Last updated 13/04/2021
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.
In most jurisdictions, you should not collect GST or VAT upon issue of Gift Vouchers. In addition, 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 accomplished 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; typically:
See Xero's Tax Types Help article for additional information.
|Purchases or Sales||Sales|
Finally, now that 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. See Closing the Register Help article for additional information.
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 goes to the default revenue account) and the total of Gift Voucher sales (which is 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 file for all Gift Vouchers redeemed that day.
For example, assume you have set up an Alternative GL Account named "Gift Liability". 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 the Insights "Gift Vouchers And Store Credits By Expiry Date" report to show all gift vouchers unredeemed in the system. You will need to manually journal the value of these gift vouchers from your revenue account(s) to the liability account for gift vouchers.
For additional help, please contact your accountant.
Because the rules about expired gift vouchers varies by jurisdiction, it is recommended to consult your accountant on how best to handle.