Accounts Receivable and Allowance for Doubtful Accounts

6 Months Ended

Jun. 30, 2020

Allowance For Doubtful Accounts And Unbilled Services [Abstract]

Accounts Receivable and Allowance for Doubtful Accounts

Accounts Receivable and Allowance for Doubtful Accounts

Timing of revenue recognition often differs from the timing of billing to our customers. Generally, we transfer goods or services to a customer before the customer pays consideration or payment is due. If we have an unconditional right to invoice and receive payment for goods or services already provided, we record billed and unbilled receivables on our Condensed Consolidated Balance Sheets. Our contract terms generally include a requirement of payment within 30 days when no contingencies exist. Payment terms and conditions vary depending on the jurisdiction, market and type of service, and whether regulatory or other third-party approvals are required. At times, we may execute contracts in a form provided by customers that might include different payment terms and contracts may be negotiated at the client’s request.

We record adjustments to the allowance for doubtful accounts and unbilled services as a reduction in revenues when there are changes in estimates of fee reductions, such as those fee reductions imposed by bankruptcy courts and other regulatory institutions for both billed and unbilled accounts receivable. The allowance for doubtful accounts and unbilled services is also adjusted after the related work has been billed to the client and we determine that all or a portion of the accounts receivable is not expected to be collected.

Adjustments to the allowance for doubtful accounts and unbilled services related to expected credit losses are recorded to selling, general and administrative ("SG&A") expenses on the Condensed Consolidated Statements of Comprehensive Income as bad debt expense. Judgment is required to assess collectability and to adjust the allowance for doubtful accounts and unbilled services to the current estimate of expected credit losses. Our judgments consider customer specific risks such as the counterparty’s creditworthiness and historical collection experience. Other factors include but are not limited to current economic conditions and forward-looking estimates.

Our bad debt expense totaled $7.8 million and $11.6 million for the three and six months ended June 30, 2020, respectively, and $2.5 million and $6.3 million for the three and six months ended June 30, 2019, respectively. Our billed accounts receivables are written off when the potential for recovery is considered remote. Our write-offs totaled $7.5 million and $13.5 million for the three and six months ended June 30, 2020, respectively, and $3.4 million and $5.9 million for the three and six months ended June 30, 2019, respectively.