ALLOWANCE FOR CREDIT LOSSES ON TRADE RECEIVABLES

12 Months Ended

Jul. 03, 2021

Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]

ALLOWANCE FOR CREDIT LOSSES ON TRADE RECEIVABLES

ALLOWANCE FOR CREDIT LOSSES ON TRADE RECEIVABLESSysco determines the past due status of trade receivables based on contractual terms with each customer and evaluates the collectability of accounts receivable to determine an appropriate allowance for credit losses on trade receivables. To calculate an allowance for credit losses, the company estimates uncollectible amounts based on historical loss experience, including those experienced during times of local and regional disasters, current conditions and collection rates, and expectations regarding future losses. The COVID-19 pandemic is more widespread and longer in duration than historical disasters that have impacted Sysco’s business, and it is possible that actual uncollectible amounts will differ from historical results.

In the third and fourth quarters of fiscal 2020, the company experienced an increase in past due receivables and recognized additional bad debt charges on its trade receivables that were outstanding at the time the pandemic caused closures among our customers in mid-March 2020. These receivables were all created in fiscal 2020 and are referred to as pre-pandemic receivables. In fiscal 2021, conditions improved and the company’s results reflect a benefit on the reduction of its allowance for pre-pandemic receivable balances, as the company has made progress on obtaining timely payments from its customers. Sysco continues to work with its customers to collect past due balances, including through the use of payment plans. The company has also discontinued charging interest on past due balances. As a result, the company’s allowance for credit losses has been reduced accordingly, resulting in a $184.8 million benefit on pre-pandemic receivables. Below is a summary of the activity in the allowance for credit losses on trade receivables for fiscal 2021:

A summary of the activity in the allowance for credit losses on trade receivables appears below:

	2021		2020		2019
	(In thousands)
Balance at beginning of period	$	334,810	$	28,176	$	25,768
Adjustments to costs and expenses	(152,740)		404,158		62,946
Customer accounts written off, net of recoveries	(45,230)		(83,915)		(64,219)
Other adjustments	(19,145)		(13,609)		3,681
Balance at end of period	$	117,695	$	334,810	$	28,176