Investing Thread

[Uncle Rico]

What Wags said.  It's 50% on the material itself.  I was dealing with copper all last week.  Most of the wire I deal with are copper alloys so after you do the math it ends up like a 30-35% tax because the other metals in the alloy are only like 3% (the earlier tariff %). 

Everyone I've talked to so far just plans to pass on the tax.

No one is going to eat the tax and not pass it on to the consumer.  Anyone that tells you tariffs aren't a tax are either stupid or disingenuous.  But I've never bankrupted a casino

[tower912]

Tariffs are a national sales tax.  In this case, more random and punitive.

[Uncle Rico]

Tariffs are a national sales tax.  In this case, more random and punitive.

And no, foreign nations aren't paying it

[Shaka Shart]

What Wags said.  It's 50% on the material itself.  I was dealing with copper all last week.  Most of the wire I deal with are copper alloys so after you do the math it ends up like a 30-35% tax because the other metals in the alloy are only like 3% (the earlier tariff %). 

Everyone I've talked to so far just plans to pass on the tax.

Most of our contracts have change in law clauses that passes the impact plus xx% for upstream impacts.

It's gonna be a massive pain in the ass to substantiate the individual materials and what tariff applied to them since it's constantly changing, but theoretically we are covered insofar as our margin isn't about the xxx% markup.

Honestly since we have thousands of customers, it is going to cause a big time A/R bad debt headache because any price markup invoices will be disputed immediately. So bad debt estimates will just keep accruing as they push back.

[Skatastrophy]

Suppliers/retailers will be raising prices across the board for a few reasons 

1. Tariffs increasing prices
2. Uncertainty about the tariff situation, so raise prices to account the future uncertainty
3. Consumers have become so accustomed to inflation due to tariffs that it's a good time to raise prices, so raise them anyway

Anyone with half a brain saw this coming a mile away. 

[JWags85]

Most of our contracts have change in law clauses that passes the impact plus xx% for upstream impacts.

It's gonna be a massive pain in the ass to substantiate the individual materials and what tariff applied to them since it's constantly changing, but theoretically we are covered insofar as our margin isn't about the xxx% markup.

Honestly since we have thousands of customers, it is going to cause a big time A/R bad debt headache because any price markup invoices will be disputed immediately. So bad debt estimates will just keep accruing as they push back.

Yeah, that stuff is always fun. 

We normally don't ship anything to out customers in India, for myriad reasons, not least of which is a constantly changing tariff/duty/corruption fee situation once the shipment reaches customs.  We have very clear and well defined terms in our contract which dictate that the customer is responsible for any associated shipping/import fees.  Yet they CONSTANTLY decide to conveniently forget that fact and take creative liberties with their payments.  We'll get a payment for an invoice that magically covers the goods but none of the fees or if we somehow have a situation where fees need to be paid before the shipment is released, we randomly see the exact amount deducted from future invoices without any communication about it.

[Jay Bee]

Honestly since we have thousands of customers, it is going to cause a big time A/R bad debt headache because any price markup invoices will be disputed immediately. So bad debt estimates will just keep accruing as they push back.

^^ dis guy no accountant

[Shaka Shart]

^^ dis guy no accountant

^^ are you being deliberately obtuse again or do you not understand bad debt reserves as a percentage of A/R.

[Shaka Shart]

Yeah, that stuff is always fun. 

We normally don't ship anything to out customers in India, for myriad reasons, not least of which is a constantly changing tariff/duty/corruption fee situation once the shipment reaches customs.  We have very clear and well defined terms in our contract which dictate that the customer is responsible for any associated shipping/import fees.  Yet they CONSTANTLY decide to conveniently forget that fact and take creative liberties with their payments.  We'll get a payment for an invoice that magically covers the goods but none of the fees or if we somehow have a situation where fees need to be paid before the shipment is released, we randomly see the exact amount deducted from future invoices without any communication about it.

Yeah shortpay of invoices especially if you have a big outsourced group doing the matching to the invoice is a nightmare.

I have been indirectly helping out with that as a favor and there's some customers that kinda just pay what they want and then get all uppity when you call them out on it.

[Jay Bee]

^^ are you being deliberately obtuse again or do you not understand bad debt reserves as a percentage of A/R.

"So bad debt estimates will just keep accruing as they push back" is just weird language that would be spoken by a non-accountant. Fully understand what you're saying... the choice of words is just WACKY

[Skatastrophy]

"So bad debt estimates will just keep accruing as they push back" is just weird language that would be spoken by a non-accountant. Fully understand what you're saying... the choice of words is just WACKY

yeah agreed, and JB is being sort of a jerk about it instead of explaining

Bad debt is unrecoverable debt. Most collections agencies will only buy bad debt at a severe discount.

AR will first push towards having a higher average age. Then a higher percentage of debt will move towards collections if companies refuse payment well past net terms. Then if companies go bankrupt those invoices will move to bad debt.

Before that happens, though, you'll likely see discounted invoices and dissolved partnerships. Nobody likes working with collection agencies and some money is better than no money. And you really just want that aged AR off of your books.

Edit: In real life I'd tell you I'm not an accountant that I just had to do it a bunch running a company where I paid people to do it, but this is the internet, so I get to speak with authority.

[TSmith34, Inc.]

I am all in on policies that punish other people.

Right?

Leopards. Faces.

[Shaka Shart]

"So bad debt estimates will just keep accruing as they push back" is just weird language that would be spoken by a non-accountant. Fully understand what you're saying... the choice of words is just WACKY

Blame IFRS

[TSmith34, Inc.]

yeah agreed, and JB is being sort of a jerk about it instead of explaining

Pedantic Man, Hero of Accountants, to the rescue!

[Shaka Shart]

yeah agreed, and JB is being sort of a jerk about it instead of explaining

Bad debt is unrecoverable debt. Most collections agencies will only buy bad debt at a severe discount.

AR will first push towards having a higher average age. Then a higher percentage of debt will move towards collections if companies refuse payment well past net terms. Then if companies go bankrupt those invoices will move to bad debt.

Before that happens, though, you'll likely see discounted invoices and dissolved partnerships. Nobody likes working with collection agencies and some money is better than no money. And you really just want that aged AR off of your books.

Edit: In real life I'd tell you I'm not an accountant that I just had to do it a bunch running a company where I paid people to do it, but this is the internet, so I get to speak with authority.

Yes I understand Bad Debt by definition is unrecoverable debt. I apologize I was less than clear that I was referring to the P&L impacts of an AR aging bad debt reserve that gets affected when a large $$$ amount of invoices start going overdue/unpaid. 

As customers dispute invoices we have issued (we are sending them price markups, they will dispute probably regardless), this reserve increases significantly based on pre-established aging A/R policy.

If all the sudden we have $100M of overdue invoices we issued for contractual price markups, you are gonna take short term EBIT hits because you will automatically be reserving the incremental overdues according to the globally dictated policy.

These disputes can go on for months/years even and can cause normal invoice payments to be frozen as well while the dispute is worked through.


Apologies for not being more clear

[Shaka Shart]

Pedantic Man, Hero of Accountants, to the rescue!

Too athletic looking. Try harder

[JWags85]

Yeah shortpay of invoices especially if you have a big outsourced group doing the matching to the invoice is a nightmare.

I have been indirectly helping out with that as a favor and there's some customers that kinda just pay what they want and then get all uppity when you call them out on it.

Yea, we switched controllers near the start of the year and then our new hire unexpectedly had to quit due to health issues, so I sort of taught myself a rough bit about our A/R  to sort out immediate invoicing and help onboard once we found a replacement.  The number of short pays and by whom was certainly illuminating.

These disputes can go on for months/years even and can cause normal invoice payments to be frozen as well while the dispute is worked through.

Its such petty BS too.  You'll have statements that are completely screwed up because some company is deciding to play semantics and war of wills over amounts that are a fraction of the total invoice amount.

Its always fun to waste the time of a CEO/upper exec of a 9 figure turnover business because they are delinquent and incurring penalties or having orders held up because something like $1000 is a year overdue as a result of shortpays...While they are prompt in paying hundreds of thousands in invoices during that time. 

[Skatastrophy]

Apologies for not being more clear

You're good. 

What happened to JB happens to me all the time but with regards to computer things. If someone calls their PC their CPU, I'll slap everyone within arm's reach until I calm down.

[Shaka Shart]

Yea, we switched controllers near the start of the year and then our new hire unexpectedly had to quit due to health issues, so I sort of taught myself a rough bit about our A/R  to sort out immediate invoicing and help onboard once we found a replacement.  The number of short pays and by whom was certainly illuminating.

Its such petty BS too.  You'll have statements that are completely screwed up because some company is deciding to play semantics and war of wills over amounts that are a fraction of the total invoice amount.

Its always fun to waste the time of a CEO/upper exec of a 9 figure turnover business because they are delinquent and incurring penalties or having orders held up because something like $1000 is a year overdue as a result of shortpays...While they are prompt in paying hundreds of thousands in invoices during that time. 

We kept getting crickets on responses over and over by just sending "you're this much overdue and this late".

I then created a model for our team (who sucks at excel but I digress) could drop the invoice data into that spits out the compounding late payment interest and then they send a letter with a pro forma invoice saying "you now owe this much in addition".

Got a whole bunch of "hey let's meet to reconcile and clean up" responses after that method, and the pro forma won't hit unless they actually pay you on it. Sometimes brute force works.

[MU82]

The nominee for the vacant BLS post is E.J. Antoni, a Project 2025 guy who has done nothing but attack the BLS.

There are serious concerns about his credentials and partisanship, and about the BLS' independence going forward.

"That's the whole ballgame here," said Michael Strain of the conservative American Enterprise Institute. Stan Veuger, also of the AEI, said: "He's utterly unqualified and as partisan as it gets."

[Jockey]

The nominee for the vacant BLS post is E.J. Antoni, a Project 2025 guy who has done nothing but attack the BLS.

There are serious concerns about his credentials and partisanship, and about the BLS' independence going forward.

"That's the whole ballgame here," said Michael Strain of the conservative American Enterprise Institute. Stan Veuger, also of the AEI, said: "He's utterly unqualified and as partisan as it gets."

He has now suggested getting rid of the agency's closely watched monthly jobs estimate after the most recent estimate angered the president.

Dictator's try to control the flow of all information. We are now firmly in that stage.

[Pakuni]

He has now suggested getting rid of the agency's closely watched monthly jobs estimate after the most recent estimate angered the president.

Dictator's try to control the flow of all information. We are now firmly in that stage.

Can't have a bad jobs report if there is no jobs report.

[forgetful]

You're good.

What happened to JB happens to me all the time but with regards to computer things. If someone calls their PC their CPU, I'll slap everyone within arm's reach until I calm down.

I totally get this. I mean those not realizing the difference between a laptop (CPU) and a desktop (PC) are infuriating.

[Jockey]

I totally get this. I mean those not realizing the difference between a laptop (CPU) and a desktop (PC) are infuriating.

Don't you think those are just simply generic terms for a lot of people? Of course, don't take this as me saying that people aren't stupid.

[forgetful]

Don't you think those are just simply generic terms for a lot of people? Of course, don't take this as me saying that people aren't stupid.

My post was in jest (should have used teal) as what I wrote would likely put Ska over the edge based on his post.

You are 100% correct, CPU and PC are generic terms people use, but to tech savvy people are not the same, where the CPU (Central Processing Unit) is a core component of every computer, but not the computer itself.

Was just trying to have a little fun with Ska.