What was the provision for credit losses for Amerispec Inspection Services in 2024?
Amerispec_Inspection_Services Franchise · 2025 FDDAnswer from 2025 FDD Document
| The Company’s notes payable consisted of the following as of December 31: | ||
|---|---|---|
| 2024 | 2023 |
TCB Services HoldCo, LLC and Subsidiaries Consolidated Statements of Cash Flows Year Ended December 31, 2024 and Period from March 31, 2023 to December 31, 2023
| 2024 | 2023 As Restated | |
|---|---|---|
| Operating Activities | ||
| Net loss | $ (5,984,064) | $ (3,176,320) |
| Adjustments to reconcile net loss to net cash used in | ||
| operating activities | ||
| Depreciation and amortization | 2,361,412 | 1,615,291 |
| Provision for credit losses | 356,794 | 4,167 |
| Share-based compensation | 96,094 | 51,165 |
| Deferred financing costs amortization | 22,347 | - |
| Paid-in-kind interest | 30,232 | - |
| Non-cash operating lease expense | 430,924 | - |
| Changes in assets and liabilities | 156,840 | (973,448) |
| Accounts receivable | ||
| Prepaid expenses and other current assets | (125,439) | (190,170) |
| Deferred tax assets | (94,570) | - |
| Accounts payable | 336,952 | 451,075 |
| Accrued expenses and other payables | (19,372) | 402,500 |
| Deferred revenue | 51,577 | - |
| Lease liabilities | (406,968) | - |
| Net Cash Used in Operating Activities | (2,787,241) | (1,815,740) |
| Investing Activities | ||
| Acquisitions | (3,098,429) | (25,646,102) |
| Purchases of property and equipment | (470,883) | - |
| Capitalized software development costs | (24,225) | - |
| Payments received on notes receivable | 119,485 | 116,016 |
| Net Cash Used in Investing Activities | (3,474,052) | (25,530,086) |
| Financing Activities | ||
| Borrowings on notes payable | 5,250,000 | - |
| Proceeds on revolving line of credit, net | 500,000 | - |
| Financing costs | (316,732) | - |
| Members' contributions | 750,000 | 29,200,000 |
| Net Cash |
Source: Item 23 — Receipts (FDD pages 47–172)
What This Means (2025 FDD)
According to Amerispec Inspection Services' 2025 Franchise Disclosure Document, the provision for credit losses in 2024 was $356,794. This figure represents an estimate of the amount of accounts receivable that Amerispec Inspection Services does not expect to collect. In 2023 As Restated, the provision for credit losses was significantly lower, at $4,167.
A provision for credit losses is a standard accounting practice where a company sets aside an amount to cover potential losses from customers who may not pay their invoices. The substantial increase in this provision from 2023 to 2024 could indicate a change in Amerispec Inspection Services' customer base, credit policies, or economic conditions affecting their customers' ability to pay. It could also reflect a more conservative approach to estimating potential losses.
For a prospective franchisee, this information is relevant because it provides insight into the financial health and risk management practices of Amerispec Inspection Services. While franchisees do not directly bear these losses, a significant increase in uncollectible accounts could impact the overall financial stability of the franchisor, which could indirectly affect the support and services provided to franchisees. It would be prudent for a potential franchisee to inquire about the reasons for this increase and the measures Amerispec Inspection Services is taking to manage credit risk.