Regulations on risk management of accounts receivable and provision for bad debts
In view of the fact that the company's current policies on risk management of accounts receivable and provision for bad debts can no longer meet the requirements of the new accounting standards and the actual situation of the company, the company, in accordance with the relevant provisions of the accounting standards for business enterprises and the rules for the preparation of information disclosure of companies offering securities to the public No. 15 - General Provisions on Financial Reporting (revised in 2014), The criteria for determining the importance characteristics of receivables, the evaluation and impairment test of risks at all levels, and the recognition methods and withdrawal standards of bad debt reserves are clarified, so as to make the relevant accounting policies of the company more operational.
1、 Regulations on risk management of accounts receivable
1. Scope of accounts receivable: accounts receivable include accounts receivable, other accounts receivable and commercial acceptance bills. For prepayment, if there is conclusive evidence that it does not conform to the nature of prepayment, or the purchased goods can no longer be received due to the bankruptcy and cancellation of the supplier, the book balance shall be transferred to other receivables and included in the scope of receivables risk management.
If there is conclusive evidence that bills receivable that are not due can not be recovered or are unlikely to be recovered, the book balance will be transferred to accounts receivable and included in the scope of accounts receivable risk management.
2. Risk classification and recognition standard of receivables:
(1) Receivables with significant single amount: according to the actual situation of the company, the customer receivables of related parties not included in the scope of consolidated financial statements with receivables of more than 30 million yuan (including 30 million yuan) at the end of the period are determined as receivables with significant single amount.
(2) Accounts receivable with insignificant single amount but high risk after combination according to credit risk characteristics: refers to the accounts receivable whose single amount at the end of the period does not meet the above (1) standard, but the aging of the last current capital of the accounts receivable is more than 3 years, or it is proved that the debtor has been insolvent, on the verge of bankruptcy, debt restructuring, merger and acquisition, etc. according to the information collected by the company, The customer receivables of related parties not included in the scope of consolidated financial statements that affect the debtor's normal performance of credit obligations are recognized as receivables with high portfolio risk.
(3) Other insignificant receivables: refer to the current customers involved in the receivables with significant single amount or insignificant single amount but with high risk after being combined according to the credit risk characteristics, except for the above two items (1) and (2). The subordinate management department is responsible for collecting the customer's financial status, capital flow and credit certification data, Including customer delivery, market sales, mortgage guarantee and other documents, which shall be submitted to the company's finance department in time. The finance department is responsible for regularly reviewing the customer's data and assessing the risk level of the customer's current account.
The risk assessment of receivables with high risk after combination according to credit risk characteristics is divided into three levels:
Primary standard:
The risk level is low, and there is still a cooperative relationship between the customer and the company, but the number of cooperation is small, the time interval is long, or the deposit and quality assurance deposit that are still within the contract period are receivables that can be recovered according to the provisions of the contract.
Secondary standard:
The risk level is medium. The customer and the company have stopped cooperation, and some current accounts have not been settled. Due to a long time, the other party refuses or delays to pay the payment for goods, but the payment is still being collected. The recovery speed is slow, and the bad debt may be more than 50%.
Level III standard:
The risk level is very high. Customers are insolvent, have difficulty in capital turnover, are on the verge of bankruptcy, debt restructuring and other conditions that affect the normal performance of credit, and the possibility of bad debt is more than 90%.
2、 Bad debt provision policy
On the basis of withdrawing bad debt reserves according to the percentage method of accounts receivable balance, the company separately withdraws bad debt reserves for individual accounts receivable according to the degree of risk.
1. Receivables with significant single amount
(1) For receivables with significant single amount and objective evidence indicating impairment, bad debt reserves shall be withdrawn according to the difference between the present value of future cash flow and its book value.
(2) For receivables with significant single amount and not impaired after independent test, bad debt reserves shall be withdrawn according to the balance of receivables combined with aging combination.
2. Accounts receivable with insignificant single amount but high risk after combination according to credit risk characteristics
(1) For the combined accounts receivable whose risk level is level I standard, the bad debt provision shall be withdrawn according to the combination of accounts receivable balance and aging.
(2) For the combined receivables whose risk level is level II standard, the bad debt provision shall be withdrawn according to 50% of the balance of receivables.
(3) For the combined receivables whose risk level is level III standard, the bad debt provision shall be withdrawn according to 100% of the balance of receivables.
3. Other insignificant receivables
(1) For the receivables of related parties included in the scope of consolidated financial statements, no provision for bad debts is made.
(2) No provision for bad debts will be made for accounts receivable from government departments and withholding agents (such as tax, customs, zhongdeng company, etc.).
(3) For other insignificant receivables other than (1) above, bad debt reserves shall be withdrawn according to the balance of receivables combined with aging combination.
4. Withdrawal period of bad debt reserves
The aging division of the company's receivables is based on the accounting year. When determining the aging of receivables that span the accounting year, first identify which receivables are received one by one. If it is really impossible to identify, determine the aging according to the principle of first occurrence, first recovery. The company adopts the annual accrual method for the provision of bad debt reserves, At the end of each year, the bad debt provision is withdrawn after the analysis of year-end receivables.
Bad debt recognition policies and write off procedures
1. Recognition criteria for bad debts:
(1) Due to the bankruptcy or death of the debtor, the accounts receivable that cannot be recovered after being paid off with its bankruptcy property or legacy;
(2) The debtor fails to perform its repayment obligations within 3 years and there is conclusive evidence that it cannot be recovered.
2. The accounting method of bad debt loss adopts allowance method to calculate bad debt loss
3. Write off procedure:
(1) Relevant business departments shall submit the bad debt write off report to the finance department in writing after obtaining the evidence that the customer meets the bad debt recognition standards;
(2) The financial department, together with the legal department (or the Department in charge of legal affairs), shall review the bad debt write off report and give comments. After the financial director signs and agrees, it shall be submitted to the general manager for approval;
(3) After the bad debt write off report is reviewed and approved by the board of directors of the company, the finance department shall deal with the accounts related to bad debt write off;
(4) The finance department shall record the written off bad debts of customers for future reference, and the legal department (or the Department in charge of legal affairs) shall continue to take necessary measures to recover them.
4、 The system will be implemented from January 1, 2021 and is applicable to the company and all subsidiaries within the scope of consolidated financial statements.
Zhuhai Enpower Electric Co.Ltd(300681) board of directors January 25, 2022
