Prepaid Package
Also called: prepaid plan, session package
What is Prepaid Package?
A prepaid package is a bundle of services — sessions, visits, classes or treatments — sold and paid for in advance at a discount to the individual price, then delivered over the following weeks or months.
Why they are attractive, and risky
Packages pull cash forward and lock a customer in, which is why salons, gyms, clinics and tuition centres sell them. The risk is the mirror image: you have been paid for work you still have to do, usually at a discount, and the staff hours to deliver it will be spent in a month when no new money arrives for them.
How to record one
The cash comes in on day one and belongs in the cash book that day — it really is in the account. What it is not is earned income. Divide the package price by the sessions included and treat that share as earned each time a session is delivered; the rest sits as an obligation until then. A business that counts the whole package as revenue on sale will report a strong month followed by a flat one, with no change in the actual work done.
The three things to track
How many packages are live, how many sessions remain in each, and when they expire. Without that list you cannot tell how much of your forward capacity is already sold, and expiry terms you never wrote down are the ones you end up honouring years later.
Frequently asked questions
It is cash when received but income only as the sessions are delivered. Until then the unused portion is an obligation to the customer. Mixing the two is what makes a package-heavy business look more profitable than it is in the month it sells well.