ALLOWANCE FOR CREDIT LOSSES

6 Months Ended

Jun. 30, 2021

Receivables [Abstract]

ALLOWANCE FOR CREDIT LOSSES

NOTE 4. ALLOWANCE FOR CREDIT LOSSES

Effective January 1, 2020, the Company adopted ASC 326, the new accounting standard related to credit losses. The Company is exposed to credit losses primarily related to accounts receivables and financed receivables derived from customer services revenue.  To reduce credit risk for residential pest control accounts receivable, we promote enrollment in our auto-pay programs. In general, we may suspend future services for customers with past due balances. The Company’s credit risk is generally low with a large number of entities comprising Rollins’ customer base and dispersion across many different geographical regions.

The Company manages its financing receivables on an aggregate basis when assessing and monitoring credit risks. The Company’s established credit evaluation and monitoring procedures seek to minimize the amount of business we conduct with higher risk customers. The credit quality of a potential obligor is evaluated at the loan origination based on an assessment of the individual’s Beacon/credit bureau score. Rollins requires a potential obligor to have good credit worthiness with low risk before entering into a contract. Depending upon the individual’s credit score, the Company may accept with 100% financing or require a significant down payment or turn down the contract. Delinquencies of accounts are monitored each month. Financing receivables include installment receivable amounts which are due subsequent to one year from the balance sheet dates.

The Company’s allowances for credit losses for trade accounts receivable and financed receivables are developed using historical collection experience, current economic and market conditions, reasonable and supportable forecasts, and a review of the current status of customers’ receivables. The Company’s receivable pools are classified between residential customers, commercial customers, large commercial customers, and financed receivables. Accounts are written-off against the allowance for doubtful accounts when the Company determines that amounts are uncollectible, and recoveries of amounts previously written off are recorded when collected. The Company stops accruing interest to these receivables when they are deemed uncollectible. Below is a roll forward of the Company’s allowance for credit losses for the three and six months ended June 30, 2021 and 2020.

	(in thousands)
	Allowance for Credit Losses
	Trade			Financed			Total
	Receivables			Receivables			Receivables
Balance at March 31, 2021	$	15,731		$	3,370		$	19,101
Provision for expected credit losses		369			1,618			1,987
Write-offs charged against the allowance		(3,650	)		(645	)		(4,295	)
Recoveries collected		1,413			(2	)		1,411
Balance at June 30, 2021	$	13,863		$	4,341		$	18,204
	Allowance for Credit Losses
	Trade			Financed			Total
	Receivables			Receivables			Receivables
Balance at December 31, 2020	$	16,854		$	3,231		$	20,085
Provision for expected credit losses		2,234			2,439			4,673
Write-offs charged against the allowance		(7,749	)		(1,326	)		(9,075	)
Recoveries collected		2,524			(3	)		2,521
Balance at June 30, 2021	$	13,863		$	4,341		$	18,204
	Allowance for Credit Losses
	Trade			Financed			Total
	Receivables			Receivables			Receivables
Balance at March 31, 2020	$	11,861		$	3,053		$	14,914
Provision for expected credit losses		6,927			554			7,481
Write-offs charged against the allowance		(4,454	)		(593	)		(5,047	)
Recoveries collected		2,118			—			2,118
Balance at June 30, 2020	$	16,452		$	3,014		$	19,466
	Allowance for Credit Losses
	Trade			Financed			Total
	Receivables			Receivables			Receivables
Balance at December 31, 2019	$	16,699		$	2,959		$	19,658
Adoption of ASC 326		(3,330	)		—			(3,330	)
Provision for expected credit losses		8,480			1,288			9,768
Write-offs charged against the allowance		(8,233	)		(1,233	)		(9,466	)
Recoveries collected		2,836			—			2,836
Balance at June 30, 2020	$	16,452		$	3,014		$	19,466