Credit Losses

3 Months Ended

Mar. 31, 2020

Credit Loss [Abstract]

Credit Losses

Credit LossesWe are exposed to credit losses primarily through our sales of packaging solutions to third-party customers. Our customer's (the counterparty) ability to pay is assessed through our internal credit review processes. Based on the dollar value of credit extended, we assess our customers' credit by reviewing the total expected receivable exposure, expected timing of

payments and the customer’s established credit rating. In determining customer creditworthiness, we assess our customers' credit utilizing different resources including external credit validations and/or our own assessment through analysis of the customers' financial statements and review of trade/bank references. We also consider contract terms and conditions, country and political risk, and the customer's mix of products purchased (for example: equipment vs. consumables) in our evaluation. A credit limit is established for each customer based on the outcome of this review. Credit limits are reviewed at least annually for existing customers.

We monitor our ongoing credit exposure through active review of counterparty balances against contract terms and due dates. Our activities are performed at both the country/entity level as well as the regional level. Monitoring and review activities include account reconciliations, analysis of aged receivables, resolution status review for disputed amounts, and identification and remediation of counter-parties experiencing payment issues. Our management reviews current credit exposure at least quarterly based on level of risk and amount of exposure.

When necessary, we utilize collection agencies and legal counsel to pursue recovery of defaulted receivables. Trade receivable balances are written-off when deemed to be uncollectible and after collection efforts have been exhausted. Our historical credit losses have been less than 0.1% of net trade sales over the last three years.

Our allowance for credit losses on trade receivables is assessed at the end of each quarter based on an analysis of historical losses and our assessment of future expected losses. All customer accounts are actively managed and no losses in excess of our allowance are expected as of March 31, 2020. We are monitoring the impact that COVID-19 may have on outstanding receivables. While it is difficult to assess the future exposure as a direct result of the economic conditions arising from COVID-19, we have not yet seen significant deterioration in aging or collections and have not increased our allowance for credit losses on trade receivables as a result of COVID-19. Our overall balance of allowance for credit losses on trade receivables has increased by $0.2 million.

At March 31, 2020, our trade receivable balance was $491.5 million, net of allowances of $8.4 million. At December 31, 2019, our allowance for credit losses on trade receivable (allowance for bad debt) was $8.2 million. For the three months ended March 31, 2020, $1.1 million was charged to our allowance for credit losses related to our trade receivables.