2005-12-16 Mediation

What Happened

Without giving away any "details", which the mediation agreement (of which I somehow don't have a copy, so I can't be quite sure), my guesses as to the Opposition's feelings about settling are much as I expected they would be, i.e. they are still convinced that they are the wronged party, and their settlement wishes are basically a mirror of my own. We're going to schedule another mediation date in January, and I need to put together an accounting of what they would have been owed if we had had a working sales agreement – with the understanding that I didn't make any such agreement, so don't owe them the amounts it will show. Last time I did such an accounting, however, the amount they were owed was still much less than their debt to me... but Lynne has apparently invented a new accounting method by which these things are to be figured... but I think it's even less favorable to them than my method was. I'm going to write it down here because I don't think I can reasonably be expected not to... and actually, although it sounds sensible enough when you first hear it, I don't know if I'll actually be able to reduce it to a formula.

What the mediator guy said that Lynne said was this: Let's say you have orders for 8 shirts, but you have to buy 12 in order to make the supplier's minimum. Let's also say you pay $10 per shirt to the supplier, and sell the shirts for $20 each. (All this is a reasonable approximation so far). So you're down $120 to buy the shirts from the supplier, but you gain $160 from the sale, leaving you a net profit of $40. Lynne considers the "80-20 split" to be calculated from that $40, i.e. I/vbz would owe Them ($40 x 0.8 =) $32, and keep the other $8.

Calculations

Some minor loose ends, about which I'll make some assumptions:

• I will assume that cost of shipping from supplier to vbz is included in the "cost of merchandise", and that the cost of shipping from vbz to the customer is deducted from the sale price. So (for example) if it cost $2 to send each of those 8 shirts, then each one only counts as $18, for a total of ($18 x 8 =) $144, leaving a profit of only $24 to be split up.
• I will assume that the example is intended to illustrate a more general formula:

C = cost of merchandise (including shipping) R = sales receipts (including amounts paid towards shipping) Xd = dollar amount to be disbursed to client (Grievers) Xd = (R - C) * 0.8

As it happens, I have a database query which can give (R-C) by month or by year. Here are the figures through June 2003 (when we stopped working together):

Year	NetGain	Receipts	Restocks	ShipCosts
1999	($478.35)	$0.00	$478.35	$0.00
2000	($5,173.09)	$0.00	$5,137.88	$35.21
2001	($5,070.84)	$11,546.75	$14,603.51	$2,014.08
2002	$1,344.01	$17,180.92	$13,819.52	$2,017.39
2003	$641.01	$17,759.04	$14,616.62	$2,501.41

• NetGain = Receipts - Restocks - ShipCosts
• ShipCosts = costs of shipping to customers
• Restocks includes costs of shipping from suppliers
• Receipts = amount paid by the customer (the credit card processor takes a 2.5-3.5% cut out of this before vbz gets it)

The database didn't track all the necessary information prior to 2003 or so, so those figures are based on retroactively-entered paperwork, some of which is missing. Going on the assumption that it's close enough, however, we can add up the profits for each year in order to find out the net amount from which 80% would have been owed to the Grievers if we had actually had an agreement in effect to disburse sales in this way:

-$  478.35
-$5,173.09
-$5,070.84
+$1,344.01
+$  320.51  (half of 641.01)
==========
-  9057.76

So I would owe the Grievers 80% of negative $9057.76, i.e. they would owe me $7246.21.

Next thing is to create a report which shows the details.