Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Tell HN: Anthropic expires paid credits after a year

news.ycombinator.com

Post reply on HN
Print view View original

111–120 of 144 posts

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

#111

Post by 7bit »

JimDabell wrote: post #91
ksec wrote: post #55

Earlier quoted context omitted.

What about Starbucks top up card or Apple iTunes Credit? How would those work?

I’ve implemented those for the next-largest coffee chain. They did the same thing as Anthropic here, for the reasons everybody gave already. Taking money in exchange for future service is a pain to account for if it never gets collected. If somebody loads up a gift card with $100 and then destroys the gift card, you don’t want that $100 to stay on your books forever. It’ll just keep mounting up and up over the years…

Here’s a concise rebuttal you could use:

> That’s not really a justification, it’s just describing their chosen accounting convenience. Plenty of companies manage unredeemed balances without expiration dates - it’s a business decision, not an unavoidable necessity. Calling it “ordinary” doesn’t make it fair to customers.

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

#112

Post by iExploder »

lelanthran wrote: post #105
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.

If the contract states the credits expire EOY all bets are off. Implicitly makes the credits the 'delivery' not the service itself.

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

#113

Post by notepad0x90 »

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.

Shouldn't they refund remaining credits using the original payment method, instead of you know..stealing?

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

#114

Post by jacquesm »

ethan_smith wrote: post #54
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 is specifically about revenue recognition under accrual accounting - unexpired credits are considered "deferred revenue" (a liability) until used or expired. Companies prefer definite expiration dates to avoid carrying growing liabilities on their balance sheets indefinitely.

If you can't be bothered to implement it properly, don't use pre-paid accounts but charge as you go.

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

#115

Post by jacquesm »

otterley wrote: post #107
foxglacier wrote: post #98

Earlier quoted context omitted.

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.

Let me introduce you to actuarial science:

https://en.wikipedia.org/wiki/Actuarial_science

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

#116

Post by jacquesm »

kelnos wrote: post #87
georgel wrote: post #9

Earlier quoted context omitted.

I lost my free credits they were giving away a couple years back, but when you pay they make it fairly clear they will expire. I see no issues here from any provider doing this, as long as it is made clear.

I have many issues with providers doing that. The reason they take your money and give you credits in exchange is because that gives them lower credit card processing fees (one larger transaction vs. many smaller ones). If they're going to do that to make things cheaper for them, then they should let me use those credits whenever I want, no matter how far into the future I want to use them. If not, they should refund…

> The reason they take your money and give you credits in exchange is because that gives them lower credit card processing fees (one larger transaction vs. many smaller ones).

That is not the main reason why they do this. The main reason why they do this is to get easy access to what essentially amounts to free capital, effectively it is an interest free loan from you to them.

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

#117

Post by jacquesm »

reactordev wrote: post #4

“Oops, we burned through your money, please give us more by this date” - are you serious? Unfortunately they basically can do whatever they want with credits. https://www.anthropic.com/legal/credit-terms

They can do whatever they want with their website, that doesn't make what they write there immediately legal.

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

#119

Post by lelanthran »

iExploder wrote: post #112
lelanthran wrote: post #105

Earlier quoted context omitted.

> 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.

If the contract states the credits expire EOY all bets are off. Implicitly makes the credits the 'delivery' not the service itself.

> If the contract states the credits expire EOY all bets are off. Implicitly makes the credits the 'delivery' not the service itself.

I wasn't addressing what the contract states and what the effect is; I was addressing the accounting rule for service sold but not yet delivered.

As long as the credits are usable (i.e. not expired), those credits are a liability on the books and financial statements must reflect that. This is why they need to expire the credits after a certain time.

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

#120

Post by gwd »

lubujackson wrote: post #97
gwd wrote: post #81

Earlier quoted context omitted.

> Why don't they count it as revenue the moment the credits are issued? You've gotten the revenue but you haven't paid the cost for that revenue yet. Those are essentially un-cashed checks that the accountants have to keep on the books indefinitely otherwise. Imagine you're chugging along and out of the blue someone shows up with $100M of credits they bought 10 years ago, expecting you to do something for them. Now y…

Makes sense. Just like how when you put money in the bank they have to put it in a big vault and not touch it so you can access it in the future. Oh wait... rules for thee and not for me.

Not sure what you mean... banks definitely have to worry about people unexpectedly coming and asking for all their money back [1]. The difference is, that risk management is the bank's core business. That's not the business Anthropic wants to be in.

[1] https://en.wikipedia.org/wiki/Bank_run

Post reply on HN