For Engel & Volkers, how are uncollectible accounts written off?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
Accounts receivable are stated at the amount the Company expects to collect. The Company maintains allowances for doubtful accounts and changes in the allowance are included in selling, general and administrative expenses in the consolidated statements of comprehensive income (loss). The Company assesses collectibility by reviewing accounts receivable on a collective basis where similar risk characteristics exist. In determining the amount of the allowance for doubtful accounts, management considers historical collectibility and makes judgments about the creditworthiness of the pool of customers based on credit evaluations. Current market conditions and reasonable and supportable forecasts of future economic conditions adjust the historical losses to determine the appropriate allowance for doubtful accounts. Uncollectible accounts are written off when all collection efforts have been exhausted.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 88)
What This Means (2025 FDD)
According to Engel & Volkers' 2025 Franchise Disclosure Document, the company writes off uncollectible accounts when all collection efforts have been exhausted. Engel & Volkers maintains allowances for doubtful accounts, and changes to these allowances are included in selling, general, and administrative expenses within the consolidated statements of comprehensive income (loss).
To determine the allowance for doubtful accounts, Engel & Volkers management considers historical collectibility and makes judgments about the creditworthiness of its customer pool, based on credit evaluations. Current market conditions and forecasts of future economic conditions are also factored in to adjust historical losses and determine the appropriate allowance for doubtful accounts.
For a prospective Engel & Volkers franchisee, this means that the company has a process in place to account for and manage the risk of uncollectible accounts. This process includes assessing the creditworthiness of customers and making informed judgments about the potential for losses. Understanding this process can help franchisees better manage their own financial risks and plan for potential losses.