How does C12 Group handle accounts receivable that become uncollectible?
C12_Group Franchise · 2025 FDDAnswer from 2025 FDD Document
Accounts receivable are financial instruments which potentially subject the Company to credit risk. The Company considers accounts receivable to be fully collectible; accordingly, no allowance for doubtful accounts is recorded. When amounts become uncollectible, the Company aims to pursue reconciliation Biblically, and after periodic review, they will be charged to operations when that determination is made. Management's policy is to grant unsecured credit to its customers.
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to C12 Group's 2025 Franchise Disclosure Document, the company considers accounts receivable to be fully collectible and therefore does not record an allowance for doubtful accounts. This indicates C12 Group believes it will receive payment for all outstanding invoices.
When amounts owed to C12 Group become uncollectible, the company's policy is to first pursue reconciliation in a manner consistent with Biblical principles. This suggests an emphasis on communication, understanding, and potentially forgiveness or negotiation with the debtor.
After a period of review, if the amounts are still deemed uncollectible, C12 Group will charge these amounts to operations. This means the uncollectible debt will be recognized as an expense, reducing the company's profit for that period. This approach reflects a conservative accounting practice where losses are recognized when they are deemed probable, even if the exact timing or amount is uncertain.
For a prospective franchisee, this policy suggests that C12 Group prioritizes ethical and relational approaches to debt collection before writing off uncollectible amounts. However, franchisees should be aware that the ultimate impact of uncollectible accounts will be reflected in the company's overall financial performance, which could affect the value of their franchise.