Sales Promotions

This Direct Expenses code records costs directly tied to producing sales, relating to sales promotions. As an expense account, it normally carries a debit balance: debit entries increase the balance and credit entries decrease it.

Real-world examples

FMCG / consumer goods

An FMCG brand pays a supermarket chain a listing and promotional fee to secure an end-of-aisle display for a new product launch. The retailer's invoice — say £3,600 (£3,000 net) — is an ordinary VATable purchase: a debit of £3,000 to 6200 (Sales Promotions), a debit of £600 to 2201 (Purchase Tax Control Account), and a credit of £3,600 to 2100 (Creditors Control Account). Trade spend like this is one of the largest direct costs in consumer goods, entirely absent from a business that doesn't sell through retail shelf space.

Hospitality

A restaurant chain runs a "2-for-1" offer on food. Because that's simply a lower selling price rather than a separate cost being bought in, it never creates a posting to 6200 at all — it just reduces sales revenue. What does land here is a genuinely separate cost, such as paying an events company to run a promotional tasting evening: a £1,200 invoice (£1,000 net) is a debit of £1,000 to 6200, a debit of £200 to 2201, and a credit of £1,200 to 2100.

Direct-to-consumer / e-commerce

A direct-to-consumer brand runs a social media giveaway, buying in third-party prize stock to award to a winner. A £480 (£400 net) prize purchase is a debit of £400 to 6200, a debit of £80 to 2201, and a credit of £480 to 2100 — a standard purchase entry, even though the goods are being given away rather than resold.

Commonly confused with

Because code 6201 (Advertising) sits right next to this one in Direct Expenses, it's a common mis-posting target. Code 6200 is specifically for sales promotions, while 6201 covers advertising — similar in nature, but keeping them separate is what makes the direct expenses section of your management accounts meaningful rather than a single lumped total.

What a mis-posting here costs you

Posting to the wrong cost code here won't change total cost of sales, but it will distort gross margin analysis by category, making it harder to see which input costs are actually rising.

Other codes in Direct Expenses