Giveaways or free-of-charge gift (FOC) vouchers allow you to supply charities with donations or issue complimentary experiences and keep a record of your liability in your system for later. There are several options for managing discounted gift vouchers, each with different implications.
This article describes a few options to consider, and their various financial implications.
- Apply a discount at POS on the Gift voucher item
This option is the simplest to set up and manage. It is also the most popular across our customer base. In this scenario, you apply a 100% discount to the gift voucher item at Point of sale. This will reduce the purchase cost of the voucher to $0 while retaining the full redemption value.
Financial implications
No cash is recognised on the initial sale, but gift voucher liability is created for the full value against the discount. On the redemption, revenue is recognised for the items redeemed with the gift voucher.
- Apply a promotion at POS on the Gift voucher item
This option is essentially the same as above, but the advantage of using a promotion to discount the sale is you can restrict the items that users can apply a 100% discount on giving you more control over the way it's used. Staff will need to enter a promo code at POS to apply the discount on the initial gift voucher purchase so this will need to be recorded somewhere for their reference.
Financial implications
This scenario has the same financial implications as applying a normal discount at Point of sale. - Charge a gift voucher to an internal account
This is the best option for tracking internal department spending. You can charge voucher sales to an internal account at POS (e.g. marketing). The initial gift voucher purchase is treated as a debtor and an invoice is generated to export to your financial system where it is then written off (journaled).
Financial implications
The gift voucher is treated as a sale on the initial purchase and becomes a liability until redeemed. Revenue/tax is recognised on the items the gift voucher is redeemed for as shown on the Trial balance report below.