What happens to payments subsequently received on accounts receivable that Ledgers has written off?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
Royalty receivables are stated at the amount management expects to collect from balances outstanding at year-end. The Company estimates its allowance for credit losses by considering a number of factors, including the length of time accounts receivable are due, previous loss history, the customer's current ability to pay its obligation and the condition of the general economy and the industry as a whole. The Company writes off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited against credit loss expense. Management has determined their is no allowance for credit losses related to royalty receivables as of December 31, 2024, 2023, and 2022.
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to Ledgers' 2025 Franchise Disclosure Document, the company writes off accounts receivable when they become uncollectible. Any payments that Ledgers subsequently receives on these previously written-off receivables are credited against credit loss expense.
For a prospective Ledgers franchisee, this accounting practice means that if a client's account is deemed uncollectible and written off, any later payments from that client will reduce the overall expenses related to credit losses. This can help offset some of the financial impact of uncollectible accounts.
This policy is a fairly standard accounting practice. It ensures that the company's financial statements accurately reflect the actual losses from uncollectible accounts and any recoveries made afterward. Franchisees should be aware of this policy as it affects how the company manages and reports its financial performance.