Note 5 - Accounts Receivable

3 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Trade and Financing Receivables [Text Block]

5. ACCOUNTS RECEIVABLE

The Company’s products may be sold under subscription agreements with unencumbered title passing to the customer at the end of the lease term, which is generally 36 months. These arrangements are considered to be sales-type leases, where the present value of all cash flows to be received under the agreement is recognized upon shipment to the customer as lease revenue.

A financing receivable is a contractual right to receive money, on demand or on fixed or determinable dates, that is recognized as an asset on the Company's unaudited condensed consolidated balance sheets. The Company's financing receivables, consisting of sales-type leases, totaled $32,809 and $40,377 as of  March 31, 2023 and December 31, 2022, respectively, and are included in accounts receivable and long-term receivables on the unaudited condensed consolidated balance sheets. The Company evaluates the credit quality of an obligor at lease inception and monitors credit quality over the term of the underlying transactions.

The Company performed an assessment of the allowance for expected credit losses as of March 31, 2023 and December 31, 2022. Based upon such assessment, the Company recorded an allowance for expected credit losses totaling $14,207 and $13,619 as of March 31, 2023, and December 31, 2022, respectively. The balance as of March 31, 2023 includes $0.5 million due to the adoption of revised guidance of Financial Instruments – Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments.

A summary of the Company’s accounts receivables is presented below:

	March 31,			December 31,
	2023			2022
Gross accounts receivable	$	68,679		$	70,925
Unearned income		(2,994	)		(3,354	)
Allowance for expected credit losses		(14,207	)		(13,619	)
	$	51,478		$	53,952
Reported as:
Current trade receivables	$	39,147		$	37,262
Current unearned interest income		(2,222	)		(2,397	)
Long-term trade receivables		15,325			20,044
Long-term unearned interest income		(772	)		(957	)
	$	51,478		$	53,952

Current subscription agreements are reported as part of accounts receivable. The following are the contractual commitments, net of allowance for expected credit losses, to be received by the Company over the next 5 years:

			March 31,
	Total		2023		2024		2025		2026		2027
Current financing receivables, net of allowance of $6,013	$	17,484	$	17,484	$	—	$	—	$	—	$	—
Long-term financing receivables, net of allowance of $743		15,325	$	—	$	12,707	$	2,599	$	19	$	—
	$	32,809	$	17,484	$	12,707	$	2,599	$	19	$	—

Accounts receivable do not bear interest and are typically not collateralized. The Company performs ongoing credit evaluations of its customers’ financial condition and maintains an allowance for expected credit losses. Uncollectible accounts are charged to expense when deemed uncollectible, and accounts receivable are presented net of an allowance for expected credit losses. Accounts receivable are deemed past due in accordance with the contractual terms of the agreement. Actual losses may differ from the Company’s estimates and could be material to its unaudited condensed consolidated financial position, results of operations and cash flows.

The allowance for expected credit losses consisted of the following activity:

Balance at January 1, 2022	$	11,997
Write-offs		(5,715	)
Provision		7,337
Balance at December 31, 2022		13,619
Write-offs		(30	)
Provision		618
Balance at March 31, 2023	$	14,207