Gift cards, series discounts, GLP-1 program fees: how does all this get booked?
The principle behind all three is the same. You recognize revenue when you earn it, not when the cash arrives. Gift card sales, prepaid packages, and monthly program fees all involve money coming in before you deliver the service. Your books need to reflect that timing correctly.
When you sell a gift card, you haven’t earned anything yet. The cash goes in your bank account, but on your books it’s recorded as a liability. You owe someone a service. When the gift card gets redeemed and you actually deliver the treatment, that’s when you move the amount from the liability account to revenue. Until then, it sits on your balance sheet. Some gift cards never get used, and state laws vary on when you can recognize that “breakage” as income, so check the rules where you operate before treating old unused cards as revenue.
Discounted series and packages follow the same pattern. Selling a package of six treatments for $600 instead of $720 is common in med spas and aesthetic clinics. When you sell the series, debit cash and credit deferred revenue for $600. As each treatment is delivered, you recognize one-sixth of the package value as revenue. That’s $100 per session, not the $120 you would have charged individually. The client paid the discounted price, and that discounted amount is what gets recognized per session.
GLP-1 and weight loss program fees work similarly but with an added layer. Medical weight loss clinics have surged in popularity, and many now run monthly memberships that include provider check-ins and medication management. Recognize the program fee as revenue over the service period. If someone pays $400 for a month of program access, you recognize $400 in revenue over that month, not all at once when they sign up.
What matters just as much is tracking your medication costs against that revenue. GLP-1 medication costs can swing significantly month to month based on supply, sourcing, and patient dosing. Without proper inventory and cost tracking, you’ll see revenue coming in but have no clear picture of actual margins.
All three scenarios follow the same logic. Cash received before a service is delivered is not revenue. It’s a liability that converts to revenue when you deliver. This keeps your financial statements honest through every promotion and package you run.
If your books currently dump gift card sales and package purchases straight into revenue, they’re overstating income in the months you sell and understating it when clients actually use what they bought. If you’d like help setting this up correctly, book a consultation and we can look at your current structure together.
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