Points liability forecasting
Points liability and breakage, forecast from your own history.
Know what your unspent points are worth today, where the balance is heading over the next twelve months, and how much of it will likely never be redeemed. Calculated from every award and redemption, with the method in plain view.
- No card needed
- Every feature on every plan
- Viewers are always free
01/Why it matters
Unspent points are a promise with a price.
Every point a member earns and has not yet spent is something the program may still have to pay for. Funding a program, budgeting next year’s rewards and answering the CFO all start with the same two numbers: what the balance is worth, and how much of it will actually be claimed.
Under revenue standards such as IFRS 15 (AASB 15 in Australia), points customers earn are generally treated as a liability until they are redeemed or expire, and expected breakage has to be estimated from evidence such as redemption history. A forecast built from the full transaction record is that evidence.
02/The method
How DashVault forecasts liability.
Five steps, run over every award and redemption in the program. No black box: the report states the basis it used right alongside the figures.
01
Start from the real balance
Every point ever awarded, less every point redeemed or adjusted, from the first transaction onward. No sampling, no opening figure typed in by hand.
02
Estimate award volume
The average number of points the program awards each month, taken from its own history.
03
Estimate the redemption rate
The share of the balance available each month (what was already there plus what was newly awarded) that members actually redeem.
04
Roll the balance forward
Month by month for twelve months: opening balance, plus forecast awards, less forecast redemptions. Because new points keep arriving, the balance behaves the way real programs do instead of draining to zero.
05
Report it on one basis
Outstanding liability today and at the end of the horizon, with present and projected breakage both expressed as the unspent share of points awarded, so the two can be compared directly.
03/A worked example
From raw ledger to a number finance can use.
Present breakage is the unspent balance as a share of everything awarded. Convert the balance at the program’s ratio and you have today’s outstanding liability. The forecast then shows where both are heading.
- Points awarded to date
- 1,000,000
- Points redeemed or adjusted
- 640,000
- Unspent balance
- 360,000
- Present breakage
- 36%
- Outstanding liability at 10 points = A$1
- A$36,000
04/Questions
Frequently asked questions
What is points liability?
Points liability is the value of points members have earned but not yet redeemed. Each unspent point is a promise the program may still have to honour, so the balance, converted to dollars, is what the program owes if every point were redeemed.
What is breakage in a loyalty program?
Breakage is the share of points that are never redeemed. A program with high breakage owes less than its raw balance suggests; a program with low breakage needs to fund close to all of it. Estimating breakage from real redemption behaviour, rather than a rule of thumb, is what makes a liability figure defensible.
What is the difference between present and projected breakage?
Both are the unspent balance as a share of points awarded to date. Present breakage uses today’s balance; projected breakage uses the balance forecast twelve months out. When projected is above present, the liability is still building. In a stable program the two converge.
Can the liability be shown in dollars?
Yes. Set how many points make one dollar for the program, and a separate ratio for any reward bucket worth more or less. The forecast runs in points and every reported value is converted.
Does this replace our accountant’s estimate?
No. DashVault gives your finance team a transparent, repeatable estimate built from the full transaction history, with the method spelled out. How it is used in your accounts is a judgement for your accountant or auditor.
Ready when your data is
Know what your points are worth.
Connect your program and the forecast is ready the moment the data lands, recalculated with every refresh.
- No card needed
- Every feature on every plan
- Viewers are always free