Accounts Receivable

12 Months Ended

Dec. 31, 2020


6.			Accounts Receivable

Accounts receivable consists of amounts billed to and due from customers across a wide range of industries and other third parties. The Company often extends short-term credit to cardholders and pays the merchant for the purchase price, less the fees it retains and records as revenue. The Company subsequently collects the total purchase price from the cardholder. In general, the Company’s trade receivables provide for payment terms of 30 days or less. Receivables not paid in full by payment due dates as stated within the terms of the agreement are generally considered past due and subject to late fees and interest based upon the outstanding receivables balance. The Company discontinues late fee and interest income accruals on outstanding receivables once customers are 90 and 120 days past the invoice due date, respectively. Payments received subsequent to discontinuing late fee and interest income accruals are first applied to outstanding late fees and interest, and the Company resumes accruing interest and late fee income as earned on future receivables balances.

The Company extends revolving credit to certain small fleets. These accounts are also subject to late fees and balances that are not paid in full are subject to interest charges based on the revolving balance. The Company had approximately $60.2 million and $62.4 million in receivables with revolving credit balances as of December 31, 2020 and 2019, respectively.

Allowance for Accounts Receivable

Receivables are generally written off when they are 180 days past due or upon declaration of bankruptcy of the customer, subject to local regulatory restrictions. The allowance for accounts receivable consists of reserves for both credit and fraud losses. The reserve for credit losses is primarily calculated using historical loss-rates applied at the portfolio level and specific customer balance collectability based on a review of past due accounts receivable balances, changes in payment patterns, and other customer-specific available information. Management further takes into account qualitative factors, such as leading economic and market indicator trends, to the extent they deviate from historical loss-rate trends when determining the need for additional qualitative reserves. The reserve for fraud losses is determined by monitoring pending fraud cases, customer-identified fraudulent activity and unconfirmed suspicious activity in order to make judgments as to probable fraud losses.

Accounts receivable are evaluated for impairment on a pooling basis based on similar risk characteristics including industry of the borrower, historical or expected credit loss patterns, risk ratings or classification, and geographic location. See Note 1, Basis of Presentation and Summary of Significant Accounting Policies, for more information.

The following tables present changes in the accounts receivable allowances by portfolio segment:


	Year ended December 31,
	2020								2019		2018
(In thousands)	Fleet Solutions		Travel and Corporate Solutions		Health and Employee Benefit Solutions		Total		Total		Total
Balance, prior to Topic 326 adoption	$	40,620	$	3,578	$	8,076	$	52,274	$	46,948	$	33,387
Impact of Topic 326 adoption1	9,390		2,187		—		11,577		—		—
Balance, beginning of year	$	50,010	$	5,765	$	8,076	$	63,851	$	46,948	$	33,387
Provision for credit losses1	56,620		21,610		213		78,443		65,664		66,482
Other2	19,019		—		—		19,019		22,746		19,067
Charge-offs3	(88,091)		(18,787)		(5,419)		(112,297)		(92,638)		(78,323)
Recoveries of amounts previously charged-off	10,421		175		17		10,613		9,781		6,854
Currency translation	1,288		847		(2,617)		(482)		(227)		(519)
Balance, end of year	$	49,267	$	9,610	$	270	$	59,147	$	52,274	$	46,948

1 The provision is comprised of estimated credit losses based on the Company’s loss-rate experience and effective January 1, 2020, also includes adjustments required for forecasted credit loss information. The provision for credit losses for the year ended December 31, 2020, includes estimates of expected credit losses over the contractual life of receivables as the markets in which the Company operates are experiencing a decline, primarily due to the impact of COVID-19. The provision for credit losses reported within this table also includes the provision for fraud losses.

2 Consists primarily of charges to other accounts. The Company earns revenue by assessing monthly finance fees on accounts with overdue balances. These fees are recognized as revenue at the time the fees are assessed. The finance fee is calculated using the greater of a minimum charge or a stated late fee rate multiplied by the outstanding balance that is subject to a late fee charge. On occasion, these fees are waived to maintain relationship goodwill. Charges to other accounts represents the offset against the late fee revenue recognized when the Company establishes a reserve for such waived amounts.

3 For the year ended December 31, 2020, the majority of the Travel and Corporate Solutions segment charge-offs is associated with the sale of the WEX Latin America business. Refer to Note 5, Sale of Subsidiary, for further information.

Concentration of Credit Risk

The receivables portfolio consists of a large group of homogeneous smaller balances across a wide range of industries, which are collectively evaluated for impairment. No one customer receivable balance represented 10 percent or more of the outstanding receivables balance at December 31, 2020 or 2019. The following table presents the outstanding balance of trade accounts receivable that are less than 30 and 60 days past due, shown in each case as a percentage of total trade accounts receivable:


	December 31,
Delinquency Status	2020		2019
29 days or less past due	97	%	96	%
59 days or less past due	98	%	97	%