TRUST ACCOUNTING
Tracking Gift Certificates for Short-Term Vacation Rentals
Gift certificates for short-term vacation rentals are a strong marketing tactic that brings new guests to your properties, but did you know they are considered advance deposits and require special handling?
Like currency, gift certificates are a form of cash that someone has paid to your business. What makes them different is that until they’ve been used or expire, they must remain in the trust account, otherwise you’re risking the comingling of funds.
Two Methods for Tracking Gift Certificates
1. Set up a Gift Certificate property in your reservation software
This method allows for gift certificate purchases to be made, charged by your preferred method (e.g., credit card, check), and tracked through your trust bank account and trust accounting platform.
You can also add the gift certificate reservation to a date on the property when the certificate expires (if you have expiration dates). When it comes time to book, you can easily look up the guest’s name and transfer the reservation and funds to the property where the guest will stay.
2. Create a Gift Certificate vendor in your trust accounting system
This method keeps the funds in your trust account, but until you have a reservation entry, what do you do?
Start by creating a vendor for tracking gift certificate purchases in your accounting system. You may want to name the vendor “Gift Certificate.”
When a gift certificate is purchased and the funds are deposited into your trust bank account, add an adjustment that debits cash and credits the “Gift Certificate” vendor in your trust accounting system. This will allow you to reconcile. The funds will remain on the vendor statement until used.
Finally, when the gift certificate is used, post the payment as “Other Payment Type” on the reservation, entering the total amount of the gift certificate. Then make an adjustment in your accounting software that credits cash and debits the “Gift Certificate” vendor. Group the “Other Payment Type” and adjustment to reconcile correctly.
Wrap-Up
Promoting your business by offering gift certificates is worth the additional steps you’ll have to take to avoid comingling of funds. We recommend either setting up a Gift Certificate property within your reservation software or creating a “Gift Certificate” vendor in your trust accounting system.
There’s no best method. Which one you choose depends on the processes and software you already have in place. Both will keep you in compliance when it comes to managing gift certificate funds.
