Under what condition does Focalpoint Coaching establish an allowance for doubtful accounts?

According to Focalpoint Coaching's 2025 Franchise Disclosure Document, an allowance for doubtful accounts is established when there is objective evidence that Focalpoint Coaching will not be able to collect all amounts due according to the original terms of receivables. This means that Focalpoint Coaching recognizes that some customers may not pay their full outstanding balances. This allowance is a contra-asset account that reduces the total amount of accounts receivable reported on the balance sheet, reflecting a more realistic estimate of what the company expects to collect.

Management actively 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. This ongoing review helps Focalpoint Coaching to identify and assess potential credit risks associated with its receivables.

Receivables are written off only after management has exhausted all collection efforts. This indicates that Focalpoint Coaching makes reasonable attempts to collect outstanding debts before classifying them as uncollectible. The allowance for doubtful accounts is 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. This suggests that Focalpoint Coaching uses a specific identification method to determine the allowance, focusing on individual customer accounts with collection issues.