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Allowance for uncollectible AR amounts
January 2, 2023
Q. The total percent to reserve based on the "Allowance for Uncollectible Accounts Receivables," model from the University of Illinois is 35 percent. Is the amount and percent appropriate?
A.
(Answered by the IOFM Advisory Panel)
We have a very mature AFDA model which is driven by the credit score of the customer. The credit score is similar to a Moodys or S&P rating, but our methodology is geared to our risk tolerance as a company and the industry we are in. We do not allocate reserves to…
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