How often does Ben Jerrys review its allowance for credit loss accounts?
Ben_Jerrys Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company maintains an allowance for credit losses for estimated losses inherent in its accounts receivable portfolio. The estimate of expected credit losses is based on the Company's historical loss experience, adjusted for current and reasonable and supportable forecasts of economic conditions and other pertinent factors affecting the Company's customers such as known credit risk or industry trends. The Company reviews its allowance for credit loss accounts monthly. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its franchisees.
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 89–133)
What This Means (2025 FDD)
According to Ben Jerrys's 2025 Franchise Disclosure Document, the company reviews its allowance for credit loss accounts on a monthly basis. This allowance is maintained for estimated losses inherent in the accounts receivable portfolio. The estimate is based on the company's historical loss experience, adjusted for current and reasonable forecasts of economic conditions and other factors affecting customers, such as credit risk or industry trends.
Past due balances exceeding 90 days and surpassing a specified amount are individually reviewed for collectability. Account balances are charged off against the allowance once all collection means have been exhausted and the potential for recovery is considered remote. This process ensures that Ben Jerrys is proactive in managing and accounting for potential credit losses.
For a prospective franchisee, this indicates that Ben Jerrys has a structured and regular process for assessing and managing credit risks associated with accounts receivable. This can provide some assurance that the company is diligent in its financial reporting and risk management practices. Understanding the specific criteria used for determining the allowance for credit losses and the historical loss experience could be beneficial for a franchisee to assess the financial health and stability of Ben Jerrys.