Choosing a Gift Card Partner
As we all recognize, we are in a difficult economic time. Whether small businesses, big box merchants; whether local or national, both consumers and businesses alike are feeling the pressure. There are continual stories of bankruptcies across all lines of businesses. This results in everyone needing to be more diligent and mindful of purchasing and selling decisions.
Some facts to know about current bankruptcy law:
Gift cards do not have to be honored. Even if a bankrupt retailer would like to honor their gift cards, they may not be able to per a court order.
If the bankrupt company is purchased by another company, the buyer might honor the cards but is not legally required to do so.
Gift cards fall in the class of unsecured creditors, which are usually the last to get paid. Secured creditors are at the top of the list—those with debts backed by assets such as real estate or accounts receivable. If the amount of debit held by secured creditors dwarfs the assets of the company in bankruptcy, nothing would be left for unsecured creditors.
The 2007 Incentive Federation Study revealed that gift cards used for merchandise or services were and still are the most effective motivational method used by large companies (those with revenues over $100 million). But, in order to continue to experience the growth of gift cards in the Business-to-Business environment, we need to practice due diligence and create sound business plans. And for corporate customers buying gift cards, merchandise or services, it becomes extremely important to be aware of a company’s financial situation and if they deploy best of class business practices.
To the best of our knowledge, the IGCC (Incentive Gift Card Council) membership is experienced and knowledgeable about the incentive industry. They operate reputable businesses with high quality gift card products. However, we advise all our members and customers to do their research when choosing a business partner. The question for all of us in business today is . . . "If your company is financially sound, what are you doing now to assure potential buyers of that fact?” Here is a tremendous marketing opportunity for you to stand out among other gift card and reward choice suppliers.