Guest Article by Gloria Murray, Accountant and Director of Murray Associates Accountants
Do you sell vouchers in your salon? If you don’t, you’re missing out on a good way to bring in revenue for your business without depending on the number of slots you have available in any given week. Plus, salon vouchers act as a handy marketing tool for adding value and saying thank you. In saying that, however, there are a few things you need to watch out for from an accounting point of view. Think you’re on top of it? Let’s see.
The Competitive Advantage Of Salon Vouchers
There are times when salon vouchers can work really well for you.
- Christmas period: If you’re fully-booked and unfortunately can’t accommodate any more clients, vouchers can come in as an extra revenue stream, while still ensuring the client gets the service done at a later time.
- Quiet times: In January, when it’s typically a quiet time, you could think about giving £/$/€ 50 worth of services for say, £/$/€ 30. Or, you could allow for it to be used only on your quiet days, for instance, Tuesdays and Wednesdays. By doing this, you’re not discounting your treatments and therefore not devaluing them, but it gives your clients (or potential clients) an incentive to come in at times when you want your free appointments filled up.
- Discovery effect: Salon vouchers can be a great incentive to get your clients trying a new service. Let’s imagine for one second you had a voucher for a cut and colour with a complementary Olaplex treatment or a manicure with free eyelash or eyebrow dye. Because your clients pay in advance, you collect the money and add to your month’s revenue. Again, you could choose to restrict the redemption of the vouchers to days where it tends to be quieter, or flat out exclude the possibility to redeem them on Fridays and Saturdays – that’s up to you.
Salon Vouchers & Accounts: What You Should Know
For this part, as I’m based in Glasgow, I will be giving examples in regards to the UK. Wherever should you be based, it’s essential that you speak to your accountant about this, as laws and regulations might differ.
The rules on VAT and vouchers are due to change in 2019, but until this happens, you may as well use the regulations to your advantage. Salon vouchers in the UK are not VATable or taxable until you deliver the service. What you do need to watch out for though, is that your bookkeeper and accountant know how to treat vouchers too. They shouldn’t go through as sales. This could increase the amount of tax you pay on your profit as well as your VAT. Also, if your vouchers expire before they are used, then VAT does not become due at any point.
To get the best out of their use, make sure that you treat your vouchers in the correct manner. Phorest Salon Software can help you with this and show you the status of all your salon’s vouchers during the selected period (totals and specific breakdowns):
I must say, I’m always shocked when I take on a new client and get the information from their old accountant. Invariably, the vouchers hadn’t been treated correctly and were put through as sales.
If you sell £10,000 of vouchers at Christmas, and that this £10,000 is put through as regular sales, you could be looking at a VAT increase in your next quarter of £1,667. Can we all agree that this money would be much more useful in your bank account rather than sitting with the VAT man?
Know Your Numbers
This is one of the reasons I believe you need to know enough about your finances to run your business and know what questions to ask. If you haven’t yet joined my Facebook group Knowing Your Numbers, it will be a pleasure to chat with you there. It’s a safe place to ask questions and get access to resources that help you run your business better.
Thanks for reading! #LetsGrow
Gloria Murray is a Glasgow-based triple award-winning accountant who has also been awarded the Most Innovative Business Advisor in the UK in the 2020 Annual Innovation Awards 2017. Director of Murray Associates Accountants, she specialises in helping small business owners grow sustainable and ethical companies that not only provide a better service to their customers but also contribute to local employment. If you would like to get more business tips from Gloria, you can get a free copy of her printed business magazine by sending an email to firstname.lastname@example.org.