Gift Cards, Packages and Memberships: What Service Businesses Need to Track

Gift cards, treatment packages and memberships can be a great way to create repeat business and more predictable revenue.

But from a bookkeeping perspective, they can also get complicated very quickly.

This is especially true for salons, spas, med spas and other appointment based businesses where payments may move through several different platforms.

A customer might buy a package through your booking system, pay through a payment processor, redeem part of it weeks later, and then have a membership payment processed through yet another platform.

Each system may be doing exactly what it is supposed to do.

The problem starts when the information does not flow cleanly into your accounting.

The sale and the bank deposit are not always telling the same story

It is easy to assume that if $5,000 was deposited into the bank, the business had $5,000 in sales.

But deposits from processors are often made up of several things.

They may include:

• regular service sales
• membership payments
• gift card purchases
• package sales
• tips
• sales tax
• refunds or adjustments
• processing fees

The amount that reaches the bank may already have fees deducted, and the timing of the deposit may not match the day the original transaction took place.

That is why simply recording the bank deposit as income can cause problems.

You may end up with revenue in the wrong category, fees missing from the books, or sales being counted twice.

Packages and memberships need to be tracked beyond the initial payment

A package can look simple at first.

A client pays $600 for several future treatments and the business receives the cash.

But from a financial tracking standpoint, there is more happening than one sale.

The business now has a responsibility to provide those services in the future.

The same can be true with memberships, depending on how the program is structured.

If prepaid amounts are recorded as ordinary sales without tracking the remaining obligation to the customer, it becomes harder to see what has actually been earned and what still relates to future services.

Over time, those balances can become significant.

Multiple systems make reconciliation more important

Many service businesses use more than one platform.

You might have a booking or point of sale system, a separate membership platform, a financing company, payroll software and QuickBooks.

Each one holds a different piece of the financial picture.

The goal is not necessarily to make every platform do everything.

The goal is to have a clear process for how the information moves between them.

That includes knowing:

• where sales are recorded
• how deposits are matched
• where processing fees are captured
• how gift cards and packages are tracked
• how refunds are handled
• how memberships are recorded
• how the final numbers are reconciled to the bank

Without that process, small differences can build up month after month.

Why this matters

The problem is not just having neat books.

If gift cards, packages and memberships are not tracked properly, your financial reports may give you the wrong impression of how the business is performing.

Revenue can be overstated or end up in the wrong period or category.

Liabilities can disappear from view.

Processor deposits can become difficult to reconcile.

And it becomes much harder to answer a fairly simple question:

How much did the business actually earn this month?

That is the number you need when making decisions about payroll, spending, pricing and growth.

A good system should make the numbers easier to understand

You do not need to eliminate every platform your business uses.

You do need a clear system behind them.

When sales, deposits, fees, memberships and prepaid services are being tracked consistently, your QuickBooks reports become much more useful.

Instead of trying to piece together what happened from several different dashboards, you can see a financial picture that actually reflects how the business operates.

At South Ridge Financial Solutions, we help service businesses organize the financial systems behind their day to day operations, including QuickBooks, payment platforms, memberships and other tools that affect the books.

The goal is not simply to get everything entered.

It is to make sure the numbers tell the right story.