Q. HOW DO I FIGURE OUT WHAT I OWE FROM THE APPROVAL REPORTING FORM?
A. The reporting form is becoming more complicated as trade value, cash and mint stamps are now treated differently on the form. The form is designed for both approval and trading customers, and for Canadian as well as international customers. Therefore, it isn't always obvious to figure out what you owe (or what I owe you), especially if you have to add tax. It also isn't well explained in the material that comes with the approvals. So, get your sharpest pencil out and lets go through one.
The reporting form has recently been redesigned to account for new business practices. In case you're still having trouble, here's how to go through it.
The reporting form has seven places to write numbers, some of which will already be filled in. These are:
-APPROVALS KEPT
-Sales Tax (for Canadians only eh!)
+(Discount, if you're entitled to one)
BALANCE FORWARD
+CREDIT OFFERED (if you sent stamps for credit)
+BONUS CREDIT (if the material you sent was time sensitive to my sorting schedule)
TOTAL
The first thing to remember is that positive numbers are amounts in your favour. Negative amounts are always amounts in my favour.
APPROVALS KEPT - You fill this in. Total all the approvals taken from all sheets and envelopes. At this point, don't include any discounts or tax. Approvals Kept are always calculated in Trade Value.
Many people make the mistake of adding the first totals for Balance Forward, Credit Offered and Approvals Kept, and then doing the rest of the calculations! Please don't as if you do your discount and sales tax totals will be wrong.
SALES TAX - Tax is always calculated on Approvals Kept minus any percentage discount that you are entitled to. However, you can't subtract a fixed amount discount before applying tax. For example, if you choose $20.00 worth of approvals with a 5% discount, you pay tax on $19.00. However, if you choose $20.00 worth of approvals with a $1.00 discount, you pay tax on the entire $20.00.
Ontario Residents have to pay 5% GST and 8% OST on all purchases. Residents of Newfoundland, Nova Scotia and New Brunswick have to add 13% HST. All other Canadians have to add 5% GST. Starting July 1, 2010, all Canadian customers will have to pay 13% HST. Foreign customers don't have to add any tax.
DISCOUNT - If you're entitled to a fixed discount of $1.00 or $2.00. Just write down the figure in the numbers column at this point, even if your discount exceeds the amount of approvals you kept. If you get a percentage discount, calculate the percentage on the amount you wrote under Approvals Kept. Percentage discounts are never applied to the Balance Forward.
BALANCE FORWARD shows how much I owe you or you owe me in Trade Credit after taking all completed trades, payments, earned discounts and approval returns into account (but not stamps sent for further credit!). An amount owing to me will always have a minus sign in front of it. Otherwise, it is a positive amount and is owing to you.
If the amount is negative and you didn't think you owed me money, there may be several explanations:
- You may have forgotten to enclose payment;
- You may have forgotten to include sales tax;
- You calculated a currency conversion incorrectly.
If the amount is positive and you didn't think I owed you money, there are also several explanations:
- You may have sent a cheque in U.S. dollars for an amount owing in Canadian dollars:
- You may have forgotten to take a discount to which you were entitled.
- You paid in cash or mint stamps and forgot to take a discount.
CREDIT OFFERED shows you how much I am willing to offer you for the stamps you sent for trade. If you don't trade, this will always be blank. The figure includes all uncompleted trades at the date the invoice was prepared, not just the most recent stamps sent.
BONUS CREDIT will only be offered if you sent stamps that I plan to sort in the next 12 months. The bonus is based on the assumption that you will accept the credit before I start sorting the stamps. As such, whether you get bonus credit or not depends on when you accept the credit. You might have mere days to do so, or up to 12 months, but if you miss the deadline (which changes with my sorting patterns) you don't get the credit, no ifs, ands or buts.
Now you can add up all the numbers and get your TOTAL. You see if you combine numbers before taking percentages into account, your math will be correct, but the Total won't be.
Q. OKAY, NOW I KNOW HOW MUCH IS OWING IN TRADING CREDIT. HOW DO I CONVERT THAT AMOUNT TO CASH OR MINT STAMPS?
A. The reporting sheet has three figures on it, the conversion rate to Canadian dollars (which will always be 0.80), the conversion rate to U.S. dollars, and a conversion rate to mint stamps in your own currency. Always multiply the TOTAL by the figure given to get the equivalent in cash or mint stamps.
The rates quoted are only good for payment on the current approval selection. I will not guarantee that rate for purchase of mint stamps or payment for other items. If you're paying in mint stamps for approvals, you can send as many copies of a stamp as you want without having to face a reduction. However, if you're sending mint stamps for trade credit, your offer will be reduced if you send more than 10 of a kind at once.
Q. SO HOW MUCH WILL YOU GIVE ME IN TRADE FOR MY STAMPS?
A. My Demand List contains "typical" trade rates for stamps from many areas and topics. In addition there are "quantity discounts" and "overstock discounts". The "typical" stamp is generally a used stamp from the area in quantities of up to ten of each. Better stamps (older, mint) get more trade credit, while less desirable stamps (CTO, common) get less trade credit.
Generally, when I sit down with your stamps, I do a quick calculation based on the stated catalogue value. First, I figure out the "base percentage" for the area (e.g., for mint Canada it's 70% and for used Canada it's generally 20%). Second, I apply a discount based on the quantity sent (e.g. for up to 10 of each there is no reduction, for 100 of the same stamp, I knock it down the scale by 10% after 10, 50, and 100 copies). Then, I take a look at areas where I'm overstocked and subtract a discount based on the immediate cash value of a box of stamps.
Let's take two examples
1. Far East Asia shows I have High Demand, Fair Supply and the base rate is 30%. That means I have a good demand for these stamps, but probably not enough in stock to keep up with the demand. I generally offer 30% of Scott's in trade value against catalogue value, I generally sell the material for 60% in trade value..
Therefore, if you sent me 10 copies of a used Japanese stamp which catalogues $1.00 each, you would get 3.00 in trade value.
2. Germany used shows I have Fair Demand, but Excellent Supply, and the base rate is 20%. I generally offer 20% of Scott's in trade value against catalogue value, I generally sell the material for 50% of Scott's in trade value. As such, I currently have enough used Germany in stock to keep all my customers happy for the time being.
Therefore if you sent me 200 used copies of a single with a catalogue value of $1.00 each, you would get a total of only $6.00 in trade credit for the whole lot as it gets the full reduction from a 20% base to the 3% level.
I have some exceptions to the general rule.
- I always give the prevailing currency rate plus 25% for mint postage in quantities up to 10. I generally give full face value for things like demonetized stamps and non-postage stamps like postage dues in quantities up to 10. I also give credit for the charity portion of semi-postal stamps. I even give face value for United Nations.
- For common stamps, I now pay by the 100g on a "market" basis. However, some stamps may be subject to a reduction or increase depending on their quality.
- For mint stamps that can't be used as postage, I generally can give about 30% of Scott's (or more), but expect less for heavy duplication or if I have a lot of those stamps already.
Q. WHY CAN'T YOU SEND ME APPROVALS IN MY COLLECTING AREA IMMEDIATELY?
A. I often run out of areas that are in demand, such as British Commonwealth, Mint Canada and Animal topicals. Furthermore, I have requests for many items that I rarely see, such as unusual Topicals or scarce countries. I either have to wait for these to turn up or go out and buy them. As it happens, I don't have the resources to buy all the requests for material I have all at once, so there is a waiting list for many items. The requests are filled in turn unless I generally am getting issues regularly from wholesale sources (like with British Commonwealth).
Q. CAN I PHOTOCOPY THE CONSIGNMENT SHEETS RATHER THAN PURCHASING THEM?
A. Yes. Please remember to copy them in the right colour, and try to copy them on North American letter size paper rather than European A4. The A4 sheets won't fold and fit into a standard envelope easily (an A4 sheet is almost precisely twice as long as the largest envelope I'm allowed to use without paying an "oversize" rate), so I usually have to use bigger envelopes.
Q. WHAT ABOUT CUSTOMS DUTY ON STAMPS?
A. Stamps generally travel duty free over borders. However, most countries that have a VAT will charge it on stamps arriving from outside the country. For customers outside of Canada, it is their responsibility to pay any local duties or taxes on the import of stamps sent from me. If you require a refund on tax paid on approvals that are returned, I will provide back-up documentation if you require it.
I do pay Canadian GST on stamps that are sent to me for credit, provided that the customs personnel properly charge it. This is not a common occurance, but rest assured your stamps will not be returned if they arrive with GST payable. Please value all shipments properly by their net market value, not their catalogue value as this does tend to greatly increase the GST payable. As a GST registrant, I get a credit for all GST payments.
If you are making a customs declaration on approvals being returned, please mark the declaration "Canadian Goods Being Returned". Otherwise, I will be charged GST to have my own stamps returned to me. If you are sending stamps for credit along with the approval returns, you may value them on the customs declaration and ignore the value of the approvals.
Q. WHY ARE SOME OF YOUR PRICES SO HIGH COMPARED TO THE SCOTT'S CATALOGUE?
A. That's a fair question. Part of the problem is market forces, and the rest is the exchange rate.
Second things first, you have to remember that the Canadian dollar is currently hovering at about 75% of the value of the American dollar, the dollar that's used for the Scott's catalogue. When I charge full Scott's in Canadian dollars, that means I'm only charging 75% of the Scott's U.S. catalogue value. Conversely, I have to charge about 130% of Scott's Catalogue Value in Canadian dollars to equal full Scott's value.
Second, Scott's is a guide, not a price list. No-one seems to complain when I charge 40% of Scott's for singles (or is it 28% in U.S. dollars, I can never remember). But when I charge 110% (the equivalent of 77%), which I do for in demand items (like Mint Canada), people politely decline. However, I often have to buy in U.S. dollars, and even mint Canada at face isn't cheap. The face value of Canadian stamps is about 75% of their catalogue value. While my mark-up may seem extreme, you have to account for a lot of things (like postage, stationary, interest, etc. etc.) to figure out my profit, which is less. Moreover, at 120% of Scott's, I sell all the mint modern Canada I get. It's only because I can find more supplies that I can continue to do so.
Scott's is way off on a number of countries. Europeans tend to judge by what they have to pay as a percent of Michel, Yvert or Stanley Gibbons, which are much much higher than Scott's. As such, Europeans often grab up what North Americans think is too expensive.
Where countries are accurate by Scott's they can often be way off when it comes to individual issues. The Canadian "Vehicles" issues, postally used, are tremendously expensive. At retail, those dealers that have them offer them for about $2 each for the top value, more than double the original face value. Scott's lists these stamps at about a third that. Therefore, this year, get ready to see lots of used Summit of the Americas (a 47 cent single), but very few of the upcoming Water Booklets (the asking price for a complete $7.50 face used set of last year's issue is double face).
If you have a want list, things often get worse. No matter what you collect, you can get most of what's on your list at about half Scott's. Therefore, when your want list starts to get short, you think you should pay half the price for those too. However, what you find is that the dealers who sold you the "easy" issues don't have the hard ones, and the dealers who have the hard ones charge more than Scott's for them. Sometimes a lot more! That's because specialized dealers know what the market for their stamps are and know how difficult and costly it will be to pick up another copy of what they want to sell you.
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