How does Focalpoint Coaching determine the allowance for doubtful accounts regarding trade receivables?
Focalpoint_Coaching Franchise · 2025 FDDAnswer from 2025 FDD Document
Trade receivables:
The Company has multiple classes of receivables based on the specific revenue components. Invoices are typically due upon execution of franchise or area representative agreements.
Management monitors the credit quality of its accounts receivable by reviewing an aging of customer invoices. Invoices are considered past due if a scheduled payment is not received within contractually agreed terms. Management may also review a variety of other relevant qualitative information such as collection experience, economic conditions, and specific customer financial conditions to evaluate credit risk in recording the allowance for doubtful accounts.
Collectability of trade receivables is reviewed on an ongoing basis for impairment. An allowance for doubtful accounts is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of receivables. Receivables are written off only after management has exhausted all collection efforts.
An allowance for doubtful accounts has been provided based on specific identifiable customer accounts considered not deemed to be collectible. Management believes that all other trade receivables are fully collectible based upon the Company's history of collections.
Source: Item 21 — Financial Statements (FDD page 56)
What This Means (2025 FDD)
According to Focalpoint Coaching's 2025 Franchise Disclosure Document, the company uses a multi-faceted approach to determine the allowance for doubtful accounts regarding trade receivables. Invoices are typically due upon the execution of franchise or area representative agreements. Management actively monitors the credit quality of its accounts receivable by regularly reviewing an aging schedule of customer invoices. An invoice is considered past due if payment is not received within the contractually agreed-upon terms.
In addition to the aging of invoices, Focalpoint Coaching's management may also consider other qualitative factors to evaluate credit risk. These factors include the company's collection experience, prevailing economic conditions, and the specific financial conditions of its customers. This comprehensive review helps in assessing the likelihood of collecting outstanding amounts.
Focalpoint Coaching reviews the collectability of trade receivables on an ongoing basis to identify any impairment. An allowance for doubtful accounts is established when there is objective evidence suggesting that the company will not be able to collect all amounts due according to the original terms of the receivables. Receivables are only written off after management has exhausted all collection efforts. The allowance for doubtful accounts is based on specific, identifiable customer accounts that are considered not collectible. However, management believes that all other trade receivables are fully collectible based on the company's history of collections.