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How to Turn Your Scrap Refining Process Into a Gold Mine
Purpose: To help pawnbrokers yield greater returns and profits from their scrap refining process.
Have you been wanting help with estimating your pawn shop’s return? This short article will show you the ins-and-outs of the scrap refining process and offer a few quick jewelry tips. For the full experience, be sure to watch our webinar here -> [Webinar] Understanding the Scrap Refining Process
Each category should have its own container or bag. Each bag should be labeled and weighed separately. Dividing your scrap into very specific categories helps streamline the process. Below, I have supplied a sample set of labels for you to use at your pawn shop.
|8 karat (no stones)||8 karat (w/ stones)||Gold Filled|
|10 karat (no stones)||10 karat (w/ stones)||Gold Plated|
|14 karat (no stones)||14 karat (w/ stones)||Silver (Ag)|
|18 karat (no stones)||18 karat (w/stones)||Platinum (Pt)|
|22 karat (no stones)||22 karat (w/ stones)||Palladium (Pd)|
|24 karat (no stones)||24 karat (w/ stones)||Bench Sweeps|
Frequency of Scrapping/Refining
Decide on a time frame of scrapping that suits your pawnshop’s size and needs. Whether it be weekly, monthly, or quarterly, make sure to process your scrap on a regular basis. Top pawnbrokers use this process to create consistent and predictable cash flow in their stores.
Personnel (Trust, but verify)
Do you know who’s responsible for sorting scrap in your organization? Do you know if your scrap was sorted correctly? Checks and balances are crucial to making sure that all the scrap metal and stones are present and accounted for. This is one of the most common ways that pawnbrokers see theft in their stores.
Weighing of Material
The sorted material mentioned above should be individually tare weighed (without containers). Weigh each category as a whole. It’s crucial that you’re regularly checking your scales for accuracy. This way, you‘ll have the most accurate estimates when sending in your scrap.
Some Do’s and Don’ts
Once all your scrap material is sorted, weighed, verified, do NOT simply dump everything together in one container and send it to the refiner. This is NOT the way to build trust with or to check your refiner. The refiner should receive material the same way you sorted your scrap. The refiner will weigh these individually. Do confirm these weights prior to the refiner processing (melting) of your material. Many problems can be avoided by confirming these individual weights. If you start out with different weights than your refiner, you WILL have issues with the assay results.
Cash is the most important piece of inventory a pawnbroker has. Without cash, and consistent cash flow, a pawnbroker cannot loan or buy, period. One of the most effective ways to improve the cash flow of your shop is through refining/scrapping. Therefore, knowing what you are scrapping and having internal procedures in place, is imperative. These procedures will help you improve, predict, and plan your cash flow. Oh, and always trust but verify (your employees and your refiner)!
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About the author: Jack Griffin has spent the last 15 years serving pawnbrokers, and the pawn industry, in a variety of ways. Spending a large chunk of that time in the refining industry, Jack learned all the industry’s do’s and don’ts.