ACCOUNTS RECEIVABLE AND SIGNIFICANT CLIENTS

12 Months Ended

Dec. 31, 2022

ACCOUNTS RECEIVABLE AND SIGNIFICANT CLIENTS [Abstract]

ACCOUNTS RECEIVABLE AND SIGNIFICANT CLIENTS

(4)ACCOUNTS RECEIVABLE AND SIGNIFICANT CLIENTS

Accounts receivable, net in the accompanying Consolidated Balance Sheets consists of the following (in thousands):

	December 31,
	2022		2021
Accounts receivable	$	421,161	$	362,719
Less: Allowance for credit losses		(3,524)		(5,409)
Accounts receivable, net	$	417,637	$	357,310

In connection with the implementation of ASC 326 as of January 1, 2020, the Company analyzed the prior history of credit losses on revenue for TTEC as a whole and separately for each of the two segments. Based on this evaluation, no modification to the allowance for credit losses balance was necessary as of the implementation date. At the end of each quarter beginning with March 31, 2020, an allowance for credit losses has been calculated based on the current quarterly revenue multiplied by the historical loss percentage of the prior three-year period and recorded in the income statement. In addition to the evaluation of historical losses, the Company considers current and future economic conditions and events such as changes in customer credit quality and liquidity. The Company will write-off accounts receivable against this allowance when the Company determines a balance is uncollectible.

Activity in the Company’s Allowance for credit losses consists of the following (in thousands):

	December 31,
	2022		2021		2020
Balance, beginning of year	$	5,409	$	5,067	$	5,452
Provision for credit losses		9,391		(350)		494
Uncollectible receivables written-off		(11,278)		(281)		(880)
Effect of foreign currency and other		2		(15)		1
Acquisition		—		988		—
Balance, end of year	$	3,524	$	5,409	$	5,067

Significant Clients

The Company had one client that contributed in excess of 10% of total revenue for each of the years ended December 31, 2022, 2021 and 2020. The 2022 client operates in the automotive industry and is included in the Engage segment. The 2021 and 2020 client operates in the financial services sector and is included in the Engage segment. The revenue from these clients as a percentage of total revenue is as follows:

	Year Ended December 31,
	2022		2021		2020
Automotive client	10	%	9	%	8	%
Financial services client	7	%	12	%	13	%

Accounts receivable from these clients was as follows (in thousands):

	Year Ended December 31,
	2022		2021		2020
Automotive client	$	38,539	$	36,466	$	27,860
Financial services client	$	14,019	$	15,483	$	58,960

The Company does have clients with aggregate revenue exceeding $100 million annually and the loss of one or more of these clients could have a material adverse effect on the Company’s business, operating results, or financial condition. To mitigate this risk, the Company has multiple contracts with these larger clients, where each individual contract is for an amount below the $100 million aggregate.

To limit the Company’s credit risk with its clients, management performs periodic credit evaluations, maintains allowances for credit losses and may require pre-payment for services from certain clients. Based on currently available information, management does not believe significant credit risk exists as of December 31, 2022.

Accounts Receivable Factoring Agreement

The Company is party to an Uncommitted Receivables Purchase Agreement (“Agreement”) with Bank of the West (“Bank”), whereby from time-to-time the Company may elect to sell, on a revolving basis, U.S. accounts receivables of certain clients at a discount to the Bank for cash on a limited recourse basis. The maximum amount of receivables that the Company may sell to the Bank at any given time shall not exceed $100 million. The sales of accounts receivable in accordance with the Agreement are reflected as a reduction of Accounts Receivable, net on the Consolidated Balance Sheets. The Company has retained no interest in the sold receivables but retains all collection responsibilities on behalf of the Bank. The discount on the accounts receivable sold will be recorded within Other expense, net in the Consolidated Statements of Comprehensive Income (Loss). The cash proceeds from this Agreement are included in the change in accounts receivable within the operating activities section of the Consolidated Statements of Cash Flows.

The balances related to the Factoring agreement are as follows (in thousands):

	December 31,
	2022		2021
Total accounts receivable factored	$	99,503	$	97,700
Total amounts collected from clients not yet remitted to Bank	$	13,602	$	22,477

The unremitted cash is Restricted Cash and is included within Prepaid and Other Current Assets with the corresponding liability included in Accrued Expenses on the Consolidated Balance Sheet. The Company has not recorded any servicing assets or liabilities as of December 31, 2022 and 2021 as the fair value of the servicing arrangement as well as the fees earned were not material to the financial statements.

Effective November 1, 2022, the Company amended the arrangement to modify the list of eligible clients who may be sold pursuant to the Agreement, and to memorialize the transition from LIBOR to SOFR for discount calculation purposes.