Receivables

12 Months Ended

Jun. 30, 2024

NOTE 4: RECEIVABLES

Receivables, net of their related allowance, consist of the following:


(in 000s)
As of	June 30, 2024				June 30, 2023
	Short-term		Long-term		Short-term		Long-term
Loans to franchisees	$	5,917	$	16,498	$	6,344	$	19,206
Receivables for U.S. assisted and DIY tax preparation and related fees	18,440		5,332		11,061		6,824
H&R Block's Instant Refund® receivables	2,947		207		8,499		414
Emerald Advance®	17,867		21,360		10,834		7,089
Software receivables from retailers	1,029		—		1,650		—
Royalties and other receivables from franchisees	5,808		—		3,416		—
Wave payment processing receivables	1,078		—		964		—
Other	15,989		427		17,219		1,108


	$	69,075	$	43,824	$	59,987	$	34,641

Balances presented above as short-term are included in receivables, while the long-term portions are included in other noncurrent assets in the consolidated balance sheets.

Loans to Franchisees. Franchisee loan balances consist of term loans made primarily to finance the purchase of franchises and short-term lines of credit primarily for the purpose of funding seasonal working capital needs. As of June 30, 2024 and 2023 loans with a principal balance more than 90 days past due, or on non-accrual status, are not material.

The credit quality of these receivables is assessed at origination at an individual franchisee level. Payment history is monitored on a regular basis. Based upon our internal analysis and underwriting activities, we believe all loans to franchisees are of similar credit quality. Loans are evaluated for collectibility when they become delinquent or more than 90 days past due. Amounts deemed to be uncollectible are written off to bad debt expense and bad debt related to these loans has typically been immaterial. Additionally, the franchise territory serves as additional protection in the event a franchisee defaults on the loan, as we may revoke franchise rights, write off the remaining balance of the loan and refranchise the territory or begin operating it as company-owned.

H&R Block's Instant Refund®. Our Canadian operations advance refunds due to certain clients from the Canada Revenue Agency (CRA), in exchange for a fee. The total fee we charge for this service is mandated by legislation which is administered by the CRA. The client assigns to us the full amount of the tax refund to be issued by the CRA and the refund is then sent by the CRA directly to us. The amount we advance to clients under this program is the amount of their estimated refund, less our fees, any amounts expected to be withheld by the CRA for amounts the client may owe to government authorities and any amounts owed to us from prior years. The CRA system for tracking amounts due to various government agencies also indicates if the client has already filed a return, does not exist in CRA records, or is bankrupt. This serves to greatly reduce the amounts of uncollectible receivables and the risk of fraudulent returns. H&R Block's Instant Refund® amounts are generally received from the CRA within 60 days of filing the client's return, with the remaining balance collectible from the client.

Credit losses from these receivables are not specifically identified and charged off; instead we review the credit quality of these receivables on a pooled basis, segregated by the tax return year of origination with older years being deemed more unlikely to be repaid. At the end of the fiscal year, the outstanding balances on these receivables are evaluated based on collections received and expected collections over subsequent tax seasons. We establish an allowance for credit losses at an amount that we believe reflects the receivable at net realizable value. In December of each year we charge-off the receivables to an amount we believe represents the net realizable value.

Balances and amounts on non-accrual status, classified as impaired, or more than 60 days past due, by tax return year of origination, as of June 30, 2024 are as follows:


			(in 000s)

Tax return year of origination	Balance		More Than 60 Days Past Due
2023	$	2,589	$	1,832
2022 and prior	1,575		1,575

	4,164		$	3,407
Allowance	(1,010)
Net balance	$	3,154

H&R Block Emerald Advance®. Historically, Emerald Advance® lines of credit have been offered to clients in our offices from mid-November through mid-January. If the borrower met certain criteria as agreed in the loan terms, the line of credit could be utilized year-round (Revolving Loan). In fiscal year 2024, EAs were offered as term loans, and we discontinued EA lines of credit, including the Revolving Loans. EA lines of credit required an annual paydown on February 15, and any amounts unpaid were placed on non-accrual status as of March 1. EA term loans are interest bearing with principal and interest due in full on March 31, late fees assessed as of April 15, and any amounts unpaid are placed on non-accrual status as of April 30. EA term loans are offered by our bank partner. We purchase participation interests in their loans, as discussed further in note 10.

Credit losses from EAs are not specifically identified and charged off; instead we review the credit quality of our purchased participation interest in EA receivables on a pooled basis, which are segregated by the fiscal year of origination with older years being deemed more unlikely to be repaid. At the end of the fiscal year, the outstanding balances on these receivables are evaluated based on collections received and expected collections over subsequent years. We establish an allowance for credit losses at an amount that we believe reflects the receivable at net realizable value. Typically, in December of each year, we charge-off the receivables and the related allowance for EA lines of credit, excluding Revolving Loans, to an amount we believe represents the net realizable value. However, due to the discontinuation of EA lines of credit, we charged-off the receivables and the related allowance of EA lines of credit and Revolving Loans during the quarter ended September 30, 2023 to an amount that we believe represents net realizable value.

Balances and amounts on non-accrual status, classified as impaired, or more than 60 days past due, by fiscal year of origination as of June 30, 2024, are as follows:


			(in 000s)
Fiscal year of origination	Balance		Non-Accrual
2024	$	64,847	$	64,847
2023 and prior – Lines of credit and Revolving Loans	7,916		7,916

	72,763		$	72,763
Allowance	(33,536)
Net balance	$	39,227

Allowance for Credit Losses. Activity in the allowance for credit losses for EAs and all other short-term and long-term receivables for the years ended June 30, 2024, 2023 and 2022 is as follows:


(in 000s)
	EAs		All Other		Total
Balances as of July 1, 2021	$	27,704	$	60,272	$	87,976
Provision for credit losses	14,814		51,993		66,807
Charge-offs, recoveries and other	(16,377)		(61,139)		(77,516)
Balances as of June 30, 2022	26,141		51,126		77,267
Provision for credit losses	16,059		36,231		52,290
Charge-offs, recoveries and other	(14,814)		(52,249)		(67,063)
Balances as of June 30, 2023	27,386		35,108		62,494
Provision for credit losses	33,864		48,703		82,567
Charge-offs, recoveries and other	(27,714)		(38,484)		(66,198)
Balances as of June 30, 2024	$	33,536	$	45,327	$	78,863