Show Me The Money: Accounting for Try Now Buy Later

Try Now Buy Later programs impact Brands’ accounting and cash flow. Because shoppers are not charged until after their trial, there is a delay until cash is captured and revenue is recognized. A Gross Sale is not recorded until a shopper has been charged, which means that returns processed during the shopper’s trial do not show up in the Returns line on financial reporting. These “during trial” returns are considered re-racks — Brands cannot process a Refund on an item that has not yet been charged for. The impact is that Try Now Buy Later can improve Brands’ return rates from a financial reporting perspective.

See below for an overview of how the funds will flow and be recognized with TNBL:

  1. Order placed for $200
  2. Shopper keeps $150, returns $50
  3. Trial period ends — shopper charged for $150. This is recognized as a Gross Sale of $150 at this time.
  4. Shopper later decides to return another $50 after the charge date — this would be marked as a refund of $50. 
  5. Net sale would be $100

Brands’ finance teams need to account and track outstanding orders that are being tried by customers, what inventory has been returned, and the amount of cash that has been captured. Additionally, Brands need to forecast return rates to plan for inventory and future revenue at any point in time for regular financial reporting. TryNow provides Brands with automated accounting reports so these numbers are just a click away.

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