Hiring guide
Gift cards: reconcile cash received with balances still available to spend
By CFO Index · Published
Gift-card cash can arrive before the goods leave your store. A later redemption can create delivery costs without another receipt for the card-funded portion. A useful management view connects those two dates and keeps purchased cards separate from promotional issues. It is not a substitute for jurisdiction-specific accounting or consumer-law advice.
Define the balance population and reporting cutoff
Start with the store, currency, snapshot time and stable card ID. Record opening available value, issue method, original purchase reference, redemptions, value restored through returns and supported adjustments. Keep full redeemable codes out of shared reports. Shopify documents an export containing card IDs, initial/current balances, currency and issue method; its standard export exposes only the last four code characters. Those are product-specific fields, not a complete bank reconciliation. Obtain event history as well as two balance snapshots, and exclude duplicate exports.
Separate issued value from bank receipts
A purchased card, a promotional card and a replacement for a deactivated card can increase apparent issued value for different reasons. Link a purchased issue to its order, payment and processor settlement. A promotional issue contributes no customer cash in this suggested model. A replacement should transfer the remaining value between linked IDs, not manufacture another sale. Keep discounts on purchased cards visible: face value and price paid need not match. Reconcile settlement fees and timing separately rather than treating the card balance as the bank balance.
Build a balance roll-forward before forecasting
Hypothetical single-currency month, with no tax, expiry, deactivation, discounts or replacement transfers: opening usable balances are €10,000. Purchased issues add €6,000 and promotional issues €1,000. Redemptions consume €5,000 and returns restore €500. Closing usable value is €12,500. Purchased issues are assumed fully collected at face value before processor fees; promotional issues add no cash. The €500 restoration is not a new customer payment.
| Event | Balance movement | Card-related customer cash in this example |
|---|---|---|
| Opening usable value | €10,000 | Collected in earlier periods or issued without payment |
| Purchased issues | +€6,000 | +€6,000 before fees |
| Promotional issues | +€1,000 | €0 |
| Redemptions | −€5,000 | €0 for card-funded portion |
| Value restored after returns | +€500 | €0 |
| Closing usable value | €12,500 | Not a bank balance |
Model fulfilment and top-up cash separately
For a hypothetical next month, assume customers redeem €4,000 of existing value, pay €1,000 through other methods on the same orders, and fulfilment cash costs are €2,200. Excluding new card sales, fees, taxes and other expenses, these orders generate €1,000 of new receipts and €2,200 of cash outflow: a €1,200 cash deficit. Counting redemption as another €4,000 receipt would reverse the decision incorrectly. Test faster redemption using product mix and delivery costs, not an unsupported industry redemption benchmark.
Do not release old balances merely because they are quiet
Separate usable value from expired, deactivated and unresolved records. Ask the authorised accounting and legal owners to determine applicable expiry, refund, unclaimed-property and recognition treatment; inactivity alone is not permission to recognise income or spend all previously collected cash. A deactivated card may have a linked refund or replacement requiring separate review. The roll-forward explains operational value movement, not the complete legal obligation. Do not add promotional and purchased balances together and call the result deferred revenue without an approved policy.
Accept the register with traceable test cases
Ask the CFO to trace one purchased card to settlement, one promotional issue to authorisation, one partial redemption to its order and one return to the restoration event. Include a replacement pair and a multi-currency case if used; do not aggregate currencies without an explicit conversion basis. Opening value plus signed movements must reconcile to the closing snapshot, with differences assigned an owner and date. Review outstanding value alongside expected redemption costs and the cash trough, rather than reporting a large gift-card sales number as immediately free cash.