For Buildingstars, how did the allowance for credit losses change from the beginning to the end of 2024?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
based on management's evaluation of the anticipated impact on the balance of current economic conditions, changes in the character and size of the balance, past and expected future loss experience and other pertinent factors.
Changes in the allowance for credit losses are as follows:
| As of and for the Years Ended December 31, | ||||||
|---|---|---|---|---|---|---|
| 2024 | 2023 | 2022 | ||||
| Balance at beginning of year |
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 34–43)
What This Means (2025 FDD)
According to Buildingstars's 2025 Franchise Disclosure Document, the allowance for credit losses increased from the beginning to the end of 2024. The balance at the beginning of 2024 was $125,222, while the balance at the end of 2024 was $139,937. This represents a net increase of $14,715 in the allowance for credit losses during the year.
Several factors contributed to this change. During 2024, Buildingstars wrote off $28,490 in amounts, reflecting uncollectible accounts. However, the company also made a provision for credit losses of $43,205. This provision is an accounting estimate of potential future losses from accounts receivable, which increased the allowance. There were no amounts recovered during 2024.
For a prospective Buildingstars franchisee, understanding these changes in credit losses is important. It provides insight into how Buildingstars manages its accounts receivable and the potential risk of uncollectible accounts. Franchisees should inquire about Buildingstars's credit policies, the criteria for determining the allowance for credit losses, and the historical trends in write-offs and recoveries to assess the financial health and stability of the franchise system.