Allowance for Credit Losses

12 Months Ended

Dec. 31, 2020

Credit Loss [Abstract]

Allowance for Credit Losses

Allowance for Credit LossesThe allowance for credit losses on trade receivables is determined based on the newly adopted accounting standard that requires companies to estimate and recognize lifetime expected losses, rather than incurred losses, which results in the earlier recognition of credit losses even if the expected risk of credit loss is remote. Upon adoption of the new standard on January 1, 2020, we recognized a credit loss adjustment related to adoption of this accounting standard as a cumulative adjustment to the allowance for credit losses. As part of our analysis, we apply credit loss rates to outstanding receivables by aging category. For certain clients, we perform a quarterly credit review, which considers the client’s credit rating and financial position as well as our total credit loss exposure. Trade receivables are written off after all reasonable collection efforts have been exhausted.

Recoveries of trade receivables previously written off are recorded when received and are immaterial for the year ended December 31, 2020.

The following table presents the activity within the allowance for credit losses on trade receivables for the year ended December 31, 2020 (in thousands):

Allowance for credit losses, January 1, 2020 (1)	$	1,843
Current period provision	2,130
Write-offs charged against the allowance, net of recoveries of amounts previously written off	(1,216)
Allowance for credit losses, December 31, 2020	$	2,757

(1) As a result of the adoption of the new credit losses accounting standard, we recorded a cumulative effect adjustment to increase the allowance for credit losses of $0.3 million as of January 1, 2020.