4. Accounts Receivable and Due to Factor

12 Months Ended

Dec. 31, 2020

Receivables [Abstract]

Accounts Receivable and Due to Factor

The Company factors designated trade receivables pursuant to a factoring agreement with LSC Funding Group L.C., an unrelated factor (the “Factor”).  The agreement is for a term of one year with automatic renewal for additional one-year terms. The agreement specifies that eligible trade receivables are factored with recourse. The performance of all obligations and payments to the factoring company was personally guaranteed by John C. Lawrence, the Company’s previous President and Chairman of the Board of Directors. The existing agreement will be addressed in 2021 to account for Mr. Lawrence’s death and that impact on the personal guarantee. Selected trade receivables are submitted to the Factor, and the Company receives 85% of the face value of the receivable by wire transfer. Upon payment by the customer, the remainder of the amount due is received from the Factor, less a one-time servicing fee of 2% for the receivables factored.  This servicing fee is recorded on the consolidated statement of operations in the period of sale to the Factor.  

Trade receivables assigned to the Factor are carried at the original invoice amount less an estimate made for doubtful accounts.  Under the terms of the recourse provision, the Company is required to reimburse the Factor, upon demand, for factored receivables that are not paid on time.  Accordingly, these receivables are accounted for as a secured financing arrangement and not as a sale of financial assets.  

Receivables, net of allowances, are presented as current assets and the amount potentially due to the Factor is included in current accrued liabilities.

Accounts Receivable	December 31, 2020		December 31, 2019
Accounts receivable - non factored	$	222,034	$	273,573
Accounts receivable - factored with recourse		16,600		10,880
Accounts receivable - net	$	238,634	$	284,453