Note 5 – Accounts Receivable and Concentration of Credit Risk

The Company’s standard credit terms vary from 30 to 120 days, depending on the class of trade and customary terms within a territory, so accounts receivable is affected by the mix of sales within the period. As is typical in the Company’s business, extended credit terms may occasionally be offered as a sales promotion or for certain sales. For sales to the Company’s distributor in Brazil, the Company has agreed to credit terms of up to 180 days subsequent to clearance of the product by the Ministry of Health in Brazil. The Company classified approximately $300,000 of trade receivables with its distributor in Brazil as long-term as of September 30, 2019, because payment was expected in greater than one year. The long-term portion of trade receivables is included in other assets on the accompanying consolidated balance sheet. No trade receivables are classified as long-term as of September 30, 2020.

The components of accounts receivable consist of the following at September 30, 2020 and 2019:


	2020		2019

Trade receivables, gross	$	5,332,786	$	5,410,165
Less: allowance for doubtful accounts		(25,643)		(33,143)
Less: allowance for sales returns and payment term discounts		(79,906)		(49,623)
Less: long-term trade receivables*		—		(306,342)
Accounts receivable, net	$	5,227,237	$	5,021,057

*Included in other assets on the accompanying consolidated balance sheets

No customer had a current accounts receivable balance that represented 10% of current assets at September 30, 2020 and 2019.

At September 30, 2020, three customers had an accounts receivable balance greater than 10% of net accounts receivable, representing 89% of net accounts receivable in the aggregate. At September 30, 2019, two customers had an accounts receivable balance greater than 10% of net accounts receivable and long-term trade receivables, representing 66% of the Company’s net accounts receivable and long-term trade receivables in the aggregate.

For the year ended September 30, 2020, there were three customers whose individual net revenue to the Company exceeded 10% of the Company’s net revenues, representing 76% of the Company’s net revenues in the aggregate. For the year ended September 30, 2019, there were three customers whose individual net revenue to the Company exceeded 10% of the Company’s net revenues, representing 64% of the Company’s net revenues in the aggregate.

The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments on accounts receivable. Management determines the allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts. Management also periodically evaluates individual customer receivables and considers a customer’s financial condition, credit history, and the current economic conditions. Accounts receivable are charged-off when deemed uncollectible.

The table below summarizes the change in the allowance for doubtful accounts for the years ended September 30, 2020 and 2019:


	2020		2019

Beginning balance	$	33,143	$	36,201
Charges to expense		—		—
Charge-offs		(7,500)		(3,058)
Ending balance	$	25,643	$	33,143

Recoveries of accounts receivable previously charged-off are recorded when received. The Company’s customers are primarily health care distributors, large global agencies, non-government organizations, ministries of health and other governmental agencies which purchase and distribute FC2 for use in HIV/AIDS prevention and family planning programs and, in the U.S. prescription channel, telemedicine providers.