On4 Communications Inc (ONCI)

[Anvil]

Let’s use a hypothetical and assume the company actually has real sales.

Now they sell there app/product to an insurance company. They extend customary terms 2% net 10, due in 30 days.

Means the buyer gets a 2% discount if paid within 10 days of invoice date, but due in 30 days.

Now the insurance not only doesn’t take advantage of the discount, but hasn’t paid the invoice in 180 days.

The invoice is now 150 days past due or 5 months. At what point, does the seller start to reserve for the uncollectabilty of the A/R?

GAAP would say it should be accounted for as uncollectable once it gets past 90 days past due.