You don't have to look too far to find a discounted coupon online these days. It may be been around for a while, but it really exploded with Groupon. Other companies such as livingsocial.com, plumdistrict.com, ksldeals.com, etc. have followed suit and jumped into the daily deal game. You don't have to look too far to find a daily deal or some sort of coupon or voucher online. From a business's stand point; they can be hard to handle accounting wise.
Small businesses use these discounted coupons to catapult themselves to a much larger customer base. There are a handful of ways to track the sales and redemptions of these coupons. Here are a few key points with handling these daily deals or coupons in Quickbooks.
Have a Great Contact
Type in 'daily deal' in Google and you will get millions of results. You will also get a million different processes that these companies have when it comes to selling and funding a daily deal (among a handful of other steps). The only way to make sense of it is to utilize a contact at the daily deal company. Have the contact provide a spreadsheet breakdown of total sold, selling price, payment terms, expiration date, etc. The more info, the better. How will the company pay your company? Will it be a one time payment, or will it be spread over the course of two payments, three payments? Will the payments be for the exact selling price, or is there a marketing expense that needs to be accounted for?
Expand Your Chart of Accounts
Chances are you are giving a large discount to the customer and you are giving a portion of the voucher selling price to the daily deal firm as a marketing expense. When the voucher is purchased, you want to record 3 items in Quickbooks. In addition to the discount given and marketing expense, you want to record a third deferred item, income. I like to create an invoice when the details come in for the vouchers sold and then receive payments against this invoice when they roll in. This will cover the AR side of the vouchers. Creating the invoice will allow you to itemize the deferred discount, deferred marketing expense, and deferred income. You will need to create the 3 new items. On a periodically basis, weekly or monthly, find out how many vouchers have been redeemed. Use a memorized transaction to record the redemptions. This entry will take the deferred entries off of the Balance Sheet and put them on the Profit & Loss report. You will now have income, discount given, and marketing expenses to analyze.
Each daily deal sold has an expiration date. As a business owner, you may want to consider this a small victory since you give up such a large amount of your profit margin in order to sell the daily deal voucher. Usually customers will buy more than one deal. Sometimes they will use the first one right away and forget to use the other ones. Once you figured out how many have expired, usually on a monthly basis, you can make the journal entry as your normally would as if they were actually redeemed. The difference is you won't see a change to your Cost of Goods Sold or Inventory.
These are the 3 key steps to handling the daily deal coupon. If you want to go over more detail, please get in touch with us at Salt Lake City Bookkeeping. We would love to help you figure out this unique, yet growing way to sell your business.