How does Brightstar Care handle accounts receivable that are deemed uncollectible?
Brightstar_Care Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company grants credit to its customers in the normal course of business. Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company may create payment plans for customers with significant past-due balances. The Company maintains an allowance for credit losses to cover potential credit losses relating to its accounts receivable. The allowance is based on the Company's historical collection experience, as well as an analysis of specific past-due accounts and forward-looking information. All accounts or portions thereof deemed to be uncollectible by management are written off in the period in which that determination is made. Balances outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 117)
What This Means (2025 FDD)
According to Brightstar Care's 2025 Franchise Disclosure Document, the company addresses uncollectible accounts receivable by writing them off. Brightstar Care management determines which accounts or portions of accounts are uncollectible and writes them off in the period that determination is made.
Prior to writing off an account, Brightstar Care uses reasonable collection efforts to recover the outstanding balance. If these efforts are unsuccessful, the outstanding balances are written off through a charge to the valuation allowance and a credit to accounts receivable.
This approach aligns with standard accounting practices, where businesses recognize potential losses from uncollectible accounts and adjust their financial statements accordingly. For a prospective Brightstar Care franchisee, this means that while they grant credit to customers, there is a system in place to account for and manage potential losses from unpaid invoices, which helps in maintaining a more accurate financial picture of their business.