What was the provision for bad debts for Precision Door Service in 2024?
Precision_Door_Service Franchise · 2025 FDDAnswer from 2025 FDD Document
end of period | 21,242 | | 25,314 | | Allowance for credit losses | (465) | | (563) | | Net trade notes receivable, at end of period | $ 20,777 | $ | 24,751 |
Notes to Combined Financial Statements ($000's)
| For the years ended December 31, | 2024 | 2023 |
|---|
Source: Item 21 — Financial Statements (FDD page 91)
What This Means (2025 FDD)
According to Precision Door Service's 2025 Franchise Disclosure Document, the provision for bad debts in 2024 was $1,630. This figure represents an estimate of the amount of accounts receivable that Precision Door Service believes will be uncollectible. It is an accounting practice to recognize potential losses from customers who may not pay their invoices.
For a prospective franchisee, understanding the provision for bad debts can offer insights into the creditworthiness of Precision Door Service's customer base and the effectiveness of its collection efforts. A higher provision might suggest a riskier customer base or less effective collection processes, while a lower provision could indicate the opposite. Franchisees should consider this in the context of their own local market conditions and customer demographics.
It's important to note that this is just an estimate, and the actual amount of bad debt may differ. The difference between the provision and the actual write-offs is reflected in the "Net write-offs" line, which was $(1,727) for 2024. This means that Precision Door Service actually wrote off $1,727 in bad debts during the year, which was more than the initial provision of $1,630. The allowance for bad debts at the end of the period was $465.