Giveaway or FOC gift vouchers allow you to provide complimentary experiences or donations to charities while keeping a record of the liability in your system for future redemption. There are several ways to manage these discounted vouchers, each with different operational and financial considerations.
This article outlines three common methods and their financial implications:
- Apply a discount at POS on the Gift voucher item
This is the simplest and most commonly used method. At the Point of Sale, you apply a 100% discount to the gift voucher item. This reduces the purchase price to $0 while retaining the full redemption value.Financial Implications
No cash is recognised at the time of sale.
A gift voucher liability is created for the full value of the voucher.
When the voucher is redeemed, revenue is recognised for the goods or services provided at that time.
- Apply a promotion at POS on the Gift voucher item
Similar to the discount method above, but using a promotion allows you to control which items can receive a 100% discount. This adds a layer of security and control. Staff will need to enter a promotion code at the time of sale, so the promo details should be clearly communicated and accessible.
Financial implicationsIdentical to the discount method.
No revenue is recorded at the time of voucher issue; full liability is recorded.
Revenue is recognised on redemption.
Charge a gift voucher to an internal account
Best suited for internal use, such as marketing departments. The voucher is sold through POS but charged to an internal debtor account (e.g. "Marketing"). An invoice is generated and exported to your financial system, where it can be journaled or written off as an internal expense.
Financial implicationsTreated as a standard sale initially, with a debtor entry created.
Liability is recorded until the voucher is redeemed.
Revenue and tax are recognised at the time of redemption, based on the items purchased.
