Why Package Revenue Is Unique
Packages are unique because patients pay upfront for services or products that are delivered over time.
That means when a patient purchases a package for future consumption, your practice is not immediately earning all of that revenue — you are holding the package contents as a liability until those services or goods are delivered. Packages revenue is prepaid, but earned incrementally as items are redeemed.
This is different from:
One-off charge items → Revenue is typically earned when the service or product is purchased.
Memberships/subscriptions → Revenue is recognized on a recurring basis over the membership period.
Because of this consumption timing difference, packages need special revenue handling.
Accounting Best Practices for Prepaid Packages
Under widely accepted accounting standards (GAAP / ASC 606), prepaid packages are generally treated as deferred revenue at the time of sale.
This means:
When the package is purchased:
The full amount is recorded as a liability (Deferred Revenue).
As services or products are delivered:
A proportional amount of revenue is recognized as earned.
For example:
If a package includes 4 lab tests for $100:
At purchase → $100 is recorded as Deferred Revenue.
Each time a lab is redeemed → $25 is recognized as Earned Revenue.
The remaining balance stays deferred until fully used.
This “recognize as used” approach is considered the most accurate and widely recommended method, especially for bundles of visits, labs, or products delivered over time.
Many industries with prepaid bundles (gyms, spas, yoga studios) follow this same model.
Customization Options: Cash vs. Accrual Accounting
Deferred revenue is common for pre-paid services. However, exactly how revenue is treated in Hint can depend on your accounting method. The packages feature is built to support two types of accounting:
Cash Basis
All Package revenue is recognized when initial payment is received.
The full package amount is recorded as income at time of sale.
No deferred revenue is tracked.
Simpler bookkeeping. However, check with your accountant based on your unique package setup, as cash basis can overstate revenue if services are not yet delivered.
Accrual Basis
Revenue is recognized when services are delivered.
Prepaid packages are recorded as deferred revenue until used.
As each item in the package is consumed, its respective value is moved from ‘deferred’ to ‘billed’ (earned) revenue in Hint.
Provides a clearer view of outstanding obligations.
Hint supports both approaches so your package configuration can align with your accounting needs and preferences.
When creating a package, you can configure whether revenue is:
Recognized upfront at purchase (Cash basis), or
Recognized as items are redeemed. (Deferred Revenue, Hint's Default for packages)
How does Deferred Revenue in Hint work?
Accounting standards treat each item inside a package (e.g., visit, lab, physical product) as a separate performance obligation.
When a package includes multiple items:
The total package price must be allocated across the included items.
Allocation is based on each item’s normal standalone selling price (SSP).
In Hint:
Each charge item already has its own price.
When bundled into a package, the system automatically distributes the total package price proportionally across included items.
Any package discount is spread proportionally across those items. You can see how much Hint has calculated for an item’s SPP next to the charge item in the package setup page.
This ensures that:
Deferred revenue is recorded correctly at the time of sale.
Revenue is recognized accurately as each service or product is delivered.
Expiration & Unused Value (“Breakage”)
If a package expires and services remain unused:
Remaining deferred revenue can be automatically recognized as earned revenue once the expiration date is reached.
Expiration settings are configured at the package level. Having an expiration date prevents revenue from hanging in a ‘deferred’ state indefinitely if items are never consumed.
This supports common accounting treatment for expected unused value.
Reporting & Category-Level Visibility
Packages are billed as a single charge item on an invoice, but internally in Hint:
Each included item has its own price allocation
Each item tracks usage
Revenue is recognized per item in both the deferred revenue and bill revenue reports
Individual charge-level category mapping is preserved
This allows you to:
Track revenue by underlying service category (e.g., labs, procedures, products)
Monitor earned vs. deferred revenue
Optionally report at both:
The individual service level, and
The overall “Packages” category level (if configured as an overall charge category)
You can treat “Packages” as a high-level reporting category while still preserving granular visibility into what was sold and delivered.