Groupon!

JodieR

Does anyone know how to account for Groupon promotions?

My client has done an offer where someone pays £12 for a service. When the client set up the offer he told the sales rep that he needed to come away with at least £6 per offer to cover his cost, so the rep said that's fine, they'll charge the customer £12 and take £6 each.
The paperwork tells a different story. Groupon receive the £12 and then take their £6 share PLUS they take VAT on that too, so only pay £4.80 into my client's account. I tried speaking to the saleman about it and he came out with 'yes we take the VAT but it's OK because you can claim it back'. He clearly doesn't have a clue and my client's not going to come away with as much as he was lead to belive he'd get, but I'm still not sure exactly how these deals work - I think that my client should account for the whole £12 as a sale (ie £10 + £2 VAT) and then claim the £6 + Vat which Groupon have taken as a cost and would therefore come out with just £4 net per deal, but after speaking to his finance department the salesman said we'd come out with £5.04????? HELP!

oakley

I would agree that you have £4 net per deal but I think this may not be the problem with the deal and the client should be more aware.

sales £12 (£10+VAT)
Commission £7.20 (£6+VAT)
payment £4.80 (£4+VAT)

even if he agreed that the £6 commission charge INCLUDED vat he would still be short of cost

sales £12 (£10+VAT)
commssion £6 (£5+VAT)
payment £6 (£5+VAT)

I think 30% commission would be enough to secure the deal through Groupon, maybe they came accross a good (or maybe unscrupulous) salesperson

JodieR

Thanks for your reply - you're looking at it from the same angle as me. It appears that the salesman didn't have a clue and has essentially miss-sold the deal, not that he cares as he'll still get his commission on it i'm sure!