Tracking Rewards Points

[Vinny]

Hi Bill,

Bill Farmilo wrote:
 > Any ideas on how to set up accounts to track rewards points ? My original
 > thought was to set up bank accounts using a custom currency (for example:
 > Air Miles) but it seems that Asset and Bank accounts only allow 
legitimate
 > currencies.
 >

This might not quite answer your question, and I am not
an accountant, but here goes:

If you really want to track points somehow, you might try an
Equity:Stock account.

You can assign a value per point (per share, as it were) of, say
$0.001, like in my case.   You'll have to decide the best way to
value your points, some point programs can be tricky.

My above grocery points could be stored as Grocery Points stock
with a GP symbol under the name space of Loyalty (instead of
AMEX, EUREX, FUND etc.).  Here's how, starting with creating
the Security for grocery points.  Open Tools->Security Editor
from the main toolbar.

Click the  '+ Add' button in the Security Editor.
To use your own exchange, you can just type the name, for example,
'Loyalty' in the Type box of the Security Editor's 'New Security'
dialog.  Don't worry that it is not in the pull-down list.
If you picture the 'New Security' dialog box, it would contain the 
following for a new security to track grocery points.:


Full name: Grocery Points
Symbol/Abbr.:  GP
Type:          Loyalty
CUSIP or other code:  (left blank)
Fraction traded:  1 / 10000

Uncheck Get Online Quotes.
...

When you press OK, the 'Loyalty' "exchange" is created (it's
called a namespace in the Securities dialog, and elsewhere).
You can then use it for other points programs.  Close the
security editor dialog.

Once you have the security, open the Tools->Price Editor dialog.
Press the '+Add' button.  Now choose the security you just
created by clicking the 'Select' button for the Security.
You'll be prompted with a dialog that lets you select the
Loyalty 'Type' and, of course, your new 'stock'.

In the Price Editor dialog, there is also a Type field that
shouldn't be confused with the security type.  Choose net asset
value and type the Price that you determined each point was
worth.  Press OK to save and close the price editor.

So far so good.  We have a security and an initial price per
share/point.

Now we create some accounts (an indentation indicates that
the account is a sub-account of the one above).


Assets (Asset account placeholder)
  Loyalty Programs (Asset account, can be a placeholder)
   Grocery Points (Stock account, select GP security)

Income (Income account placeholder)
  Loyalty Programs (Income account, can be a placeholder)
   Grocery Points Earned (Income account)


Now when you get new points you can add them as follows
(an example for 5000 points).  You essentially buy 5000
'shares' and pretend they're points.


New Points Earned transaction
Debit
  Assets:Loyalty Programs:Grocery Points
   Buy 5000 shares 0.001 per share       $5
Credit
  Income:Loyalty Programs:Grocery Points Earned   $5


To redeem them, simply sell the points and use the value
of the item/service you are receiving to calculate the
current price for the points.  This can be subjective
for since there are a variety of market values for any
given item.

I suggest adding at a specific fixed price and using
the various prices that fall out as you redeem points
as an interesting way to track the average value of
the points.  Anyway, a redemption would look like:


Points Redeemed transaction
Debit
  Expenses:Groceries     $5
Credit
  Assets:Loyalty Programs:Grocery Points
   Sell 5000 shares 0.001 per share       $5


So, that's how I might do it.  I merely track redemptions,
though.  Can't think of any other way to do it unless you
want to consider the incoming points as a liability that
balances the points as an asset instead of income.

--- How I currently do it:

I track the 'redeemed' points as income and balance them with the 
expense of the reward (or value of the asset).  For example:

Grocery store transaction
Credits
  Grocery store payment on credit
   Liabilities:Short Term:Credit Card   $50
  Grocery store payment with 20000 points (balance 980)
   Income:Loyalty Programs:Grocery Points  $20
Debits
  Groceries  Expenses:Groceries:Milk $25
  Groceries  Expenses:Groceries:Steak $45

In the above there are two grocery expenses, milk and steak, which
have their own expense accounts under an umbrella Groceries account
(which is also under an umbrella Expenses account).  They total $70.
I put $50 on my credit card and cash in 20000 points (= $20) to pay
for the remaining $20.  I track the point balance loosely
in the description/memo field.

I use an income account since I worked to gain the points (by
shopping behaviour).  ;-)

Now this doesn't actually track your points like you wanted, it
tracks your redemptions and their monetary value.


Vinny