Last updated 24/10/2017
Gift Voucher (or Gift Card) sales are treated differently to typical product sales. A Gift Voucher, when issued, should create a liability until the time at which it is redeemed.
As a result, there are a few small changes required in Cin7. In your accounting software there will be a few processes that you should follow to make sure information passed from Cin7 is accounted for correctly. This article explains in detail the process of accounting for vouchers issued and redeemed.
This article applies specifically to POS v3 - which has updated Gift Voucher settings. If you use Gift Vouchers and are currently using POS v2, we strongly recommend upgrading. See this blog for more information.
In most jurisdictions, you should not collect GST or VAT upon issue of Gift Vouchers. Secondly, revenue created when a gift voucher is sold must be entered to a liability account in your accounting software.
To make sure gift voucher sales are set up correctly, you first need to create an alternative GL Account that does two things:
To set this up:
|Account Number||1234 - i.e. the liability account in which the value should appear.|
|Tracking Categories Name||Leave blank|
|Tracking Categories Option||Leave blank|
|Xero Tax Types Codes||The tax code for your region, see Xero's article. Typically:
|Purchases or Sales||Sales|
Finally, now the alternative GL Account has been created, you will need to apply this to the Gift Voucher product in the Products module.
To do this:
Please note that you will have to sync the settings in the POS for the tax rate to appear correctly.
When Registers are closed at the end of each day, a 'batch' is created for each payment type. This batch is imported to your accounting software as a draft invoice. For more detailed information about this, see Closing the Register.
If a Gift Voucher is sold and paid for using - for example - "Card" payment type, the Card batch will be split into typically two line items: total of product sales, which will go to the default revenue account, and the total of Gift Voucher sales which will be split off (due to the Alternative GL Account) into the assigned liability account.
This batch will be reconciled as usual against the related payment in your Bank feed.
Upon redemption of a Gift Voucher, POS users will select the payment type Gift Voucher. At the end of each day, this will create a batch for all Gift Vouchers redeemed that day.
If you have used an Alternative GL Account named 'Gift Liability' then when importing the batch, it will debit your Liability account, and credit your sales revenue account automatically.
The first thing to do will be to decide upon a date at which to switch over.
You will need to create a Gift Voucher liability account - see above for more information.
At the cutover date, you will run a report to show all gift vouchers unredeemed in your system - Gift Vouchers And Store Credits By Expiry Date.
You will need to manually journal the value of these gift vouchers from your revenue account or accounts to the liability account for gift vouchers.
If you are unsure, please ask your accountant.
Because the rules about expired gift varies between jurisdictions, it is best to consult your accountant on the best way to handled expired gift vouchers.