biggest cause of a dispute a month after the work is done.

Does gold at the workshop count as my inventory?

Yes. It is still yours, it is simply not on your premises. Keep it as an open balance in the workshop's name, by weight and karat, and include it in your stocktake total. What leaves your assets is the approved loss once the batch closes, not the metal at the moment of issue.

The workshop says it returned everything and I am short — what now?

Go back to the job order by number and signature, compare like karat with like karat, confirm the scrap and filings are counted, and check that both weights are on the same basis with or without stones. If all of that holds and the gap remains, settle it as a visible entry carrying its reason and signed by both sides.

Should I close each batch, or settle at month end?

Close each batch. A month-end settlement across pooled batches makes loss impossible to isolate, so you will not know which batch or which type of work carries the high loss. Close the batch with its loss and its making charge, and let only the financial settlement accumulate.

Written by the Mindshift Team, Tibr product team.

Want issue, return and loss for every workshop in one place? Take a look at Tibr on its official page.