A gift card (also known as a gift voucher or gift certificate) can be purchased by a customer as a pre-paid money card to use as a method of payment some time later. People often use these types of vouchers as gifts to others.
When a gift voucher is sold and redeemed it needs to be accounted for in a particular way to ensure that revenue is recognized at the appropriate time.
Brightpearl doesn't currently support gift card schemes.
Selling gift cards
When a gift card is sold the revenue should be recorded as a current liability. The revenue can only be recognized once the gift card is redeemed. To ensure this happens the gift card product can be assigned a "gift card" code in place of a sales code. When the SKU is added to a sales order (manual or downloaded) the liability account code will be assigned to the order row to ensure on invoicing, the revenue is not yet recognized.
How to create a gift card SKU
- If one doesn't already exist, create a current liability account code at Accounting > Chart of accounts specifically for recording the sale of gift cards.
- At Settings > Company > Accounting: Account codes (nominal codes) choose this code as the "gift cards" code.
- Create product records to represent each different value gift card for sale. In the prices tab of the product record, for the sales code choose the "gift card" code.
- For UK merchants, also assign the tax code, VAT is applicable as soon as the voucher is sold.
Gift card / voucher redemption
When the customer buys goods using the gift card a normal payment against the order won't allow the correct accounting to be created. For this reason, the payment can be added as a negative order row instead.
Once goods have been purchased with the voucher the revenue from the original voucher sale can be recognized. This is done by entering a manual accounting journal to move the balance from the gift card liability account code to the gift card sales revenue account code.
How to enter a gift card payment (redemption)
- On the sales order add a new row.
- Enter the description as a gift card redemption, perhaps with the card reference if it has one.
- Set the account code and tax code to be the same as the actual product being purchased.
- Enter the amount being paid by gift card as a negative amount.
- Take any additional cash payments using the "Take payment" option as normal.
How to recognize gift card revenue
- If one doesn't already exist, create a sales type account code at Accounting > Chart of accounts specifically for recording the revenue for gift card sales.
- Go to Accounting > Enter a journal.
- Select the current liability gift cards account code and enter a debit value for the revenue being recognized.
- On the next row, select the gift card sales account code and enter a credit value for the revenue being recognized.
- Save the journal.
Expired gift cards / breakage
When gift cards have been sold and not redeemed within the valid date range the revenue may be recognized. To recognize revenue for expired gift cards enter a manual accounting journal to debit the value from the gift card liability code and credit it to the gift card sales code. Alternatively, a separate account sales type account code can be used specifically for "Expired gift cards".
The figure on the "Gift card" liability account code should be the net of the value with the gift card management company.