Receivables from customers and notes receivable, net

6 Months Ended

Mar. 31, 2012

Receivables from customers and notes receivable, net [Abstract]

Receivables from Customers and Notes Receivable, net

Receivables from customers, net and notes receivable, net include a provision for bad debts, which reflects our best estimate of probable losses inherent in the receivables from customers and notes receivable. The Company provides for an allowance for doubtful accounts based on a specific-identification basis. The Company continually reviews its provision for bad debts. The allowance for doubtful accounts related to receivables from customers was $2.3 million and $11.8 million as of March 31, 2012 and September 30, 2011, respectively. The allowance for doubtful accounts related to notes receivable was $0.1 million as of March 31, 2012 and September 30, 2011, respectively.

Bad debt expense, net of recoveries, was negligible for the three and six months ended March 31, 2012. During the three and six months ended March 31, 2011, the Company recorded bad debt expense, net of recoveries, of $0.4 million and $2.8 million, respectively, including provision increases and direct write-offs of $4.5 million, offset by recoveries of $1.9 million. The provision increases during the six months ended March 31, 2011 primarily related to a customer to whom the Company had consigned gold, in the C&RM segment, and a clearing customer deficit account in the CES segment. The recorded recoveries during the six months ended March 31, 2011 included $1.3 million following a settlement relating to a disputed trade that was "given-up" to FCStone, LLC during the quarter ended June 30, 2010 by another futures commission merchant for a customer that held an account with FCStone, LLC.

Activity in the allowance for doubtful accounts and notes was as follows:



(in millions)
Balance, September 30, 2011	$	11.9
Provision for bad debts	—
Deductions:
Charge-offs	(9.5		)
Recoveries	—
Balance, March 31, 2012	$	2.4

Additionally, in the normal course of operations the Company accepts notes receivable under sale/repurchase agreements with customers (see additional discussion in Note 3). These transactions are short-term in nature, and are treated as secured borrowings rather than commodity inventory, purchases and sales in the Company’s condensed consolidated financial statements. As of March 31, 2012 and September 30, 2011, the Company had outstanding notes receivable of $16.2 million and $24.3 million, respectively, related to this program.