PRENEED CEMETERY RECEIVABLES

Preneed sales of cemetery interment rights and related products and services are usually financed through interest-bearing installment sales contracts, generally with terms of up to five years, with such interest income reflected as Preneed cemetery finance charges. In substantially all cases, we receive an initial down payment at the time the contract is signed.

Our cemetery financed receivables at December 31, 2017 and September 30, 2018 are as follows (in thousands):



	December 31, 2017		September 30, 2018
Accounts receivable, including unearned finance charges and allowance for contract cancellations of $2,779 and $2,425, respectively	$	11,843	$	11,537	⁽¹⁾
Preneed receivables, including unearned finance charges and allowance for contract cancellations of $4,922 and $4,169, respectively	28,631		25,774		⁽²⁾
Preneed cemetery financed receivables	$	40,474	$	37,311




(1)	In accordance with Topic 606, $1.4 million of cemetery accounts receivable has been reclassified to reduce deferred preneed cemetery revenue at September 30, 2018.
(2)	In accordance with Topic 606, $3.1 million of preneed cemetery receivables has been reclassified to reduce deferred preneed cemetery revenue at September 30, 2018.

The unearned finance charges associated with these receivables were $5.7 million and $4.7 million at December 31, 2017 and September 30, 2018, respectively.

We determine an allowance for customer cancellations and refunds on contracts in which revenue has been recognized on sales of cemetery interment rights. We have a collections policy where past due notifications are sent to the customer beginning at 15 days past due and periodically thereafter until the contract is cancelled or payment is received. We reserve 100% of the receivables on contracts in which the revenue has been recognized and payments are 90 days past due or more, which was approximately 4.9% of the total receivables on recognized sales at September 30, 2018. An allowance is recorded at the date that the contract is executed and periodically adjusted thereafter based upon actual collection experience at the business level.

For the nine months ended September 30, 2018, the change in the allowance for contract cancellations was as follows (in thousands):



	September 30, 2018
Beginning balance	$	2,019
Write-offs and cancellations	(1,024		)
Provision	870
Ending balance	$	1,865

The aging of preneed cemetery financed receivables as of September 30, 2018 was as follows (in thousands):



	31-60 Past Due		61-90 Past Due		91-120 Past Due		>120 Past Due		Total Past Due		Current		Total Financed Receivables
Recognized revenue	$	686	$	382	$	124	$	1,216	$	2,408	$	25,152	$	27,560
Deferred revenue	209		122		38		304		673		9,078		9,751
Total	$	895	$	504	$	162	$	1,520	$	3,081	$	34,230	$	37,311