Physical Gift Cards double-counting sale?

[Jackson_McLean]

I am looking at swiching to shopify's physical gift cards but I am nervous that it will cause accounting issues. I saw in a (now closed for commenting) forum post that people were having issues with it double-counting the sale in the daily sales totals, once when the gift card it sold then again when the gift card is used.

I called support but theyr didn't know if this issue has been fixed. Can anyone who uses the gift cards reassure me that this issue has been solved?

Also, I was playing around with the gift card feature and I tried the auto-generated receipt gift card, which printed no problem. An issue came up however when I went to try and pay for an order with that gift card. It says to "scan" or type in the gift card code, but I don't see any way to scan. Am i missing something there or is it glitching out?

Thank you,

Jackson

[Jennifer_D]

Hi Jackson,

Jennifer here from the Shopify support team. I can assure you that our gift cards are not creating a double tally of their value in the POS.

If you're using our physical Shopify gift cards which you can order from our hardware store they have barcode on the back which you can scan using your iPad camera. 

If you have any more questions please feel free to contact us, we're available 24/7!

Cheers!

[Jackson_McLean]

Thank you Jennifer. So is the sale counted when the gift card is sold or when it's used?

I'm also curious as to how this works with custom payment types, which is how we sell our current paper gift certificates. Does that double count the sale when it's purchased and when it's used, for tax purposes?

[Jennifer_D]

Hi Jackson,

The sale is counted when the gift card is used :) If you're currently using paper gift certificates then the sale would be double counted unless you're selling Shopify gift cards and just using the receipts as the gift cards.

Cheers!

[Jackson_McLean]

Hi Jennifer,

Shouldn't the sale count when the gift card is sold, not used? What if the customer never uses the gift card, shouldn't our system still show that we made that amount of money?

Thanks,

Jackson

[sassandsawdust]

That also doesn't make sense to me, nor do I think it is correct. We have customers purchase gift cards in our retail store all the time and the sale counts towards that day. When they pay with one however, the payment only goes towards the sale if there was a balance remaining after. 

I stumbled upon this forum trying to find out if we have messed up by having pre-loaded several gift cards in $25 and $50 amounts back at the holidays to put on our tree ready for people to grab and purchase so we dont have to fight with the long 16 character codes with a long line to load them. Does "loading" a gift card count as a sale, or not until it is run through the POS system? Can anyone confirm? 

[Stephen34]

I'm not sure what Shopify is doing, but from an accounting perspective when you sell a giftcard it's not actually income it's a liability because you owe someone that value of products. Then its marked as a sale/income when they make the transaction to purchase inventory. I would imagine how all this is playing out in your QB/Xero is based on how your syncing software is setup.

[sassandsawdust]

For us as store owners, it's exactly the opposite. We profit on the sale of
the gift card at the time they bought the gift card, if they never come
back and redeem it then we have not lost any money. We don't profit
anything when somebody comes in and spends $500 but has a $300 gift card.

[Stephen34]

In accounting theres a difference between cashflow and profit. When you sell the card it's a liability, you took thier cash (say $100) bit it's not income on your books, it's a liability because you owe it back to them later (in the form of products). Then when they purchase it comes from the liability account and becomes income with the cost of the item purchases as cogs. If they never purchase anything then at some point you can cancel it and it becomes income. BUT honestly youd never want to do that because of tax implications, same reason you dont want it as income when you sell the card. You would have $100 of income with no expenses and pay tax on all of that, instead just keep it on the books as a liability.

[Parextech]

Right said everone. - Shopify doesn't double count. But if you use any external accounting app, you need to take care of it. Our accounting integration apps for QuickBooks and Xero take care of it for you so that you don't have to manually handle it.

You may take a look at
https://apps.shopify.com/xero-bridge
And
https://apps.shopify.com/quickbooks-bridge