XML 23 R11.htm IDEA: XBRL DOCUMENT v3.24.1.u1
Receivables and Allowance for Doubtful Accounts
3 Months Ended
Mar. 31, 2024
Receivables and Allowance for Doubtful Accounts [Abstract]  
Receivables and Allowance for Doubtful Accounts Receivables and Allowance for Doubtful Accounts
Installment sales receivables consist primarily of receivables due from customers for the sale of merchandise in our retail installment stores. Installment sales receivables associated with the sale of merchandise at our Get It Now and Home Choice stores generally consist of the sales price of the merchandise purchased and any additional fees for optional services the customer has chosen, less the customer’s down payment. No interest is accrued and interest income is recognized each time a customer makes a payment, generally on a monthly basis. Interest payments received on installment agreements for each of the three months ended March 31, 2024 and 2023 was $2.7 million and $3.0 million, respectively.
Trade and notes receivables consist of amounts due from our lease-to-own customers for lease renewal payments and past due uncollected lease payments, adjusted for the probability of collection based on our assessment of historical collection rates and length of time the receivable is past due; amounts owed from our franchisees for inventory purchases, earned royalties and other obligations; and other corporate related receivables. Credit is extended to franchisees based on an evaluation of each franchisee’s financial condition and collateral is generally not required. Trade receivables are generally due within 30 days.
Receivables consist of the following:
(in thousands)March 31, 2024December 31, 2023
Installment sales receivables$60,404 $62,901 
Trade and notes receivables(1)
62,509 62,358 
Total receivables122,913 125,259 
Less allowance for doubtful accounts(2)
(14,500)(14,254)
Total receivables, net of allowance for doubtful accounts$108,413 $111,005 
(1) Trade and notes receivables includes accrued revenue, adjusted for the probability of collection, related to our lease-to-own agreements of $35.5 million and $36.8 million at March 31, 2024 and December 31, 2023, respectively.
(2) Lease receivables are accrued on a net basis, adjusted for the probability of collection based on our assessment of historical collection rates, as described above. Therefore, we do not maintain a separate allowance for doubtful accounts related to our lease receivables.
We have established an allowance for doubtful accounts for our installment notes receivable. Our policy for determining the allowance is primarily based on historical loss experience, as well as the results of management’s review and analysis of the payment and collection of the installment notes receivable within the previous year. We believe our allowance is adequate to absorb all expected losses. Our policy is to charge off installment notes receivable that are 120 days or more past due. Charge-offs are applied as a reduction to the allowance for doubtful accounts and any recoveries of previously charged off balances are recognized as contra-bad debt expense in our Condensed Consolidated Statements of Operations.
The allowance for our Franchising trade and notes receivables is determined by considering a number of factors, including the length of time receivables are past due, previous loss history, the franchisee’s current ability to pay its obligation, and the condition of the general economy and the industry as a whole. Trade receivables that are more than 90 days past due are either written-off or fully reserved in our allowance for doubtful accounts. Payments subsequently received on such receivables are recognized as contra-bad debt expense in our Condensed Consolidated Statements of Operations.
The allowance for doubtful accounts related to Franchising trade and notes receivables was $1.5 million and $1.2 million at March 31, 2024 and December 31, 2023, respectively, and the allowance for doubtful accounts related to installment sales receivables was $13.0 million at both March 31, 2024 and December 31, 2023.
Changes in our allowance for doubtful accounts are as follows:
(in thousands)March 31, 2024
Beginning allowance for doubtful accounts$14,254 
Bad debt expense(1)
5,532 
Accounts written off, net of recoveries(5,286)
 Ending allowance for doubtful accounts$14,500 
(1) Uncollectible installment payments, franchisee obligations, and other corporate receivables are recognized in non-labor operating expenses in our condensed consolidated financial statements.