What was the allowance for bad debts deducted from accounts receivable for Bumper Man in 2022?

According to Bumper Man's 2025 Franchise Disclosure Document, the allowance for bad debts deducted from accounts receivable was $120,787 as of December 31, 2022. This figure represents the company's estimate of accounts receivable that may not be collectible. This allowance is a contra-asset account, reducing the gross accounts receivable to its net realizable value, which is the amount Bumper Man realistically expects to collect. The allowance for bad debt is based on historical experience and a review of the current status of existing receivables.

For a prospective Bumper Man franchisee, understanding the allowance for bad debts is important because it reflects the credit risk associated with the company's receivables. A higher allowance could indicate a more conservative approach to revenue recognition or potentially higher credit risk within Bumper Man's customer base. Conversely, a lower allowance might suggest a more optimistic view of collectibility or a lower risk profile.

The FDD also provides the allowance for bad debts for 2023 ($129,645) and 2024 ($159,129), allowing a franchisee to see how this estimate has changed over recent years. Reviewing these figures over time can provide insights into the stability and predictability of Bumper Man's revenue streams and the effectiveness of its credit and collection policies. It is important to note that the actual amount of bad debts may differ from these estimates, as they are based on management's judgment and assumptions.