Gift cards are a staple of med spa holiday sales. They bring in cash, introduce new clients and often lead to additional purchases. But the money from a gift card is not revenue on the day you sell it.
On the day of sale
When a client buys a $200 gift card, you receive $200 in cash and take on a $200 obligation to provide services later. Record it as a liability, such as gift card liability, not as revenue.
On redemption
When the recipient uses the card for a treatment, move the redeemed amount from the liability to revenue. If they spend more than the card value, the extra is normal revenue for that visit.
Promotional gift card offers
Offers such as "buy $500 in gift cards, get $100 free" need care. The bonus value is effectively a discount on future services. Track bonus cards separately from purchased cards so you can see what the promotion really costs when they are redeemed.
Unredeemed balances
Some gift cards are never used. How unused balances are treated, including expiry rules and whether unclaimed amounts must be reported to the state, varies by state. Do not assume old balances simply become profit. Ask your CPA and attorney how the rules apply to you.
Common mistakes
- Booking holiday gift card sales as December revenue, which inflates December and makes January look poor
- Not reconciling the liability against the gift card balances in the POS
- Treating promotional bonus cards the same as purchased cards
- Spending gift card cash as if it were profit
A simple monthly routine
- Record gift card sales to the liability account.
- Record redemptions from the liability to revenue.
- Compare the liability balance with the outstanding card balances reported by your POS.
- Investigate any difference.
Done consistently, this keeps your monthly revenue accurate and shows exactly how much future work your clinic has already been paid for.
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