What was the provision for bad debt for 1 800 Packouts in 2023?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
| For the year ded December 31, 2022 | (in | r the period from April 9, 2021 ception) through cember 31, 2021 | ||
|---|---|---|---|---|
| Cash flows from operating activities: | ||||
| Net loss | $ | (10,438,670) | $ | (6,149,296) |
| Adjustments to reconcile net loss to net cash used in | ||||
| operating activities: | ||||
| Amortization of goodwill and intangible assets | 10,568,470 | 2,543,033 | ||
| Depreciation of fixed assets | 29,104 | 5,840 | ||
| Amortization of deferred financing costs | 213,726 | 38,998 | ||
| Amortization of operating lease right-of-use asset | 108,253 | - | ||
| Gain on sale of unconsolidated subsidiary Loss on disposal of fixed assets | (1,025,637) 43,615 | - | ||
| Provision for bad debt | 43,615 25,950 | 32,710 | ||
| Decrease (increase) in: | 23,330 | 32,710 |
Source: Item 23 — RECEIPT (FDD pages 67–238)
What This Means (2025 FDD)
According to the 2025 FDD, 1 800 Packouts' provision for bad debt in 2023 was $23,330. This figure represents an estimate of the amount of accounts receivable that the company does not expect to collect. It is an expense recognized on the income statement and a contra-asset account that reduces the carrying value of accounts receivable on the balance sheet.
For a prospective franchisee, understanding the provision for bad debt is important because it reflects the credit risk associated with 1 800 Packouts' customers. A higher provision for bad debt may indicate that the company serves customers with a higher risk of default or that its collection efforts are not as effective. This could impact a franchisee's own accounts receivable and cash flow.
Franchisees should inquire about 1 800 Packouts' credit policies, collection procedures, and historical bad debt experience to assess the potential impact on their business. Understanding these factors can help franchisees manage their own credit risk and make informed decisions about extending credit to customers. It's also worth noting that bad debt expenses can fluctuate depending on economic conditions and the specific customer base served by the franchise.