Receivables

12 Months Ended

Apr. 30, 2020

NOTE 4: RECEIVABLES

Receivables, net of their related allowance, consist of the following:



(in 000s)
As of April 30,	2020				2019
	Short-term		Long-term		Short-term		Long-term
Loans to franchisees	$	25,397	$	31,329	$	22,427	$	35,325
Receivables for U.S. assisted and DIY tax preparation and related fees	47,030		3,112		34,284		3,716
H&R Block Instant Refund^TM receivables	15,031		1,325		37,319		1,701
H&R Block Emerald Advance® lines of credit	10,001		14,081		8,546		12,418
Software receivables from retailers	7,341		—		9,354		—
Royalties and other receivables from franchisees	9,861		42		11,888		97
Wave payment processing receivables	3,200		—		—		—
Other	15,336		1,828		15,147		2,382
	$	133,197	$	51,717	$	138,965	$	55,639

Balances presented above as short-term are included in receivables, while the long-term portions are included in other noncurrent assets in the consolidated balance sheets.

Loans to Franchisees. Franchisee loan balances consist of term loans made primarily to finance the purchase of franchises and revolving lines of credit primarily for the purpose of funding working capital needs. As of April 30, 2020 and 2019, loans with a principal balance of $0.2 million and $0.8 million, respectively, were more than 90 days past due. We had no loans to franchisees on non-accrual status as of April 30, 2020 or 2019.

The credit quality of these receivables is assessed at origination at an individual franchisee level. Payment history is monitored on a regular basis. Based upon our internal analysis and underwriting activities, we believe all loans to franchisees are of similar credit quality. Loans are evaluated for collectibility when they become delinquent or more than 90 days past due. Amounts deemed to be uncollectible are written off to bad debt expense and bad debt related to these loans has typically been immaterial. Additionally, the franchise territory serves as additional protection in the event a franchisee defaults on the loan, as we may revoke franchise rights, write off the remaining balance of the loan and refranchise the territory or begin operating it as company-owned.

H&R Block Instant Refund^TM. Our Canadian operations advance refunds due to certain clients from the Canada Revenue Agency (CRA), in exchange for a fee. The total fee we charge for this service is mandated by legislation which is administered by the CRA. The client assigns to us the full amount of the tax refund to be issued by the CRA and the refund is then sent by the CRA directly to us. The amount we advance to clients under this program is the amount of their estimated refund, less our fees, any amounts expected to be withheld by the CRA for amounts the client may owe to government authorities and any amounts owed to us from prior years. The CRA system for tracking amounts due to various government agencies also indicates if the client has already filed a return, does not exist in CRA records, or is bankrupt. This serves to greatly reduce the amounts of uncollectible receivables and the risk of fraudulent returns. H&R Block Instant Refund^TM amounts are generally received from the CRA within 60 days of filing the client's return, with the remaining balance collectible from the client.

Credit losses from these receivables are not specifically identified and charged off; instead we review the credit quality of these receivables on a pooled basis, segregated by the year of origination with older years being deemed more unlikely to be repaid. At the end of the fiscal year, the outstanding balances on these receivables are evaluated based on collections received and expected collections over subsequent tax seasons. We establish an allowance for doubtful accounts at an amount that we believe represents the net realizable value. In December of each year we charge-off the receivables to an amount we believe represents the net realizable value.

Current balances and amounts on non-accrual status and classified as impaired, or more than 60 days past due, by year of origination, as of April 30, 2020 are as follows:



				(in 000s)
Year of Origination	Current Balance			Non-Accrual

2020	$	17,920		$	1,629
2019 and prior	338			338
	18,258			$	1,967
Allowance	(1,902		)
Net balance	$	16,356

H&R Block Emerald Advance® lines of credit. EAs are typically offered to clients in our offices from mid-November through mid-January, currently in an amount not to exceed $1,000. If the borrower meets certain criteria as agreed in the loan terms, the line of credit can be utilized year-round. EA balances require an annual paydown on February 15^th, and any amounts unpaid are placed on non-accrual status as of March 1^st. Payments on past due amounts are applied to principal. These lines of credit are offered by Axos. We purchase participation interests in their loans, as discussed further in note 11.

Credit losses from EAs are not specifically identified and charged off; instead we review the credit quality of these receivables on a pooled basis, segregated by the year of origination with older years being deemed more unlikely to be repaid. At the end of the fiscal year, the outstanding balances on these receivables are evaluated based on collections received and expected collections over subsequent tax seasons. We establish an allowance for doubtful accounts at an amount that we believe represents the net realizable value. In December of each year we charge-off the receivables to an amount we believe represents the net realizable value.

Current balances and amounts on non-accrual status and classified as impaired, or more than 60 days past due, by year of origination as of April 30, 2020, are as follows:



				(in 000s)
Year of Origination	Current Balance			Non-Accrual

2020	$	36,146		$	36,146
2019 and prior	5,773			5,773
Revolving loans	14,197			11,766
	56,116			$	53,685
Allowance	(32,034		)
Net balance	$	24,082

Allowance for Doubtful Accounts. Activity in the allowance for doubtful accounts for EAs and all other short-term and long-term receivables for the years ended April 30, 2020 , 2019, and 2018 is as follows:



(in 000s)
	EAs			All Other			Total
Balances as of May 1, 2017	$	10,123		$	46,552		$	56,675
Provision	16,499			57,990			74,489
Charge-offs, recoveries and other ⁽¹⁾	—			(49,351		)	(49,351		)
Balances as of April 30, 2018	26,622			55,191			81,813
Provision	17,272			53,297			70,569
Charge-offs, recoveries and other	(16,359		)	(54,550		)	(70,909		)
Balances as of April 30, 2019	27,535			53,938			81,473
Provision	21,771			54,850			76,621
Charge-offs, recoveries and other	(17,272		)	(58,342		)	(75,614		)
Balances as of April 30, 2020	$	32,034		$	50,446		$	82,480

⁽¹⁾There were no charge-offs related to EAs in fiscal year 2018 based on the timing of when charge-offs were performed.