Accounts Receivable, Net

12 Months Ended

Dec. 31, 2023

Accounts receivable, net is summarized as follows (in millions):


	December 31,
	2023		2022
Trade receivables	$	147.2	$	144.4
Business tax credits, including VAT	10.2		5.5
Hedge contracts receivable	2.6		3.5
Other receivables	19.7		26.8
Less allowance for doubtful accounts and sales discounts	(3.2)		(2.0)
Total accounts receivable, net	$	176.5	$	178.2

The following is the activity related to the allowance for doubtful accounts (in millions):


	Years Ended December 31,
	2023		2022		2021
Beginning balance	$	2.0	$	0.8	$	0.5

Bad debt expense	1.0		1.6		0.3
Recoveries	—		(0.1)		(0.1)
Write-offs and discounts	0.2		(0.3)		0.1

Ending balance	$	3.2	$	2.0	$	0.8

Transfer of Receivables

On December 23, 2022, the Company entered into an accounts receivable sales agreement (the “Receivables Sales Agreement”) to sell certain trade receivables arising from revenue transactions of the Company's U.S. subsidiaries on a revolving basis. The maximum funding commitment of the Receivables Sales Agreement is $175.0 million. The agreement has an initial term of three years and can be renewed. Upon entry into the Receivables Sales Agreement, the Company sold $126.0 million of trade receivables.

In connection with the Receivables Sales Agreement, the Company formed a separate bankruptcy-remote special purpose entity (“SPE”), which is a wholly owned and controlled subsidiary. The Company continuously transfers receivables to the SPE and the SPE transfers ownership and control of certain receivables that meet certain qualifying conditions to a third-party financial institution in exchange for cash. Certain receivables are held by the SPE and are pledged to secure the collectability of the sold receivables.

On October 20, 2023, we entered into Amendment No. 1 to the Receivables Sales Agreement (the Receivables Sales Agreement Amendment”). The Receivables Sales Agreement Amendment amends the original Receivables Sales Agreement (the “Amended Receivables Sales Agreement”) to, among other things, (i) reflect the repurchase by the Company from the SPE of all of its accounts receivable and certain related assets previously sold by Company to the SPE (collectively, “Receivables”), (ii) reflect that the Company is no longer an originator of Receivables under the Company’s accounts receivable securitization facility, but remains the servicer and performance guarantor, (iii) reflect the Company’s assignment of 100% of the ownership interests in the SPE to Neenah, such that Neenah will now be able to contribute Receivables to the SPE on a go-forward basis, and (iv) update the maximum Net Debt to EBITDA Ratio to match the level set forth in the Company’s First Lien Credit Agreement as in effect on the date of such amendment.

The amount of receivables pledged as collateral as of December 31, 2023 and 2022 was $27.9 million and $34.2 million respectively. The SPE incurs fees due to the third-party financial institution related to accounts receivable sales transactions.

The Company has continuing involvement with the receivables transferred by the SPE to the third-party financial institution by providing collection services.

The Company also participates in uncommitted trade accounts receivable sales programs ("Reverse Receivables Programs") under which certain trade receivables are sold, without recourse, to a third-party financial institution in exchange for cash. The Company does not retain any interest in or continuing involvement with the invoices after they are sold. The invoices are sold at face value, less a transaction fee.

The Company accounts for transactions under the Amended Receivables Sales Agreement and Reverse Receivables Programs as sales of financial assets, with the associated receivables derecognized from the Company’s Consolidated Balance Sheets. Total fees related to the Receivables Sales Agreement and Reverse Receivables Programs are considered to be a loss on the sale of financial assets. Total fees for the year ended December 31, 2023 were $4.5 million and are recorded in General expense in the Consolidated Statements of Income (Loss). Total fees for the year ended December 31, 2022 were immaterial. Continuous cash activity related to the Amended Receivables Sales Agreement and Reverse Receivables Programs is reflected in cash from operating activities in the Consolidated Statement of Cash Flows.

The following table summarizes the activity under the Amended Receivables Sales Agreement and Reverse Receivables Program (in millions):


	Years Ended December 31
	2023		2022
Trade accounts receivable sold to financial institutions	$	1,096.1	$	203.4
Cash proceeds from financial institutions	1,094.8		201.8