disclosed in the Condensed Consolidated Statement of Shareholders' Equity.

The company's approach is to separate its receivables into good-standing and collection receivables. Good-standing receivables are assigned to risk pools of high, medium and low. The risk pools are driven by the specifics associated with the geography of origination. Expected loss percentages are calculated and assigned to each risk pool, driven primarily by historical experience. The historical loss percentages are calculated for each risk pool and then judgmentally revised to consider current risk factors as well as consideration of the impact of forecasted events, as applicable. The expected loss percentages are then applied to receivables balances each period to determine the allowance for doubtful accounts.

In North America, excluding Canada, good-standing receivables are assigned to the low risk pool and assigned an expected loss percentage of 1.0% as these receivables are deemed to share the same risk profile and collections efforts are the same. Installment receivables in North America are characterized as collection receivables and thus reserves based on specific analysis of each customer. In Canada, good-standing receivables and installment receivables are deemed low risk and assigned a loss percentage of 0.2%.

In Europe, expected losses are determined by each location in each region. Most locations have a majority of their receivables assigned to the low risk pool, which has an average expected loss percentage of 0.3%. About half of the locations have a portion of their receivables assigned as medium risk with an average expected loss percentage of 0.9%. Only a few locations have any receivables characterized as high risk and the average credit loss percentage for those locations is 2.7%. Collection risk is generally low as payment terms in certain key markets, such as Germany, are immediate and in many locations the ultimate customer is the government.

In the Asia Pacific region, receivables are characterized as low risk, which have an average expected loss percentage of 0.3%. Historical losses are low in this region where the use of credit insurance is often customary.

The movement in the trade receivables allowance for doubtful accounts was as follows (in thousands):


	Nine Months Ended September 30, 2020
Balance as of beginning of period	$	4,804
Current period provision	522
Direct write-offs charged against the allowance	(629)
Balance as of end of period	$	4,697

The current period provision includes the immaterial impact of the adoption of ASU 2016-03. The company did not make any material changes to the assignment of receivables to the different risk pools or to the expected loss reserves in the quarter. The company is monitoring the impacts of the COVID-19 pandemic and the possibility for an impact on collections, but to date this has not materially impacted 2020.

For collections receivables, the estimated allowance for uncollectible amounts is based primarily on management’s evaluation of the financial condition of each customer. In addition, as a result of the company's financing arrangement with DLL, a third-party financing company which the company has worked with since 2000, management monitors the collection status of these contracts in accordance with the company’s limited recourse obligations and provides amounts necessary for estimated losses in the allowance for doubtful accounts and establishes reserves for specific customers as needed.

The company writes off uncollectible trade accounts receivable after such receivables are moved to collection status and legal remedies are exhausted. See Concentration of Credit Risk in the Notes to the Condensed Consolidated Financial Statements for a description of the financing arrangement. Long-term installment receivables are included in “Other Assets” on the condensed consolidated balance sheet.

Upon adoption of ASU 2016-03, the company recorded a new contingent liability in the amount of $306,000 related to the contingent aspect of the company's guarantee associated with its arrangement with DLL. The contingent liability is recorded applying the same expected loss model used for the trade and installment receivables recorded on the company's books. Specifically, historical loss history is used to determine the expected loss percentage, which is then adjusted judgmentally to consider other factors, as needed.

The company’s U.S. customers electing to finance their purchases can do so using DLL. In addition, the company, prior to 2020, provided financing directly for its Canadian customers for which DLL is not an option, as DLL typically

provides financing to Canadian customers only on a limited basis. The installment receivables recorded on the books of the company represent a single portfolio segment of finance receivables to the independent provider channel and long-term care customers. The portfolio segment is comprised of two classes of receivables distinguished by geography and credit quality. The U.S. installment receivables are the first class and represent installment receivables repurchased from DLL because the customers were in default. Default with DLL is defined as a customer being delinquent by three payments. The Canadian installment receivables represent the second class of installment receivables which were originally financed by the company because third party financing was not available to the HME providers. The Canadian installment receivables were typically financed for twelve months and historically have had a very low risk of default.

The estimated allowance for uncollectible amounts and evaluation for both classes of installment receivables is based on the company’s quarterly review of the financial condition of each individual customer with the allowance for doubtful accounts adjusted accordingly. Installments are individually and not collectively reviewed. The company assesses the bad debt reserve levels based upon the status of the customer’s adherence to a legally negotiated payment schedule and the company’s ability to enforce judgments, liens, etc.

For purposes of granting or extending credit, the company utilizes a scoring model to generate a composite score that considers each customer’s consumer credit score and/or D&B credit rating, payment history, security collateral and time in business. Additional analysis is performed for most customers desiring credit greater than $250,000, which generally includes a detailed review of the customer’s financial statements as well as consideration of other factors such as exposure to changing reimbursement laws.

Interest income is recognized on installment receivables based on the terms of the installment agreements. Installment accounts are monitored and if a customer defaults on payments and is moved to collection, interest income is no longer recognized. Subsequent payments received once an account is put on non-accrual status are generally first applied to the principal balance and then to the interest. Accruing of interest on collection accounts would only be restarted if the account became current again.

All installment accounts are accounted for using the same methodology regardless of the duration of the installment agreements. When an account is placed in collection status, the company goes through a legal process for pursuing collection of outstanding amounts, the length of which typically approximates eighteen months. Any write-offs are made after the legal process has been completed.

Installment receivables consist of the following (in thousands):


	September 30, 2020						December 31, 2019
	Current		Long- Term		Total		Current		Long- Term		Total
Installment receivables	$	555	$	228	$	783	$	1,192	$	1,257	$	2,449
Less: Unearned interest	(3)		—		(3)		(22)		—		(22)
	552		228		780		1,170		1,257		2,427
Allowance for doubtful accounts	(291)		(164)		(455)		(434)		(1,080)		(1,514)
Installment receivables, net	$	261	$	64	$	325	$	736	$	177	$	913

Installment receivables purchased from DLL during the nine months ended September 30, 2020 increased the gross installment receivables balance by $343,000, which will be part of the company's 2020 class of installment receivables. No sales of installment receivables were made by the company

during the quarter. There was no impact on the allowance for doubtful accounts for installment receivables as a result of the adoption of ASU 2016-03 as the installment receivables in the U.S. are specifically reserved for by account and no adjustment was needed to the allowance for doubtful accounts for Canada installment receivables.

The movement in the installment receivables allowance for doubtful accounts was as follows (in thousands):


	Nine Months Ended September 30, 2020		Year Ended December 31, 2019
Balance as of beginning of period	$	1,514	$	1,542
Current period provision	32		479
Direct write-offs charged against the allowance	(1,091)		(507)
Balance as of end of period	$	455	$	1,514

Installment receivables by class as of September 30, 2020 consist of the following (in thousands):


	Total Installment Receivables		Unpaid Principal Balance		Related Allowance for Doubtful Accounts		Interest Income Recognized
U.S.
Impaired installment receivables with a related allowance recorded	$	649	$	649	$	453	$	—
Canada
Non-Impaired installment receivables with no related allowance recorded	132		129		—		26
Impaired installment receivables with a related allowance recorded	2		2		2		—
Total Canadian installment receivables	134		131		2		26
Total
Non-Impaired installment receivables with no related allowance recorded	132		129		—		26
Impaired installment receivables with a related allowance recorded	651		651		455		—
Total installment receivables	$	783	$	780	$	455	$	26

Installment receivables by class as of December 31, 2019 consist of the following (in thousands):


	Total Installment Receivables		Unpaid Principal Balance		Related Allowance for Doubtful Accounts		Interest Income Recognized
U.S.
Impaired installment receivables with a related allowance recorded	$	1,762	$	1,762	$	1,497	$	—
Canada
Non-Impaired installment receivables with no related allowance recorded	670		648		—		92
Impaired installment receivables with a related allowance recorded	17		17		17		—
Total Canadian installment receivables	687		665		17		92
Total
Non-Impaired installment receivables with no related allowance recorded	670		648		—		92
Impaired installment receivables with a related allowance recorded	1,779		1,779		1,514		—
Total installment receivables	$	2,449	$	2,427	$	1,514	$	92

Installment receivables with a related allowance recorded as noted in the table above represent those installment receivables on a non-accrual basis in accordance with ASU 2010-20. As of September 30, 2020, the company had no U.S. installment receivables past due of 90 days or more for which the company is still accruing interest. Individually, all U.S. installment receivables are assigned a specific allowance for doubtful accounts based on management’s review when the

company does not expect to receive both the contractual principal and interest payments as specified in the loan agreement. In Canada, the company had an immaterial amount of Canadian installment receivables which were past due of 90 days or more as of December 31, 2019 for which the company was still accruing interest.

The aging of the company’s installment receivables was as follows (in thousands):


	September 30, 2020						December 31, 2019
	Total		U.S.		Canada		Total		U.S.		Canada
Current	$	132	$	—	$	132	$	659	$	—	$	659
0-30 Days Past Due	—		—		—		2		—		2
31-60 Days Past Due	—		—		—		4		—		4
61-90 Days Past Due	—		—		—		—		—		—
90+ Days Past Due	651		649		2		1,784		1,762		22
	$	783	$	649	$	134	$	2,449	$	1,762	$	687