As of December 31, 2024, what was the allowance for doubtful accounts for 360 Painting?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
period adjustments) are classified as financing activities; any excess is classified operating activities. The Company did not pay any contingent consideration during the years ended December 31, 2024 or 2023.
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management determines the allowance for doubtful accounts based on its assessment of the current status of individual accounts. Uncollectible accounts are written off against the allowance when collection of the amounts
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)
What This Means (2025 FDD)
According to 360 Painting's 2025 Franchise Disclosure Document, the allowance for doubtful accounts as of December 31, 2024, was $140,839. This allowance represents the company's estimate of the amount of accounts receivable that may not be collectible. Management determines this allowance based on their assessment of the current status of individual accounts.
For a prospective 360 Painting franchisee, this figure provides insight into the company's financial health and its approach to managing credit risk. A higher allowance for doubtful accounts could indicate a more conservative approach to revenue recognition or potential challenges in collecting outstanding payments from customers. The FDD also states that uncollectible accounts are written off against this allowance when collection appears doubtful.
In 2024, 360 Painting wrote off $522,191 in uncollectible accounts. Reviewing the trend of write-offs and the allowance for doubtful accounts over several years, as presented in the FDD, can give potential franchisees a better understanding of the credit risk associated with 360 Painting's business model and its effectiveness in managing accounts receivable. Comparing these figures to industry benchmarks can also be a valuable exercise during due diligence.