Note 5 - Revenue

3 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

The Company follows a five-step process in accordance with ASC 606, for revenue recognition that focuses on the transfer of control, rather than the transfer of risks and rewards.

Contracts with Customers

All of the Company's revenues are derived generally from written contracts with our customers. Our contracts document our customers' agreement to utilize our services and the relevant terms and conditions under which our services will be provided. Our contracts generally do not contain minimum purchase requirements nor do they include termination penalties. Our customers may generally cancel our contract, without cause, upon written notice (generally ninety days). While our contracts do have stated terms, because of the facts stated above, they are accounted for on a month-to-month basis.

Our contracts give us the right to bill for services rendered during the period, which for most of our customers is a calendar month, with a few customers specifying a fiscal month. Our payment terms vary by client and generally range from due upon receipt to 60-90 days.

Performance Obligations

We have identified one main performance obligation for which we invoice our customers, which is to stand ready to provide care services for our customers’ clients. A stand-ready obligation is a promise that a customer will have access to services as and when the customer decides to use them. Ours is considered a stand-ready obligation because the delivery of the underlying service (that is, receiving customer contact and performing the associated care services) is outside of our control or the control of our customer.

Our stand-ready obligation involves outsourcing of the entire customer care life cycle, including:

• The identification, operation, management, and maintenance of facilities, IT equipment, and IT and telecommunications infrastructure

• Management of the entire human resources function, including recruiting, hiring, training, supervising, evaluating, coaching, retaining, compensating, providing employee benefits programs, and disciplinary activities

These activities are all considered an integral part of the production activities required in the service of standing ready to accept calls as and when they are directed to us by our clients.

Revenue Recognition Methods

Because our customers receive and consume the benefit of our services as they are performed and we have the contractual right to invoice for services performed to date, we have concluded that our performance obligation is satisfied over time. Accordingly, we recognize revenue for our services in the month they are performed.

We are entitled to invoice for our services on a monthly basis. We invoice according to the hourly and/or per-transaction rates stated in each contract for the various activities we perform. Some contracts include opportunities to earn bonuses or include parameters under which we will incur penalties related to performance in any given month. Bonus or penalty amounts are based on the current month’s performance. Formulas are included in the contracts for the calculation of any bonus or penalty. There is no other performance in future periods that will impact the bonus or penalty calculation in the current period. We estimate the amount of the bonus or penalty using the “most likely amount” method and we apply this method consistently. The bonus or penalty calculated is generally approved by the client prior to billing (and revenue being recognized). The unbilled revenue, where the right to invoice has not accrued is recognized based on service delivery estimate.

Practical expedients and exemptions

Because the Company’s contracts are essentially month-to-month, we have elected the following practical expedients:

• ASC 606-10-50-14 exempts companies from the disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less

• ASC 340-40-25-4 allows companies to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the entity otherwise would have recognized is one year or less.

• ASC 606-10-32-2A allows an entity to make an accounting policy election to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the entity from a customer (for example, sales, use, value-added, and some excise taxes)

• ASC 606-10-55-18 allows an entity that has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the entity’s performance completed to date (for example, a service contract in which an entity bills a fixed amount for each hour of service provided), the entity may recognize revenue in the amount to which the entity has a right to invoice.

Disaggregated Revenue

Revenues by our clients' industry verticals for the three months ended March 31, 2023 and 2022 respectively:

	Three Months Ended March 31,
Vertical	2023		2022
Telecom		23,985		24,343
E-commerce & Consumer		15,996		20,143
Financial & Business Services		13,379		13,135
Media & Cable		13,966		15,351
Travel & Hospitality		11,699		12,272
Healthcare & Education		6,646		8,633
Technology, IT & Related Services		3,271		3,619
Other verticals		3,147		3,596
Revenue		92,089		101,092

Allowance for expected credit losses

On January 1, 2023, the Company adopted ASC Topic 326, ‘Financial Instruments-Credit Losses’. Accounts receivables, unbilled revenue and other financial assets are in the scope for which assessment is made. In calculating expected credit loss, the Company also considered past payment and recovery trends, and other related information for its customers to estimate the probability of default in the future.

As a result of adoption of ASC 326, the Company recognized an incremental allowance for credit losses on its accounts receivable and unbilled revenue, resulting in decrease in these assets by $135, increase in deferred tax assets by $34 and a corresponding decrease in retained earnings by $101 as on January 1, 2023.

Trade accounts receivables and Unbilled revenue

	As of March 31, 2023			As of December 31, 2022
Trade accounts receivables and Unbilled Revenue		77,877			74,377
Less: Allowance for expected credit loss		(3,363	)		(3,032	)
Trade accounts receivables and Unbilled Revenue		74,514			71,345

The movement in allowance for current expected credit loss on Trade accounts receivables and Unbilled revenue for the period ended March 31, 2023 and December 31, 2022, is as follows:

	As of March 31, 2023
Balance at the beginning of the period		3,032
Transition period adjustment pursuant to ASC 326		135
Additions during the period		196
Balance at the end of the period		3,363