Contract Receivables, Net

3 Months Ended

Mar. 31, 2024

NOTE 3 – CONTRACT RECEIVABLES, NET

Contract receivables, net consisted of the following:


	March 31, 2024			December 31, 2023
Billed and billable	$	208,930		$	210,919
Allowance for expected credit losses		(6,684	)		(5,435	)
Contract receivables, net	$	202,246		$	205,484

The Company sells certain billed receivables in accordance with its Master Receivables Purchase Agreement (the “MRPA”) with MUFG Bank, Ltd. (“MUFG”). The receivables that are sold without recourse and where the Company does not retain any ongoing financial interest in the transferred receivables, other than providing servicing activities, are accounted for as sales under ASC 860, Transfers and Servicing (“ASC 860”). Consequently, these receivables are derecognized from the Company’s consolidated balance sheets at the date of the sale, and the cash received from MUFG is presented as part of cash flows from operating activities.

The following is the summary of the amount of ASC 860 eligible contract receivables sold to MUFG but not yet collected from the customers, as of March 31, 2024, and 2023, respectively:


	As of and for the Three Months Ended
	March 31, 2024			March 31, 2023
Beginning balance	$	21,302		$	3,819
Billed receivables sold during the period		133,398			28,635
Collections from customers during the period		(129,824	)		(17,044	)
Ending balance (1)	$	24,876		$	15,410

(1)

For the three months ended March 31, 2024 and 2023, the Company recorded net inflows of $3.6 million and $11.6 million, respectively, in its cash flows from operating activities from the sale of billed receivables. The ending balance of $24.9 million and $15.4 million represent billed receivables that were sold and derecognized by the Company, but have not yet been collected from customers as of March 31, 2024 and 2023.

The following is a reconciliation of cash collections and remittances to MUFG for the sale of billed receivables as of and for the three months ended March 31, 2024 and 2023:


	As of and for the Three Months Ended
	March 31, 2024			March 31, 2023
Beginning balance	$	21,796		$	6,164
Collections from customers during the period		129,824			17,044
Remittances to MUFG during the period		(125,879	)		(9,983	)
Ending balance (1)	$	25,741		$	13,225

(1)

For the three months ended March 31, 2024 and 2023, the Company recorded net inflows of $3.9 million and $7.1 million, respectively, in its cash flows from operating activities from the collection of billed receivables that were sold but not yet remitted to MUFG. The liability balances from March 31, 2024 and 2023 of $25.7 million and $13.2 million, respectively, are included as part of “Accrued expenses and other current liabilities” on the Company’s consolidated balance sheets.

The Company services the receivables sold by collecting cash and remitting it to MUFG. The related servicing fee received from MUFG was immaterial.

The Company also sold certain receivables to MUFG that did not qualify as sales under ASC 860. Consequently, the cash received from and remitted back to MUFG is presented as cash from financing activities within “Proceeds from other short-term borrowings” and “Repayments of other short-term borrowings” on the Company’s consolidated statements of cash flows. At March 31, 2024 and December 31, 2023, the amounts due to MUFG for cash collected and not yet remitted for receivables sold that did not qualify as sales under ASC 860 totaled $7.3 million and $6.9 million, respectively. These amounts are included as part of “Accrued expenses and other current liabilities” on the Company’s consolidated balance sheets.