Most business owners think about vouchers as a sales number:
"Voucher sales were $47,200 this quarter."
That number matters, but it is only the beginning of the story.
Once vouchers are sold, they become a liability until they are redeemed, expire, or otherwise close out. AASB 15 treats non-refundable prepayments as a customer right to receive goods or services in future, with unexercised rights commonly described as breakage.
The practical question is not just how many vouchers did we sell?
It is: how quickly do they come back?
That is what the redemption velocity report shows.
It takes voucher sales from a given period, groups them into cohorts, and tracks how much of their value has been redeemed over time. Once you can see that curve, you can make better decisions about liability, breakage, cash flow, marketing, and expiry policy.
This article is general information, not accounting advice. Your accountant should confirm how breakage and revenue recognition apply to your business.
What the report actually shows
The redemption velocity report is a cumulative redemption curve, grouped by cohort.
A cohort is a group of vouchers issued in the same period - usually a month or quarter.
The x-axis shows time since issue. The y-axis shows how much of that cohort's original voucher value has been redeemed.
So a point at Month 3 might tell you:
Of all vouchers issued in July-September, 46% of their original face value had been redeemed by the end of Month 3.
That is a much more useful number than "we sold $47,200 in vouchers." It tells you how quickly those vouchers are turning into real redemptions - and how much remains as outstanding liability.
The shape of a healthy curve
A typical healthy curve rises sharply early, slows after the first few months, and then flattens into a long tail.
That shape tells you three things: the recipient is actually using the voucher, your voucher product is not creating avoidable friction, and the remaining balance is moving into a predictable long-tail period.
A flat curve near the beginning is a warning sign. It can mean recipients are not booking, the voucher is hard to redeem, the buyer and recipient are geographically mismatched, or the product was purchased as a "someday" gift rather than an immediate-use gift.
The report does not tell you which of those is true. But it tells you where to look.
Four decisions it should drive
1 · Breakage policy
Breakage is the portion of voucher value that customers are unlikely to redeem.
Under AASB 15, if a business expects to be entitled to breakage and can support the estimate, it recognises expected breakage in proportion to the pattern of customer redemptions. If it cannot support that estimate, breakage is recognised only when the likelihood of redemption becomes remote.
The velocity report helps with that assessment.
If you have several years of clean voucher data and your cohorts follow a consistent redemption pattern, your accountant may be comfortable using an expected-breakage approach. If your curve is jagged, your volumes are low, or your redemption behaviour changes from cohort to cohort, the simpler and safer method is usually to recognise breakage only when vouchers expire.
For most small businesses, the report is not there to make an aggressive accounting case. It is there to make the conservative method visible, measurable, and easy to reconcile.
2 · Cash-flow planning
A voucher sale brings in cash today. The cost of fulfilling that voucher comes later.
That timing gap is useful, but it can also fool you.
If you sell $10,000 in vouchers in December and a large share redeems in January and February, those quiet months may not be as quiet operationally as your sales report suggests. You may need staff, rooms, stock, or appointment capacity before the revenue shows up in the usual way.
The velocity report helps you forecast redemption pressure. It shows when vouchers usually return, by cohort, so you can plan for the service cost before it lands in your calendar.
3 · Marketing timing
A redemption curve can show whether people are using vouchers naturally or need prompting.
If most vouchers redeem within the first few months, you probably do not need an early "use your voucher" campaign. Those customers are already coming back.
If the curve flattens too early, a reminder campaign may help.
The useful timing is not during the steep part of the curve. It is when the curve starts to flatten. That is when the natural redemptions have slowed and a gentle nudge may move vouchers out of the forgotten tail.
4 · Expiry policy
In Australia, most gift cards and vouchers must be redeemable for at least three years from supply, unless an exemption applies. The expiry date must also be displayed prominently.
The velocity report does not change that rule. What it does is show whether year three is commercially meaningful.
If nearly all redemptions happen in the first 12 months, year three may exist mostly as compliance, goodwill, and breakage tail. That is still important. But it should not be treated as a normal service-demand year in your forecasts.
The report lets you separate legal validity from operational demand. You honour the three-year minimum. You budget based on how customers actually redeem.
Reading cohorts against each other
The report becomes more useful when you compare multiple cohorts.
A single curve tells you how one period behaved. Several curves tell you whether your voucher program is becoming healthier or more erratic.
Crossing lines
If a newer cohort redeems faster than an older cohort, something has changed.
That might be better voucher design, a stronger buyer fit, clearer redemption instructions, better staff training, or a seasonal product that drives faster booking.
It can also mean you sold more self-purchase or near-term-use vouchers rather than gifts.
Crossing lines are not automatically good or bad. They are a prompt to ask what changed.
Diverging tails
If each cohort settles at a different long-tail level, your breakage estimate is unstable.
That does not mean anything is wrong. It just means you should be careful about relying on a single breakage percentage.
Stable tails create confidence. Diverging tails mean your accountant will probably want the simpler approach.
A later knee
If the curve's "knee" keeps moving later - from Month 3 to Month 4 to Month 5 - your buyers may be changing.
Often, this happens when more vouchers are bought by people outside your local area. The recipient may still redeem, but they may wait for a visit, a holiday period, or a specific occasion.
That is useful information. It tells you your voucher store is reaching further than your appointment book.
Value vs count
A subtle but important distinction.
The velocity report is usually plotted by value redeemed as a percentage of face value issued. That is the right view for liability and breakage decisions.
A second view, redemption count as a percentage of vouchers issued, can also be useful. The two curves usually look similar, but they diverge when partial redemptions are common, when buyers stack multiple small vouchers, or when bundled package vouchers behave differently from dollar-value vouchers.
If your business sells a mix of voucher types, look at both. One shows you the money. The other shows customer behaviour.
You need both.
Where this sits in VoucherGrid
In VoucherGrid, the velocity report lives under Reports → Liability.
You can view voucher cohorts by issue month or quarter, compare cohorts against each other, and export the underlying data as CSV.
On Professional, the report can be included in scheduled reporting for your accountant.
Each cohort is scoped to the voucher expiry window, so the curve does not just show the first few months of activity - it shows the full long-tail shape.
If you only check one report
Forget the dashboard for a moment. Forget the monthly sales number.
If you only look at one voucher report each quarter, make it the velocity report.
It answers four questions in one view:
- Are customers actually redeeming?
- When will the service demand arrive?
- Is our breakage estimate defensible?
- Are our voucher products attracting the right buyers?
A sales report tells you what happened at checkout. A redemption velocity report tells you what happens after the gift is given.
That is where the real economics of a voucher program live.