What payment terms do Aplus's fuel supply contracts with customers generally include?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
Fuel supply contracts with our customers generally provide that we distribute motor fuel at a formula price based on published rates, volume-based profit margin and other terms specific to the agreement. The customer is invoiced the agreed-upon price with most payment terms ranging less than 30 days. If the consideration promised in a contract includes a variable amount, the Partnership estimates the variable consideration amount and factors in such an estimate to determine the transaction price under the expected value method.
Source: Item 22 — CONTRACTS (FDD page 68)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, fuel supply contracts with customers typically involve distributing motor fuel at a formula price that is based on published rates, volume-based profit margins, and other terms specific to the agreement. The customer receives an invoice for the agreed-upon price.
Most payment terms for these invoices require payment in less than 30 days. Aplus estimates the variable consideration amount if the contract includes a variable amount, factoring this estimate into the transaction price determination using the expected value method.
Revenue is recognized when the customer takes control of the fuel, at which point the sale is considered final, as customers do not have the right to return the fuel. The shipping terms of the contract are assessed to determine when control transfers to the customer, with revenue recognized at the time of shipment for FOB shipping point terms. This means that once the goods are shipped, Aplus cannot redirect the shipment, and revenue is recognized.