Vouchers and accounting

One of the main concerns we hear about with vouchers is the prospect of double counting.

For example if you sell a voucher for $100 and then someone gets a $100 haircut and pays for it with that voucher you have two $100 sales, but to count this as $200 worth of revenue would be wrong. You should only count one of the sales -  but which one?   

This comes down to the two broad types of accounting - Cash and Accrual.

Cash accounting -  revenue is realised when you get the money 

Accrual  accounting - takes into account money owing and liabilities

For vouchers we use accrual accounting.

When a voucher is sold we consider this both revenue and liability - the net effect is 0, when the voucher is redeemed the liability disappears and the revenue is realised

This approach is chosen for 3 reasons -  

• Accrual is a more standard approach
• It is a better business predictor -  if you sell 100k of vouchers leading into xmas then cash accounting would indicate you have had a great month and potentially you can splash out on luxuries, however it is likely these vouchers will come back in the new year and while you will be working hard performing services you won't be receiving any actual money for them
• It is better for staff - if someone has a service and pays by a voucher then for commissions sake it is best to record that service as revenue for the staff person. Otherwise the staff person is unfairly penalised when a customer produces a voucher to  pay with. The same is true for sales of vouchers - most salons do not want voucher sales to contribute towards total commissionable sales for  their staff

Examples of  Kitomba Reporting - when a voucher is sold

Business Summary when a voucher has been sold

Cash Drawer Report when a voucher has been sold

Kitomba Reporting - when a voucher is redeemed

Business Summary when a voucher has been redeemed

Cash drawer report when a voucher has been redeemed

FAQ's

What about vouchers that expire? Or vouchers that never come back. That revenue will never be realised

The recommended way to  deal with expired vouchers is to account for them as an expired liability, this can be added as revenue when your accountant does your end of period accounts.

For vouchers that never come back there are 2 options

1. ensure you have expiry dates on  your vouchers and they will eventually fall under expired vouchers  or
2. Use voucher reporting to  show the outstanding value of  vouchers older than a certain date and write these off as you would with expired vouchers above

What about promo vouchers or ones that are sold for less than they are worth ?

Use the voucher report to get a total of vouchers sold for less than their redemption value  -  The difference between what they are sold for and what they are worth becomes a negative revenue line.

But I don't care,  I just want to  run cash based  accounting, when I sell a voucher I want to  see it in my revenue figures

This is still possible but requires a small manual step.

The business summary totals do not include voucher sales but the voucher total is shown in the top left corner. Underneath the voucher total is the value of  vouchers redeemed. If you add the voucher sold figure to the total and then deduct the voucher redeemed amount this will  give you a revenue figure that counts vouchers at time of sale

Are vouchers included in Kitomba payments reporting

Yes. Kitomba Payment Reporting includes both the money received when the voucher was purchased and  an entry for the voucher when it was redeemed. This will mean that payment report totals in Kitomba will usually be different to sales report totals. It also means you shouldn't use payment reports to calculate revenue

Are vouchers the only reason why my payment total may not  match my business summary sales total

No  there are a number of valid reasons total payments may be different to total sales. These include , unpaid invoices,  additional payments made  (e.g deposits, laybys, payment of outstanding  accounts, petty cash sales and rounding.  The Cash takings report in Kitomba is the best way to  reconcile payments to sales and to identify any transactions that relate to  the difference.

Kitomba reports are designed to reflect how vouchers work in your store.  

When a voucher is purchased and you take the money (e.g. cash, eftpos or credit card) the money is included in your cash drawer reports (under the method paid) this is so that you can reconcile your cash drawer/banking at the end of the each day against the money you have received.   

When the voucher is purchased it is not included in your ‘Total Sales’ in the Business Summary.  When the voucher is redeemed it is included in the ‘Total Sales’ under the item that it was used to purchase e.g. product or service.

How do I reconcile Vouchers across the group?

To reconcile vouchers between sites you can run the Vouchers Sold & Redeemed report in Kitomba One. This report shows you the value of vouchers sold and redeemed by location. If you are using the method of paying out when a voucher is sold and being paid when a voucher is redeemed this report will give you that information.   It will also show where a voucher has been redeemed that was not purchased at your location.