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FINANCING RECEIVABLES | 12 Months Ended
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Dec. 31, 2023
Receivables [Abstract] |
FINANCING RECEIVABLES | FINANCING RECEIVABLES Short-Term Payment Plans The Company provides fixed monthly payment arrangements ("short-term payment plans") over terms ranging from three to twelve months for certain add-on software installations. As a practical expedient, we do not adjust the amount of consideration recognized as revenue for the financing component as unearned income when we expect payment within one year or less. These receivables, included in the current portion of financing receivables, were comprised of the following on December 31, 2023 and 2022:
(In thousands) | 2023 |  | 2022
Short-term payment plans, gross | $ | 788 |  |  | $ | 330 |
Less: allowance for credit losses | (39) |  |  | (16) |
Short-term payment plans, net | $ | 749 |  |  | $ | 314 |
Long-Term Financing Arrangements Additionally, the Company provides financing for purchases of its information and patient care systems to certain healthcare providers under long-term financing arrangements expiring in various years through 2028. Under long-term financing arrangements, the transaction price is adjusted by a discount rate that reflects market conditions and that would be used for a separate financing transaction between the Company and licensee at contract inception, and takes into account the credit characteristics of the licensee and market interest rates as of the date of the agreement. As such, the amount of fixed fee revenue recognized at the beginning of the license term will be reduced by the calculated financing component. As payments are received from the licensee, the Company recognizes a portion of the financing component as interest income, reported as other income in the consolidated statements of operations. These receivables typically have terms from two to seven years. The decrease in long-term financing arrangement balances during 2023 is primarily a result of the continued evolution of customer licensing preferences. Although the overwhelming majority of our historical EHR installations prior to 2019 were made under a perpetual license model, the dramatic shift in customer preferences to a SaaS license model began during 2019 with 49% of the year's new acute care EHR installations being performed in a SaaS model, compared to only 12% in 2018. The shift in customer preference toward a SaaS model has since continued, with SaaS installations representing approximately 63% of new acute care EHR installations in 2021, 100% in 2022 and 100% in 2023. Due to the nature of the revenue recognition requirements for SaaS arrangements coupled with recurring monthly payments, these arrangements do not give rise to long-term financing arrangements. The components of these receivables were as follows on December 31, 2023 and 2022:
(In thousands) | 2023 |  | 2022
Long-term financing arrangements, gross | $ | 5,212 |  |  | $ | 8,683 |
Less: allowance for credit losses | (377) |  |  | (533) |
Less: unearned income | (361) |  |  | (678) |
Long-term financing arrangements, net | $ | 4,474 |  |  | $ | 7,472 |
Future minimum payments to be received subsequent to December 31, 2023 are as follows:
(In thousands) |
2024 | $ | 3,157 |
2025 | 1,793 |
2026 | 178 |
2027 | 40 |
2028 | 36 |
Thereafter | 8 |
Total minimum payments to be received | 5,212 |
Less: allowance for credit losses | (377) |
Less: unearned income | (361) |
Receivables, net | $ | 4,474 |
Credit Quality of Financing Receivables and Allowance for Credit Losses The following table is a roll-forward of the allowance for financing credit losses for the years ended December 31, 2023 and 2022:
(In thousands) | Beginning Balance |  | Provision |  | Charge-offs |  | Recoveries |  | Ending Balance
December 31, 2023 | $ | 549 |  |  | $ | (133) |  |  | $ | — |  |  | $ | — |  |  | $ | 416 |
December 31, 2022 | $ | 722 |  |  | $ | (211) |  |  | $ | 38 |  |  | $ | — |  |  | $ | 549 |
The Company’s financing receivables are comprised of a single portfolio segment, as the balances are all derived from short-term payment plan arrangements and long-term financing arrangements within our target market of community hospitals. The Company evaluates the credit quality of its financing receivables based on a combination of factors, including, but not limited to, customer collection experience, economic conditions, the customer’s financial condition, and known risk characteristics impacting the respective customer base of community hospitals, the most notable of which relate to enacted and potential changes in Medicare and Medicaid reimbursement rates as community hospitals typically generate a significant portion of their revenues and related cash flows from beneficiaries of these programs. In addition to specific account identification, the Company utilizes historical collection experience to establish the allowance for credit losses. Financing receivables are written off only after the Company has exhausted all collection efforts. Customer payments are considered past due if a scheduled payment is not received within contractually agreed upon terms. To facilitate customer collection and credit monitoring efforts, financing receivable amounts are invoiced and reclassified to trade accounts receivable when they become due, with all invoiced amounts placed on nonaccrual status. As a result, all past due amounts related to the Company’s financing receivables are included in trade accounts receivable in the accompanying consolidated balance sheets. The following is an analysis of the age of financing receivables amounts (excluding short-term payment plans) that have been reclassified to trade accounts receivable and were past due as of December 31, 2023 and 2022:
(In thousands) | 1 to 90 Days Past Due |  | 91 to 180 Days Past Due |  | 181 + Days Past Due |  | Total Past Due
December 31, 2023 | $ | 857 |  |  | $ | 231 |  |  | $ | 323 |  |  | $ | 1,411 |
December 31, 2022 | $ | 1,086 |  |  | $ | 278 |  |  | $ | 283 |  |  | $ | 1,647 |
From time to time, the Company may agree to alternative payment terms outside of the terms of the original financing receivable agreement due to customer difficulties in achieving the original terms. In general, such alternative payment arrangements do not result in a re-aging of the related receivables. Rather, payments pursuant to any alternative payment arrangements are applied to the already outstanding invoices beginning with the oldest outstanding invoices as the payments are received. Because amounts are reclassified to trade accounts receivable when they become due, there are no past due amounts included within the financing receivables or the financing receivables, current portion, net amounts in the accompanying consolidated balance sheets. The Company utilizes an aging of trade accounts receivable as the primary credit quality indicator for its financing receivables, which is facilitated by the reclassification of customer payment amounts to trade accounts receivable when they become due. The table below categorizes customer financing receivable balances (excluding short term payment plans), none of which are considered past due, based on the age of the oldest payment outstanding that has been reclassified to trade accounts receivable:
(In thousands) | December 31, 2023 |  | December 31, 2022
Stratification of uninvoiced client financing receivables based on aging of related trade accounts receivable: |  |  |
Uninvoiced client financing receivables related to trade accounts receivable that are 1 to 90 Days Past Due | $ | 1,068 |  |  | $ | 3,876 |
Uninvoiced client financing receivables related to trade accounts receivable that are 91 to 180 Days Past Due | 1,720 |  |  | 1,369 |
Uninvoiced client financing receivables related to trade accounts receivable that are 181+ Days Past Due | 965 |  |  | 1,894 |
Total uninvoiced client financing receivables balances of clients with a trade accounts receivable | $ | 3,753 |  |  | $ | 7,139 |
Total uninvoiced client financing receivables of clients with no related trade accounts receivable | 1,098 |  |  | 866 |
Total financing receivables with contractual maturities of one year or less | 788 |  |  | 330 |
Less: allowance for credit losses | (416) |  |  | (549) |
Total financing receivables | $ | 5,223 |  |  | $ | 7,786 |

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