Accounting and Finance in Tariff Economy (Furniture and Appliances)

Accounting and Finance in a 2025 Tariff Economy

Executive summary: Tariffs are a front-end COGS increase (10% reciprocal; 50% steel content) while 2025 tax changes (e.g., §199A at 20% permanent; bonus depreciation) are back-end relief. Finance must recognize duty in inventory, stabilize cash with a 13-week forecast, leverage consumer and inventory financing, and execute GAAP-compliant closes. STORIS supports AP/AR/GL, financial statements, installment/revolving receivables, and credit/collections, with landed-cost flows into inventory and COGS.

1) Policy & macro context

·         Tariffs: Reciprocal tariff baseline +10%; Section 232 steel/aluminum 50% (steel content basis); selected Section 301 (China) exclusions extended through Aug 31, 2025; China reciprocal rate temporarily held at 10% through Nov 10, 2025.

·         Tax: §199A (20%) permanent for pass‑throughs; bonus depreciation available on qualifying capex (cash‑flow aid, not a per‑unit cost offset).

·         Macro: July 2025 CPI—headline 2.7% y/y; household furnishings and operations +3.4%; furniture and bedding +3.2%; appliances −0.3% (category‑level averages; subcomponents vary).

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2) Accounting treatments and controls (GAAP)

·         Inventory and COGS: Capitalize duty and import fees into inventory; expense through COGS upon sale; reconcile estimated vs actual landed cost at receipt.

·         Cutoff and liabilities: Ensure in-transit recognition; maintain duties payable accounts; variance accounts for duty/freight differences.

·         Revenue and financing: Apply ASC 606 to performance obligations; recognize interest income (installment/revolving) per policy.

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3) Cash-flow strategy

·         13-week cash forecast: Map receipts with duty-paid dates; layer promos, lender fees, and seasonality.

·         Consumer financing: Increase penetration (multi-lender/waterfall) to smooth receipts; monitor true cost of credit.

·         Inventory financing: Use ABL/lines for tariff-heavy peaks; align covenants to seasonality; use dynamic discounting for early-pay yield when cash allows.

·         Capex/expensing: Apply bonus depreciation to WMS/routing/automation assets.

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4) How STORIS supports Finance under tariffs

·         AP/AR/GL & Financials: Duty as a landed-cost add-on flows to inventory valuation and COGS; financials reflect true cost.

·         Installment/Revolving receivables: Credit applications, terms, aging, collections, write-off controls.

·         Credit & collections: DSO dashboards; auto-dunning; dispute workflows.

·         Close & BI: Contribution after duty; P-V-M bridges; checklists/reconciliations.

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5) Plays by business size

Small retailers
Lock duty capitalization; start a simple 13-week cash; tighten collections SLAs; leverage §199A planning.

Mid-market chains
Expand multi-lender consumer financing; model ABL/seasonal lines; implement dynamic discounting.

Large enterprises
Optimize capital structure for tariff cycles; scenario models for duty spikes; automate close and BI feeds.

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6) 30-60-90 day Finance plan

·         Days 0–30: Validate landed-cost flows; stand up 13-week cash; map duties payable and variance accounts.

·         Days 31–60: Integrate financing dashboards; renegotiate AP terms; model inventory/ABL capacity.

·         Days 61–90: Automate close checklists; publish board KPIs (contribution after duty; CCC; covenant headroom).

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7) KPIs & governance

1. Contribution after shipping & duty
2. Cash conversion cycle (CCC) — DIO, DSO, DPO
3. Cash coverage (weeks) & covenant headroom
4. DSO/Bad debt % (installment/revolving)
5. AP capture rate and discount capture

Cadence: Weekly cash; monthly board pack; quarterly policy review vs tariff windows.

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FAQ

Sources (primary)

White House / Federal Register; USTR; BLS CPI & Employment (July 2025); IRS/legislative summaries; STORIS Finance documentation.

See: Merchandising in a 2025 Tariff Economy for the first of these comprehensive guides.

This accounting and finance blueprint represents the second in a series of comprehensive guides STORIS has committed to publishing over the next three months. The company plans to release tactical resources covering every area of retail operations—still to include: Inventory Control, Sales, Customer Service, IT Infrastructure, Business Intelligence, and eCommerce—all provided free to the industry.

STORIS Supports Your Finances in Tariff Economy

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