About
Shopify supports several types of gift cards, and each one impacts your books differently.
Finaloop automatically tracks Shopify gift card activity and applies the correct accounting treatment based on:
The type of gift card type, and
Whether your books are on cash basis or accrual basis accounting
This article explains:
The different types of Shopify gift cards
How each type impacts your books
How gift cards are treated under cash vs accrual accounting
How to use the Shopify Gift Cards page in Finaloop
1. Types of Gift Cards in Shopify
There are three types of gift cards available in Shopify.
Purchased Gift Cards
A customer purchases a gift card directly through an order in your store.
For example:
A customer purchases a $100 gift card from your website
The customer later redeems the gift card to place an order
Because the customer paid cash for the gift card, this creates a financial obligation that needs to be tracked in your books until the card is redeemed.
Issued Gift Cards
You manually issue a gift card to a customer.
For example:
Customer service compensation
Loyalty rewards
Influencer gifting
Promotional campaigns
No cash is exchanged when these gift cards are issued.
Third-Party Gift Cards
A connected third-party app issues a gift card to your customers.
Examples may include:
Loyalty apps
Reward programs
Referral platforms
From an accounting perspective, Finaloop treats third-party gift cards similarly to issued gift cards.
2. How Finaloop Records Gift Cards
The accounting treatment depends on:
The type of gift card
Whether your books are on accrual basis or cash basis accounting
Accrual Basis
Accrual Basis
Purchased Gift Cards
When a customer purchases a gift card:
Finaloop records the amount as a liability in your Balance Sheet
The liability is recorded in:
Gift card liability - Shopify
There is no immediate impact to your P&L
This is because the revenue has not yet been earned.
Once the customer redeems the gift card:
The gift card liability decreases
Revenue is recognized in your P&L
The sale is recorded like a normal Shopify order
This ensures revenue is recognized only when the actual sale happens.
If a purchased gift card later expires or is permanently disabled without being redeemed:
The gift card liability decreases
Revenue is recognized in your P&L for the remaining balance.
Issued and Third-Party Gift Cards
When an issued or third-party gift card is created:
Nothing is recorded in your books initially
No liability is created
This is because most issued or promotional gift cards are never redeemed.
Recording them as liabilities upfront would inflate your liabilities and wouldn’t accurately reflect your financial position.
Once the customer redeems the gift card:
Finaloop records the redeemed amount as a:
Giveaway discount
The amount is recorded in:
Discounts & promotions in your P&L
This treatment reflects the economic reality of promotional or complimentary gift cards.
Your Gift Card Liability Accounts in Finaloop
To keep your books accurate, Finaloop maintains two gift-card-related accounts on your Balance Sheet:
Gift card liability - the actual outstanding balance of purchased gift cards that customers have not yet redeemed. If you have an open balance when joining Finaloop, we’ll automatically create this account with the accurate opening balance.
Uncleared gift card liability - a temporary clearing account used while Shopify gift card activity is syncing and reconciling.
Why are there two accounts?
Shopify sends gift card activity through two separate streams:
Shopify order activity - a customer paid for, redeemed, or refunded a gift card during checkout), and
The Shopify gift card system - the actual gift card record with the balance, expiration details, etc.
These two data streams do not always sync at the exact same time.
Because of this, Finaloop temporarily stores unmatched activity in the: Uncleared gift card liability. This account temporarily holds gift card activity until Finaloop receives both sides of the Shopify data and can fully reconcile the transaction.
Once both sides sync and reconcile properly, the balance moves into: Gift card liability. At that point, the Uncleared gift card liability account should generally return back to zero.
What Is the “Gift card issuance” Account?
Finaloop continuously monitors and reconciles the: Uncleared gift card liability account.
If Shopify’s order activity and gift card balance activity do not fully match, for example due to timing differences or data gaps in Shopify, Finaloop may offset the remaining difference into an account called Gift card issuance, found under Discounts & promotions in your P&L.
This account is primarily used as an internal reconciliation and monitoring mechanism. It helps surface situations where Shopify’s gift card activity is temporarily incomplete, delayed, or out of sync and ensures your books stay fully reconciled.
Remember:
Seeing a small balance in Gift card issuance does not mean your books are incorrect.
In many cases, Shopify sync differences resolve automatically over time.
Finaloop continuously monitors and reconciles these balances behind the scenes.
Cash Basis
Cash Basis
Purchased Gift Cards
For cash basis users:
When the customer purchases the gift card:
The payment is immediately recorded as Sales in your P&L
When the gift card is later redeemed:
There is no additional accounting impact
This is the correct cash basis treatment because the revenue is recognized when cash is received.
Issued and Third-Party Gift Cards
When issued or third-party gift cards are created:
No accounting entry is recorded
No liability is created
No revenue is recognized
This is because no cash was exchanged.
When the gift card is redeemed:
Finaloop records the redeemed amount as a:
Giveaway discount
The amount is recorded in:
Discounts & promotions in your P&L
3. Shopify Gift Cards Page in Finaloop
Finaloop includes a dedicated Shopify Gift Cards page that lets you track:
Gift card balances
Redemption activity
Gift card status
Purchased vs issued gift cards
You can access the page from: Orders → Shopify → Shopify gift cards.
Summary Metrics
At the top of the page, you’ll see summary metrics including:
Total number of gift cards: The total number of gift cards across all stores synced from Shopify.
Total gift cards balance: The combined outstanding redeemable balance across all active gift cards (both purchased and issued).
Purchased gift cards (accrual basis only): The liability you have to your customers specifically related to purchased gift cards.
Gift Card Table
The table includes detailed information for each gift card, including:
Column | Description |
Issued date | The date the gift card was created |
Code ending | The last digits of the gift card code |
Type | Purchased or Issued (includes cards issued through third-party apps) |
Store | The Shopify store associated with the gift card |
Status | Active, Redeemed, Partially Redeemed, Expired, or Deactivated |
Disabled date | The date the gift card was deactivated or expired |
Initial value | The original gift card amount |
Balance as of date | Remaining balance as of the selected reporting date |
Current balance | The current remaining balance |
Gift Card Statuses
Active: The gift card still has an available balance.
Redeemed or Partially Redeemed: The gift card balance has been fully or partially used.
Expired: The gift card expired and can no longer be redeemed.
Deactivated: The gift card was disabled and can no longer be redeemed.
Balance as Of Date
The Gift Cards page allows you to select a historical balance date.
This lets you view:
Historical gift card balances
Outstanding liabilities as of a prior date
Historical gift card exposure
Point-in-time reporting for reconciliation purposes
4. Important Notes
Purchased gift cards impact your books differently from issued and promotional gift cards
Gift card liabilities are only created for purchased gift cards under accrual accounting
Issued and third-party gift cards only impact your books when redeemed
Gift card balances and statuses sync automatically from Shopify
As always, if you have any questions at all, feel free to contact us at [email protected].