Handling Gift Certificates

Does your business sell gift certificates, which can be redeemed later?  

This is how we recommend handling the sale & redemption of gift certificates.  While it may not work in every case, depending on how you need to handle them for accounting purposes, this should provide a workable solution.

First of all make sure you have a special Transaction Category for Gift Certificate (through Pick Lists).  Also if you Export to QuickBooks, don't forget to add this to QuickBooks mapping, with it being mapped to an Income type of account in QuickBooks.

When you sell a certificate, enter it as merchandise -- e.g. use a Charge transaction for the certificate itself, then of course a Payment from the customer.  If you charge tax on the certificate (in addition to the "face" value) then add the tax also.  If you only have certificates of certain values, you could add them as merchandise Rates to make this a little easier (so you can just select it from Select Rates).

When it's redeemed, treat it as returned merchandise -- do a Charge transaction, but use a negative Qty (e.g. Qty -1, Each $20).  That will give them a credit toward whatever other charges they have. Again, make sure Sales Tax is "added" for it only if you charged the tax for the original certificate (which would credit the tax now).

You can also use the POS for this if you prefer.  If you have fixed value certificates you can do them as inventory items (and when redeemed, enter the negative Qty *before* selecting the certificate item).  Otherwise use the "Other Charge" function to enter them.

If you export to QuickBooks, note that it won't go into A/R unless of course they don't pay for it up front.  The Gift Certificate account will act as a holding account, though -- gift certificate sales will be added to that account, but when they're redeemed it will subtract the amount from that account (just like returned merchandise would be).  The Payment will go in when it's sold, not when it's redeemed.