6. PRENEED CEMETERY RECEIVABLES

Preneed sales of cemetery interment rights and related products and services are usually financed through interest-bearing installment sales contracts, generally with terms of up to five years with such interest income reflected as Preneed Cemetery Finance Charges. In substantially all cases, we receive an initial down payment at the time the contract is signed. The interest rates generally range between 9.5% and 12%. Occasionally, we have offered zero percent interest financing to promote sales for limited-time offers. At September 30, 2011, the balance of preneed receivables for cemetery interment rights and for merchandise and services was $18.3 million and $9.6 million, respectively, of which $8.2 million is presented in Accounts Receivable and $19.7 million is presented in Preneed Receivables.

The Company determines an allowance for customer cancellations and refunds on contracts in which revenue has been recognized on sales of cemetery interment rights. We reserve 100% of the receivables on contracts in which the revenue has been recognized and payments are 120 days past due or more, which was approximately 1.9% of the total receivables on recognized sales at September 30, 2011. An allowance is recorded at the date that the contract is executed and periodically adjusted thereafter based upon actual collection experience at the business level. For the nine months ended September 30, 2011, changes in the allowance for contract cancellations was as follows (in thousands):


	September 30, 2011
Beginning balance	$	1,488
Write-offs and cancellations		—
Recoveries		—
Provision		187

Ending balance	$	1,301

The Company has a collections policy where past due notifications are sent to the customer beginning at 15 days past due and thereafter periodically until 90 days past due. Any items on contracts that are past due 120 days are sent to a third-party collector.

The aging of past due financing receivables as of September 30, 2011 is as follows (in thousands):


	31-60		61-90		91-120		>120						Total Financing
	Past Due		Past Due		Past Due		Past Due		Total Past Due		Current		Receivables
Recognized revenue	$	713	$	421	$	204	$	379	$	1,717	$	17,801	$	19,518
Deferred revenue		290		168		84		164		706		7,715		8,421

Total contracts	$	1,003	$	589	$	288	$	543	$	2,423	$	25,516	$	27,939