[jacquesm]

That's not how you count a loss. Your loss is the product you bought (not sold) and the time and effort spent on sending it, as well as possible marketing expense to get it sold. You don't recognize the revenue until the money is in the bank, especially not if you have a dispute with your payment service provider otherwise you are creating yet another problem for yourself, the taxman will want his due even though you did not receive the money. So stop recognizing this as revenue until you have been paid.

[danzig13]

Agree that I have no idea how this person is calculating their loss at 100k over their revenue. However, generally as in GAAP, you would recognize revenue on shipment or when a service is rendered because that would be the period in which the revenue was accrued. For example, most companies that sell on terms like NET 30 will invoice AND recognize revenue on shipment; they would not wait until payment is received on the invoice. That is why there are [contra asset]/expense accounts relating to bad debt.

Waiting until funds hit your bank account is cash basis accounting and even in that case, I am not sure how having a third party like Stripe holding the money affects things.

[jacquesm]

Yes, you can do this. But in the case of the OP recognizing the revenue prior to receiving the payment makes them liable for the taxes on that revenue and that probably isn't a very clever thing to do.

[danzig13]

If you're accrual basis like most companies _in the U.S._, you would be obligated to do this and not recognizing would be a finding on an audit. If not, at the end of the year, companies could ship goods out reducing assets, book the corresponding cost of goods sold, and not recognize revenue until the following year.

[stingraycharles]

Yeah I was also confused at that calculation, if there’s any loss here it’s just the material loss of the products that have been shipped but will never be paid for. I cannot see how the loss could be almost twice the sale value.

[rippercushions]

They were paid, Stripe has just frozen the funds and apparently intends to refund the lot.

[jacquesm]

No, Stripe was paid. Really, the basics here are pretty simple: until your IPSP has released the funds to you you have not been paid. The fact that Stripe intends to refund is a pretty strong bit of evidence that the company has not been paid yet.

One thing that people that use services like Stripe really ought to do is to make sure they understand exactly what the position is that they maneuver themselves into, it looks like a lot of this is driven by wishful thinking rather than understanding.

Legally speaking Stripe has the option to refund a customer during the hold-back period at their discretion. Technically you are not supposed to send any physical goods until you have received the payment. If you do so that is at your own risk.

[omeid2]

If Stripe, or any payment processor was "paid" you would have to invoice them for tax purposes not the end user; and they will have to invoice and the end user and deal with Value Added and other taxes.

[jacquesm]

You should google the term 'merchant of record'. In this case Stripe is the merchant of record. If you bring your own merchant account then you are the merchant of record. In the first case it is Stripe that gets paid, in the second case it is you that gets paid. Either way, in this case the transactions will be reversed so it looks like soon nobody will have been paid. Stripe reduces your liability by acting as the merchant of record but the fact that that liability shifts to them gives them certain rights - and obligations - with respect to the funds, and a unilateral refund is part of those rights.

The moral of the story: do not enter into an agreement without understanding the terms and the practical implications of those terms when applied to you and the relationship with your customer as well as the transactions themselves if you don't want to be surprised by some of the potential outcomes.

[omeid2]

And Stripe isn't a Merchant of Record. They even have a specific product to overcome this, Stripe Tax.

[jacquesm]

According to all of the information the OP has given they are in this case. If you have evidence to the contrary I'm all open to it but it does not apply here unless you have information that contradicts the OP in a believable way.

Also: note that Stripe has all kinds of technical countermeasures in place to detect money laundering and other terms violations and it may well be that everything looks totally above board to an outsider whereas they have valid reasons to deny a party service.