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Tell HN: Anthropic expires paid credits after a year

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Re: Tell HN: Anthropic expires paid credits after a year

#101

Post by ewoodrich »

akagusu wrote: post #37
mrbungie wrote: post #29

Earlier quoted context omitted.

Even with a CFO-level explanation, it feels like a weak excuse for "fuck the customer" as always. Notice that in some places (with good enough customer protection rules) pre-paid credits can't expire, as expiration itself is a clear abuse of market power: they are forcing out revenue from services not given, even if it is "made clear at buy-time". Especially at such short time horizons like 1-year. And yet they are s…

> it feels like a weak excuse for "fuck the customer" as always. Of course it is just an excuse to "fuck the customer" and grab the money, but it is not something you should question, because in our society you don't question how companies make money. And it doesn't matter if you are the offended part, people will just protect the state of affairs,even at their own expense. Just look how people always find a justific…

I see this all the time on Reddit where someone points to some kind of consumer-hostile tactic from Apple and some people feel compelled to defend them with "but they need to do that to have the highest profit margins in the industry".

Re: Tell HN: Anthropic expires paid credits after a year

#102

Post by interestica »

backprop1989 wrote: post #6

Accounting rules. If the credits last indefinitely, any unused credits cannot be counted as revenue. Ran into this at my last company when we signed a big contract and gave them hundreds of thousands of dollars in non-expiring credits. Our accountant went nuts when we told him.

This was the (corp) argument in Canada for allowing companies to expire gift cards. They no longer expire.

Re: Tell HN: Anthropic expires paid credits after a year

#103

Post by KingOfCoders »

backprop1989 wrote: post #6

Accounting rules. If the credits last indefinitely, any unused credits cannot be counted as revenue. Ran into this at my last company when we signed a big contract and gave them hundreds of thousands of dollars in non-expiring credits. Our accountant went nuts when we told him.

Had the same problem with vouchers in one startup, gave out free vouchers as marketing, became a huge accounting headache when the company wanted to clean things up.

Also huge problems (Germany) with yearly payments and how to account for them to minimize liabilities.

Re: Tell HN: Anthropic expires paid credits after a year

#104

Post by archerx »

I got the same email. This is theft and not only will this not make me buy more credits, it will make sure I will never buy credits on anthropic ever again. I was using haiku to run a small free webapp and the llm provider can be changed. There is nothing special about anthropic.

Re: Tell HN: Anthropic expires paid credits after a year

#105

Post by lelanthran »

backprop1989 wrote: post #6

Accounting rules. If the credits last indefinitely, any unused credits cannot be counted as revenue. Ran into this at my last company when we signed a big contract and gave them hundreds of thousands of dollars in non-expiring credits. Our accountant went nuts when we told him.

> Accounting rules.

Correct.

> If the credits last indefinitely, any unused credits cannot be counted as revenue.

Maybe incorrect? Unless they are cooking the books, the unused credits should reflect as a liability on the books.

When someone pays you for a thing, until they take delivery of it (or use it up if it is a service), you owe them the value of that thing.

Re: Tell HN: Anthropic expires paid credits after a year

#106

Post by archerx »

neom wrote: post #21
backprop1989 wrote: post #6

Accounting rules. If the credits last indefinitely, any unused credits cannot be counted as revenue. Ran into this at my last company when we signed a big contract and gave them hundreds of thousands of dollars in non-expiring credits. Our accountant went nuts when we told him.

When we hired our pre-ipo CFO at DigitalOcean to start getting it ready, he brought in this whole finance team ofc, full FP&A...anyway they spent a couple months going through everything and then one day the controller called a meeting with me and was like "errr... so what's the story with all the credits?" And I was like "huh?" and he said "well we have millions of dollars of credits you've issued to people..." and…

I miss pre ipo digitalocean.

Re: Tell HN: Anthropic expires paid credits after a year

#107

Post by otterley »

foxglacier wrote: post #98
xeromal wrote: post #93

Earlier quoted context omitted.

They hold 2 billion dollars worth of gift cards on the books.

They probably have a good model for what percentage of those will never be redeemed so they wouldn't have to count the whole $2 billion as a liability. The OP's one big customer would be harder to predict the future behavior of.

That’s not how accounting works. There’s no such thing as a probabilistic liability.

Re: Tell HN: Anthropic expires paid credits after a year

#108

Post by neom »

archerx wrote: post #106
neom wrote: post #21

Earlier quoted context omitted.

When we hired our pre-ipo CFO at DigitalOcean to start getting it ready, he brought in this whole finance team ofc, full FP&A...anyway they spent a couple months going through everything and then one day the controller called a meeting with me and was like "errr... so what's the story with all the credits?" And I was like "huh?" and he said "well we have millions of dollars of credits you've issued to people..." and…

I miss pre ipo digitalocean.

You and me both buddy, you and me both...

Re: Tell HN: Anthropic expires paid credits after a year

#109

Post by thaumasiotes »

yial wrote: post #40
jkaplowitz wrote: post #22

Earlier quoted context omitted.

> Exactly, now you’re a bank (or maybe selling unlicensed securities, either way it’s jeopardy). This seems unlikely - after all, a US federal law (the Credit CARD Act of 2009) requires closed-loop (store/brand-specific) gift cards to be valid for at least 5 years after activation and some states like Florida and California don't allow them to expire at all, so for simplicity national companies don't usually let them…

With gift cards you end up creating a liabilities account and tracking the outstanding value of your issued gift cards. This is almost easier if you have a gift card processor who holds the funds for you, but most I’ve worked with either just facilitate transferring money (as in franchises ) or simply processing the initial payment. This means you then have to track your outstanding. Depending on the state, if you ce…

> while the money is in a liability account, I’ve seen companies in trouble not actually have the funds to cover the liability.

That's a weird edge case. As long as the company is operating, it isn't even possible for it to be unable to cover the liability of outstanding gift cards no matter how many there are. It has to honor the cards, but it has total freedom to set its own prices!

Given that the company is free to pay off the cards in kind while it's operating, it's not obvious why it should have to pay them off in cash as it ceases operating.

Re: Tell HN: Anthropic expires paid credits after a year

#110

Post by thaumasiotes »

Havoc wrote: post #77
Waterluvian wrote: post #64

Earlier quoted context omitted.

I don't really get this logic. Why don't they count it as revenue the moment the credits are issued? Or is this more just a "this is a convenient free win as a consequence of how we decide to manage our books."

> Why don't they count it as revenue the moment the credits are issued? Because the corresponding service hasn't been rendered yet. Conceptually you want the revenue and the costs to generate it recognised at roughly same time else your P/L number is volatile/meaningless

Well, your actual profits and expenses are volatile. Is it bad for your accounting to reflect the reality of your company?
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