MAXIMIZE THE BENEFITS FROM YOUR GIFT CARD SALES

Many restaurants have successful gift card programs that are becoming an increasingly significant part of their sales volume. However, recognizing income on your balance sheet from gift card sales can be challenging. It can take several years to convert liabilities to income for that portion of gift card sales that will never be redeemed.

Collaborative Business Consulting, in conjunction with the National Restaurant Association, has developed a program that provides a solution to these gift card income challenges. Association members through this program have a means by which they can affect a true and simple transfer of liability to an A rated insurance company and bring forward the recognition of the sale of gift cards not yet redeemed.

Program benefits include:

1) Removing balance sheet liability for previously issued gift cards. Unused gift cards values accumulate as liability on the balance sheet, as the gift card holder has paid but has not yet purchased. The gift card issuer has to carry the liability; These same liabilities are also at risk depending on the escheatment laws of the gift card issuer's state of domicile. The indemnity gift card insurance program transfers the liability to an A-rated insurance company so the gift card issuer can bring these accumulated liabilities forward as sales.

2) Accelerating the ability to recognize a proportion of future gift card revenue. The gift card insurance policy enables the gift card issuer to recognize gift card sales immediately rather than only after gift card redemption.

3) Permitting the company to amortize the premiums over the life of the contract. The premiums paid for this program can be amortized over the life of the contract which reduces the cost of the program.

Gift card insurance will strengthen your company's balance sheet, enhance shareholder value, eliminate dormancy fees and expiration dates and improve shareholder and customer relations and company reputation while bringing real value to your business's bottom line. Please be sure to check the state laws that apply to your business to
determine how you can effectively use gift card insurance.