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How does this work from an accounting perspective? They write off a bad debt, but the actual loss is likely multiple orders of magnitude less. Do they only get

How does this work from an accounting perspective? They write off a bad debt, but the actual loss is likely multiple orders of magnitude less. Do they only get to write off up to the actuals?

dolphinscorpion 8mo ago
Marketing probably, unless thew CEO pulls out his credit card
- dbbk 8mo ago
  I don't really understand why he'd say he'd cover the costs personally... like, Vercel can just write it off, what's the significance of him paying for it?
  - lysace 8mo ago
    Personal brand building? Wanting Vercel to stay out of politics? A vague attempt at diffusing the focus on Vercel pricing? Really hard to tell.
    - Klonoar 8mo ago
      Assuming that he wants to keep Vercel out of politics is a somewhat wild take considering what he’s posted in the past.
mschuster91 8mo ago
Alternatively, bill the costs under the PR department as a marketing campaign.
- pdpi 8mo ago
  I suspect this sort of thing is some of the best marketing money can buy anyhow, so it's a bit of a no-brainer.
azhenley 8mo ago
You deduct the expenses you paid, not the income you hoped to earn.
gunapologist99 8mo ago
It's simply discounting the fees for that one user to zero. (It's not writing off a bad debt, which is technically different) So: your costs are still X but now your revenue is Y instead of Y + (that one user's fee which likely wasn't going to get paid anyway) You pay taxes on Y - X (profit). So, really, their costs just increased by whatever it cost to deliver that data (likely zero depending on how they're billed for it), and their revenue didn't change at all. Turning a no-collect situation into a PR positive. To be fair: it really depends on their datacenter environment; if they're physically hosting, this is probably a rounding error. But, if instead, they're actually running on top of AWS or another hyperscaler and paying 9 cents per gigabyte for traffic, then their bandwidth bill could actually be quite substantial and they're just passing that along to the customer. In that case, this could be actually quite generous of them.
spIrr 8mo ago
Yes, because accounts payable are valued at recognized revenue, and aren't being revalued at cost when written off.

How does this work from an accounting perspective? They write off a bad debt, but the actual loss is likely multiple orders of magnitude less. Do they only get to write off up to the actuals?

dolphinscorpion 8mo ago

Marketing probably, unless thew CEO pulls out his credit card

dbbk 8mo ago
I don't really understand why he'd say he'd cover the costs personally... like, Vercel can just write it off, what's the significance of him paying for it?
- lysace 8mo ago
  Personal brand building? Wanting Vercel to stay out of politics? A vague attempt at diffusing the focus on Vercel pricing? Really hard to tell.
  - Klonoar 8mo ago
    Assuming that he wants to keep Vercel out of politics is a somewhat wild take considering what he’s posted in the past.

mschuster91 8mo ago

Alternatively, bill the costs under the PR department as a marketing campaign.

pdpi 8mo ago
I suspect this sort of thing is some of the best marketing money can buy anyhow, so it's a bit of a no-brainer.

azhenley 8mo ago

You deduct the expenses you paid, not the income you hoped to earn.

gunapologist99 8mo ago

It's simply discounting the fees for that one user to zero. (It's not writing off a bad debt, which is technically different) So: your costs are still X but now your revenue is Y instead of Y + (that one user's fee which likely wasn't going to get paid anyway) You pay taxes on Y - X (profit). So, really, their costs just increased by whatever it cost to deliver that data (likely zero depending on how they're billed for it), and their revenue didn't change at all. Turning a no-collect situation into a PR positive. To be fair: it really depends on their datacenter environment; if they're physically hosting, this is probably a rounding error. But, if instead, they're actually running on top of AWS or another hyperscaler and paying 9 cents per gigabyte for traffic, then their bandwidth bill could actually be quite substantial and they're just passing that along to the customer. In that case, this could be actually quite generous of them.

spIrr 8mo ago

Yes, because accounts payable are valued at recognized revenue, and aren't being revalued at cost when written off.