ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS:

Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses on existing accounts receivable. Management determines the allowance based on historical write-off experience within each of the Company’s regions. Management reviews material past due balances on a monthly basis. Account balances are charged off against the allowance when management determines it is probable that the receivable will not be recovered.

Accounts receivable consisted of the following at December 31, 2012 and 2011, which included $91.4 million, representing the net realizable value, of accounts receivable acquired in the RailAmerica acquisition (dollars in thousands):



	2012			2011
Accounts receivable—trade	$	214,163		$	130,486
Accounts receivable—grants	25,036			20,753
Accounts receivable—insurance	26,443			17,336
Total accounts receivable	265,642			168,575
Less: allowance for doubtful accounts	(2,693		)	(2,807		)
Accounts receivable, net	$	262,949		$	165,768

Activity in the Company’s allowance for doubtful accounts for the years ended December 31, 2012, 2011 and 2010 was as follows (dollars in thousands):



	2012			2011			2010
Balance, beginning of year	$	2,807		$	3,079		$	3,764
Provisions	977			1,055			1,799
Charges	(1,091		)	(1,327		)	(2,484		)
Balance, end of year	$	2,693		$	2,807		$	3,079

The Company’s business is subject to credit risk. There is a risk that a customer or counterparty will fail to meet its obligations when due. Customers and counterparties that owe the Company money have defaulted and may continue to default on their obligations to the Company due to bankruptcy, lack of liquidity, operational failure or other reasons. For interline traffic, one railroad typically invoices a customer on behalf of all railroads participating in the route. The invoicing railroad then pays the other railroads their portion of the total amount invoiced on a monthly basis. When the Company is the invoicing railroad, therefore, it is exposed to customer credit risk for the total amount invoiced and the Company is required to pay the other railroads participating in the route even if the Company is not paid by the customer. Although the Company has procedures for reviewing its receivables and credit exposures to specific customers and counterparties to address present credit concerns, default risk may arise from events or circumstances that are difficult to detect or foresee. Some of the Company’s risk management methods depend upon the evaluation of information regarding markets, customers or other matters that are not publicly available or otherwise accessible by the Company and this information may not, in all cases, be accurate, complete, up-to-date or properly evaluated. As a result, unexpected credit exposures could adversely affect the Company’s operating results, financial condition and liquidity