Accounts Receivable

3 Months Ended

Mar. 31, 2020



5.	Accounts Receivable

Accounts receivable consists of amounts billed to and due from customers across a wide range of industries and other third parties. The Company often extends short-term credit to cardholders and pays the merchant for the purchase price, less the fees it retains and records as revenue. The Company subsequently collects the total purchase price from the cardholder. In general, the Company’s trade receivables provide for payment terms of 30 days or less. Receivables not paid in full by payment due dates as stated within the terms of the agreement are generally considered past due and subject to late fees and interest based upon the outstanding receivables balance. The Company discontinues late fee and interest income accruals on outstanding receivables once customers are 90 and 120 days past the invoice due date, respectively. Payments received subsequent to discontinuing late fee and interest income accruals are first applied to outstanding late fees and interest, and the Company resumes accruing interest and late fee income as earned on future receivables balances.

The Company extends revolving credit to certain small fleets. These accounts are also subject to late fees and balances that are not paid in full are subject to interest charges based on the revolving balance. The Company had approximately $63.8 million and $62.4 million in receivables with revolving credit balances as of March 31, 2020 and December 31, 2019, respectively.

Allowance for Accounts Receivable

Receivables are generally written off when they are 150 days past due or upon declaration of bankruptcy of the customer, subject to local regulatory restrictions. The allowance for accounts receivable consists of reserves for both credit and fraud losses. The reserve for credit losses is primarily calculated using historical loss-rates applied at the portfolio level and specific customer balance collectability based on a review of past due accounts receivable balances, changes in payment patterns, and other customer-specific available information. Management further takes into account qualitative factors, such as leading economic and market indicator trends, to the extent they significantly deviate from historical loss-rate trends when determining the need for additional qualitative reserves. The reserve for fraud losses is determined by monitoring pending fraud cases, customer-identified fraudulent activity and unconfirmed suspicious activity in order to make judgments as to probable fraud losses.

Accounts receivable are evaluated for impairment on a pooling basis based on similar risk characteristics including industry of the borrower, historical or expected credit loss patterns, risk ratings or classification, and geographic location. See Note 1, Basis of Presentation, for more information.

The following table presents changes in the accounts receivable allowances by portfolio segment:



	Three Months Ended March 31, 2020												Three Months Ended March 31, 2019
(In thousands)	Fleet Solutions			Travel and Corporate Solutions			Health and Employee Benefit Solutions			Total			Total
Balance, prior to Topic 326 adoption	$	40,620		$	3,578		$	8,076		$	52,274		$	46,948
Impact of Topic 326 adoption¹	9,390			2,187			—			11,577			—
Balance, beginning of period	$	50,010		$	5,765		$	8,076		$	63,851		$	46,948
Provision for credit losses¹	20,607			13,264			116			33,987			17,791
Charges to other accounts²	5,520			—			—			5,520			4,533
Charge-offs	(24,635		)	(2,359		)	—			(26,994		)	(24,800		)
Recoveries of amounts previously charged-off	1,810			27			—			1,837			2,215
Currency translation	(135		)	(96		)	(2,544		)	(2,775		)	55
Balance, end of period	$	53,177		$	16,601		$	5,648		$	75,426		$	46,742

¹ The provision is comprised of estimated credit losses based on the Company’s loss-rate experience and effective January 1, 2020, also includes adjustments required for forecasted credit loss information. The provision for credit losses for the three months ended March 31, 2020, includes additional estimates of expected credit losses over the contractual life of our receivables as the markets in which the Company operates are experiencing a decline, primarily due to the impact of COVID-19. The provision for credit losses reported within this table also includes the provision for fraud losses. See Note 1, Basis of Presentation, for further details of the adoption of Topic 326 on a modified retrospective basis.

²The Company earns revenue by assessing monthly finance fees on accounts with overdue balances. These fees are recognized as revenue at the time the fees are assessed. The finance fee is calculated using the greater of a minimum charge or a stated late fee rate multiplied by the outstanding balance that is subject to a late fee charge. On occasion, these fees are waived to maintain relationship goodwill. Charges to other accounts represents the offset against the late fee revenue recognized when the Company establishes a reserve for such waived amounts.

Concentration of Credit Risk

The receivables portfolio consists of a large group of homogeneous smaller balances across a wide range of industries, which are collectively evaluated for impairment. No one customer receivable balance represented 10 percent or more of the outstanding receivables balance at March 31, 2020 or December 31, 2019. The following table presents the outstanding balance of trade accounts receivable that are less than 30 and 60 days past due, in each case, as a percentage of total trade accounts receivable:



Delinquency Status	March 31, 2020		December 31, 2019
29 days or less past due	96	%	96	%
59 days or less past due	97	%	97	%