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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

#91

Post by JimDabell »

ksec wrote: post #55
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.

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 until you have a massive theoretical debt that in practice can’t ever be collected. So they put expiration dates on so they can clear those things off their books. It’s a completely ordinary thing to do, it’s not a rip-off.

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

#92

Post by kldg »

theshrike79 wrote: post #75
stingraycharles wrote: post #7

Earlier quoted context omitted.

Correct, then you effectively become a holder of someone else’s money, which creates all kinds of legal trouble (you need to put that money into a separate, third party’s account that shields it from bankruptcy etc). What they could do is automatically refund the credits to the original account as soon as they expire, but that would mean it’s not the deposit but every API request that would be counted as revenue, whi…

Fun fact: Starbucks is holding 2 BILLION of people's money in the form of unused gift cards and pre-paid store credit: https://alltrades.substack.com/p/the-bank-of-starbucks

with proper paternal laws, we could put that money toward useful projects or return the money back to individuals.

(just kidding; we'd divert it to subsidize billionaires) https://local12.com/news/local/ohio-allocates-billions-from-...

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

#93

Post by xeromal »

Tade0 wrote: post #89
benabbott wrote: post #50

Earlier quoted context omitted.

Because it does not cost them to provide in-game items (skins, weapons, etc.) On the other hand, certainly does cost companies to provide compute.

How does Starbucks avoid the same with their vouchers?

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

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

#95

Post by khuey »

eviks wrote: post #20
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.

There are other numbers besides 1 and infinity, though

I believe the reason to use 1 year comes from the customer's side: prepayments of services that extend past 1 year have to be capitalized for tax purposes, whereas prepayments of services for 1 year or less can be expensed immediately.

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

#96

Post by prasadjoglekar »

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…

Un redeemed gift cards are a liability for the issuer in perpetuity in many US states including CA. In many others the expiry is at least 5 years from the date of issuance.

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

#97

Post by lubujackson »

gwd wrote: post #81
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? 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.

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

#98

Post by foxglacier »

xeromal wrote: post #93
Tade0 wrote: post #89

Earlier quoted context omitted.

How does Starbucks avoid the same with their vouchers?

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.

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

#99

Post by [deleted] »

ikidd wrote: post #43
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.

You'd have to replace your accountants anywhere that gift cards aren't allowed to expire by law.

[deleted]

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

#100

Post by kstrauser »

renewiltord wrote: post #84
hn_throwaway_99 wrote: post #71

Earlier quoted context omitted.

Thank you. As someone who used to work for a health fintech, it was amazing how often you'd hear loads of confidently wrong opinions on stuff like HIPAA (no, saying that Lisa couldn't make the meeting because she's out with the flu doesn't make it a HIPAA violation) and money transferring/KYC/AML/etc. laws. Like you said, selling prepaid credits to your service doesn't mean you're covered by money transmitter service…

Did you know it's okay to give bad health information advice if you spell it HIPPA instead?

My eye just twitched so hard I might have sprained it.
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