Promo credits and cashback
Where 'free' money comes from on your books.
By Solomon Ajayi · Free to read, no signup
You give a new user ₦500 of 'free' wallet credit as a signup bonus. Then you give them 2% cashback on a ₦1,000 purchase. The user sees free money. On YOUR books, that money came from somewhere, your marketing budget. 'Free' to the user is never free to your P&L, and engineers who book promos wrong hide their real customer acquisition cost.
When you drop ₦500 of bonus credit into a user's wallet, you have just created a real liability: that wallet balance is spendable, so you genuinely owe it. The credit did not appear from nowhere. Every credit needs a matching debit, and the question this lesson forces is which account takes the other side. The honest answer is an expense, because giving away spendable money costs you something.
So a signup bonus is User Wallet up and Marketing Expense up, and 2% cashback is the same shape at a smaller amount. The user experiences free money; your P&L experiences the cost of acquiring and keeping that user. That cost has a name finance people care about, customer acquisition cost, and booking promos as marketing expense is what keeps it visible and auditable.
The pattern is identical for referral bonuses, free trials, and loyalty rewards: a spendable credit on one side, a marketing or promotional expense on the other. The framing matters because it is the only way your unit economics stay true. When the expense is visible, you can compare what a cohort cost to acquire against what it earns, which is the whole point of tracking CAC in the first place.
Worked example, step by step
Issue ₦500 signup promo credit
New user signs up. You credit their wallet ₦500. Your CFO needs this booked somewhere.
| Account | Debit | Credit |
|---|---|---|
| Marketing Expense (5500) | ₦500.00 | |
| User Wallet (2000) | ₦500.00 |
User Wallet UP ₦500 (we now OWE them ₦500, it is a real liability, they can spend it). Marketing Expense UP ₦500 (it cost YOU ₦500). The money did not appear from nowhere, it came from your marketing budget. This is your customer acquisition cost, recorded honestly.
User makes ₦1,000 purchase, earns 2% cashback (₦20)
Same pattern, smaller amount. You credit ₦20 to their wallet as a reward. Your marketing budget shrinks by ₦20.
| Account | Debit | Credit |
|---|---|---|
| Marketing Expense (5500) | ₦20.00 | |
| User Wallet (2000) | ₦20.00 |
Marketing Expense UP ₦20. User Wallet UP ₦20. Same shape as the signup bonus. If your engineers route this through a 'free credit' account that does not hit an expense, your marketing CAC looks artificially low and your investors are getting lied to.
Takeaway
Anything you give a user that costs you something, signup credits, cashback, referral bonuses, free trials, must hit an expense account. 'Free' to the user is never free to your P&L. Book promos as marketing expense from day one and your CAC stays auditable; book them as anything else and your unit economics become fiction.
Practice this on a real ledger
Reading is half of it. Open this lesson in the lab to post the entries yourself against a real Postgres-backed double-entry ledger, with the validation on. Free, your sandbox is yours.