Recording gifts and Gift Vouchers

OK, how do I record a ‘gift’ given from inventory to a customer? do I use inventory write off and just create an expense account called customer gifts? :flushed: Just found the answer to that :wink:

and if someone purchases a gift voucher for a service, where and how would you recommend I put it in the accounts, and is there a way of tracking when they have come in to use it?

The voucher is a liability for your company. It does not, yet, go into a revenue account, because you have not done anything to earn the money. You could handle things in several ways:

  1. Create individual customers and issue a credit note.
  2. Create a generic customer named Gift Vouchers and allocate all credit notes to that.
  3. Create a regular liability account without the credit note. Credit the liability account and debit whichever bank or cash account you put the money in.

How you account for the voucher’s use depends on how you set it up. But basically, you will debit whichever account you allocated it to and credit a revenue account.

I suggest to use method #1 or method #3. Don’t use method #2.

How to decide which method to use? I’d say if gift voucher is to be used by specific customer then method #1. If gift voucher can be used by any customer, then #3.

im looking to use option 3 as above. customer purchases gift card, passes card onto friend as present, friend presents gift card to redeem product.
from what i have worked out, when the customer purchases the original gift voucher i can enter its value in my ‘liabilities:gift vouchers’ account when entering the transaction on Receive Money. which will hold it to track amounts owing.
receive money: liabilities:gift vouchers-unpresented = 25

then when the customer later presents the gift voucher i have to make a double entry for the voucher. one line to debit the liability account for the value redeemed, then a second line to convert that liability into an income account
eg, in the one transaction:
receive money: liabilities:gift vouchers-unpresented = -25
receive money: income:gift vouchers-income = 25

this will have $0 Amount on the Receive Money transaction (as it hasnt cost the customer anything) but will essentially move the ‘money’ from the Liability Balance Sheet over to the Income P&L statement…correct? is this the best method to record gift vouchers or am i doing it backwards? (or should i present the income and negative liability on initial payment?)

Also is there a way within manager to track each gift voucher? i have just gone through supplier credits for another task and it might be overkill to create a ‘supplier’ for each voucher presented but would allow the voucher to be tracked individually with credit remaining. so far there has only been one or two vouchers and presume it wont happen too often

You could use the $0 Receive Money if you set up a dedicate Cash Account (Vouchers Claimed) so you don’t pollute your normal Bank/Cash accounts or you could do the transaction by Journal.

To track each gift voucher, number them and record that number in the description field with the receipt and the spend - then with your “liabilities : gift vouchers-unpresented” you can click on the column heading “Description” and it sort them by number order and highlight those that haven’t been presented

@Nocor - If the gift voucher is redeemed for an Inventory Item, then you would use the Income - Inventory Sales account (so the stock can be updated) instead of Income - Gift Vouchers Income account in your $0 Receive Money. Otherwise all’s good with what you have outlined

Part of your thinking is correct, @Nocor, but not all. Allocating the purchase of a gift voucher to a special liability account while receiving money is acceptable. But the way to later transfer that liability to income is with a journal entry. Since no money is changing hands, no cash or bank account is involved. And Receive Money only works in cash and bank accounts. You would debit the unpresented voucher liability account and credit the income account.

@Brucanna’s idea of a “voucher” cash account will also work, but might distort your balance sheet somewhat, depending on what you actually did with that money. I doubt you want to open a special bank account just to hold voucher receipts. And you probably don’t want to hold those receipts in physical cash, so you would end up with an artificial segregation inside some other existing account. (This will not affect your net position, however, but will complicate reconciliation or cash box verification.)

But either approach leaves you with the problem of tracking a partially used voucher. Including information in the description field does not make any financial adjustments to your records. The only way I can see that Manager would automate this balance-remaining task this is by setting each voucher up as a customer–not a supplier. Think of voucher use as the voucher card itself purchasing something. That sort of goes back to Option #1 from my August 2015 posting. Some things have changed in the program since then, so there is a better workflow:

  1. In the Customers tab, create a new Customer. All you need to enter is the Customer Name, which would be a voucher card number. You might also title the voucher with its original face value, something like $200 Cash Voucher #2016-01. You can be as plain or fancy as you want to include information that might be useful to you. The voucher card holder will never see this. But the card itself must show some identifying name or number.

  2. In Bank Accounts or Cash Accounts, depending on where the incoming received money is going, Receive Money and allocate to Customer credits and the subaccount for that voucher card.

  3. When the card is presented for a purchase, raise a sales invoice for the “Customer” that card represents. The outstanding customer credit will be automatically applied.

As a matter of customer relationships, you should be clear to those who purchase the voucher card that it is equivalent to cash and should be protected. However, you will actually be able to replace them if lost by giving the customer a new card with the old number (or changing the number in the Customer name). The record of the value of the card will be stored in the Customer credits account, not on or in the card itself. To protect against theft, you should probably record who the original purchaser was. This way, if the card is given to someone who later loses it, that person will suffer the loss unless she or he can contact the original purchaser to have them verify things for you.

You also have the problem of aging credits on cards that are never used. How long will you store them? Will they ever expire? Those are business decisions, but they illustrate how complex the entire subject of gift cards can be.

@Nocor the essence of any accounting system is keeping it simple and uncomplicated.

The use of your $0 Receive Money into a dedicated Gift Voucher Claimed cash account does not cause any distortion to your BS as the account is “always zero” so there is no reconciliation to complicate - refer to the following screenshot of such a cash account:

Tracking fully and partially used vouchers is also not an issue as long as the Description field is appropriately used and sorted - refer to the following screenshot of the GV Unclaimed liability account:

You can see that GV1 was for 100 and has used 40 leaving a balance of 60, GV2 was for 50 and fully spent. GV3 was for 75 and 30 spent leaving a balance of 45. GV4 for 100 & GV5 for 100 are both unspent.

As @lubos stated above “If the gift voucher can be used by any customer, then #3” which clearly aligns itself to your stated requirements “the customer purchases gift card, passes card onto friend as present” - Therefore your “I’m looking to use option 3” is the perfect solution for you.

As for the operational parameters of the Gift Vouchers I’m sure you can ascertain them.

@Nocor, the reason I said to use a journal entry rather than what has been referred to as the $0 Receive Money approach was because no actual transfer of money into or out of the business has occurred. The ultimate financial effect is identical. But you are passing the transfer from the liability account to the income account through a bank or cash account. So that account will show records of offsetting transactions that never occurred. In effect, you would be using Receive Money function as a journal entry, but with unnecessary complications. So why not just use a journal entry?

Using the Description field to track remaining balances on gift vouchers might be acceptable to you. But you should understand that you are still having to perform the actual calculation outside Manager. Suppose you had a $500 gift voucher with 20 small purchases adding up to $379. Do you really want to do all that math just to know how much is remaining. If you use the Customer credits approach, the balance will be instantly visible under the Customers tab and automatically applied. Both methods will work. You must decide how you want to implement the process.

Thank you to those that have responded in this tread.

This is essentially what I have been looking for. I run a community pantry (not-for-profit) organisation and we have just started supplying charities with food vouchers. I think I have pretty much everything here I need to sort this out.