Selling Something You Cannot Ship

What these things have in common

A customer pays now and receives value later. Nothing is packed, nothing is posted, and the transaction is complete from their side.

From your side it is not complete at all. You are holding money against something you still owe.

That distinction affects how you describe it, how you account for it, and what happens if circumstances change before you deliver.

The forms it takes

• Gift vouchers, redeemable against anything you sell.
• Deposits, securing a booking or a place in a queue.
• Advance bookings, paid in full for a future date.
• Prepaid blocks, such as ten sessions bought together.
• Services delivered remotely, where nothing physical exists at all.
• Made-to-order goods, paid before they are built.

The last two are ordinary trading. The first four all involve holding money against a future obligation, which is the part worth getting right.

Saying what the customer is buying

More important here than for a physical product, because there is nothing to look at.

For a voucher: what it can be spent on, whether it expires, whether it can be used partially, and what happens if you change your prices.

For a deposit: what it secures, whether it is refundable, what happens if either side cancels, and whether it comes off the final price.

For a booking: the date, what happens if it has to move, and how far in advance changes are possible.

All of that should be visible before payment rather than in terms afterwards. Somebody buying an intangible thing is buying your description of it, and the description is the product.

A worked example

A small restaurant selling vouchers online, with a page saying only the amount and a buy button.

Three months later a customer arrived with one, wanting to use half of it. Nobody had decided whether that was allowed. The staff improvised, said no, and the customer left annoyed.

The same week somebody asked whether a voucher covered drinks, and got a different answer from a different member of staff.

The fix was four lines added to the page and printed on the voucher: valid for two years, usable against anything on the bill including drinks, partial use allowed with the balance carried forward, not exchangeable for cash.

The questions stopped, and so did the inconsistent answers, because there was now something to point at.

None of that was a legal question. It was four decisions nobody had made until a customer forced one.

Expiry, and whether to have one

Worth checking rather than assuming, because rules vary.

Several provinces restrict expiry on gift cards, and in some cases prohibit it for general-purpose vouchers. A policy copied from an American template may not be enforceable here.

The practical position for most small businesses: no expiry on a straight monetary voucher, and a stated validity period on anything promotional or discounted, which is generally treated differently.

Where you are unsure, the safe answer is no expiry, because an unenforceable expiry produces an argument you will lose in front of a customer.

The money is not yours yet

The accounting point, stated simply, because it catches small businesses out.

Money taken for something not yet delivered is a liability rather than revenue. It sits on your books as something owed until the voucher is redeemed or the work is done.

Practically that matters because spending it feels like income and is not. A business that sells a good volume of vouchers in December and treats it as a good December has spent money it still owes.

Your bookkeeper will handle the mechanics. What you need is the habit of thinking of it as held rather than earned.

The counter-case

Where selling ahead is a poor idea.

When you cannot be confident of delivering. Taking deposits for work you may not be able to schedule creates an obligation and a refund problem at the same time.

When your costs are moving quickly. A voucher sold today is redeemed at tomorrow's prices, and if your costs rise substantially you are honouring it at a loss.

And when the business itself is uncertain. Prepayment is a loan from your customers, and it is the worst kind to default on.

None of that argues against vouchers generally. It argues for selling only what you can confidently honour.

Delivering the intangible thing

The practical part that gets neglected.

A voucher bought online needs to arrive as something: a PDF, a code, or a posted card. Decide which, and make sure it happens automatically rather than depending on somebody remembering.

If it is a gift, the buyer usually wants it to look like one. A plain email with a reference number is technically a voucher and disappointing to hand over.

And it needs to be redeemable by somebody who is not the buyer, which means whoever is at the counter has to be able to check it.

Keeping track

1. Record every voucher issued, with a unique code.
2. Record redemptions, including partial ones.
3. Keep the outstanding total visible, since it is money you owe.
4. Make the list accessible to whoever serves customers.
5. Review it annually, particularly if there is an expiry.

A spreadsheet is enough for most small businesses. What does not work is no record at all, which makes fraud trivial and disputes unresolvable.

What the fees look like

Worth checking, because selling a voucher and redeeming it can both cost you.

The payment provider takes its percentage when the voucher is bought. If the voucher is then redeemed through the same system, some setups charge again on the redemption.

For a small voucher that double charge is a meaningful share of the value. It is worth asking your provider how redemption is handled before assuming it is free.

The usual arrangement that avoids it is treating redemption as a discount at the point of sale rather than as a second transaction.

Refunds on things not yet delivered

Worth deciding before somebody asks.

A deposit for work you cannot now do should generally be returned, whatever the terms say, because the alternative is a complaint that will cost more than the money.

A voucher somebody changed their mind about is different, and a stated position either way is fine provided it was visible at purchase.

What creates real damage is deciding case by case, because customers compare notes and inconsistency reads as unfairness.

How to describe any of this on the page is the same problem as in a returns policy written for customers.

Frequently asked questions

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