Money taken for work not yet done

A good month that is not a good month

Sell twelve ten-session packages in a month and the takings look excellent. What has actually happened is that the parlour has been paid for a hundred and twenty treatments and delivered perhaps fifteen of them.

The remaining hundred and five are work owed, staffed and stocked out of future months that will look correspondingly poor. A parlour that expands on the strength of a strong package month is expanding on money it has already committed to spending in labour.

The card problem

The balance lives on a card the customer carries. When that card is lost, and it will be, the conversation is unpleasant for both sides and there is no way to resolve it except by trusting somebody's memory.

The parlour usually concedes, because arguing with a paying customer about four hundred rupees of treatments is not worth it. Keeping the record on both sides removes the argument entirely. Customers should keep the card. The business should stop treating it as the only copy.

One thing to ask your accountant

When package income is recognised, and the GST position on money received in advance of a service, is a question for whoever does your accounts. It is not obvious, it depends on how the package is structured, and it is not something to work out from a blog post.

What a system does is make the underlying facts accurate, which is what makes that advice possible to act on. It is not a substitute for the advice.