Eng Kok , just to check with you on Provision for Doubtful debts – General Provision
• Customer Outstanding debts > 90 days
• Overdue due to short term cash flow.
• Assuming we hold the customer BG and the amount covers – 100% of the Overdue debts (>90 days) and/or Total Exposure.
o Should we allow NOT to provide the Provision as (1) below since the amount owing is fully secured.
• Another scenario, the BG only covers a portion of the Overdue debts and/or Total exposure – say 33%;
o Should we provide for the non-secured portion only 67%?
• Customer is still trading normally with approved Order Release.
Appreciate your clarification.
1. Exceptions
In the following situations it doesn’t need to comply with this policy:
1. Claim is fully secured, given that realization of security within 12 month is feasible
2. Adequate repayment plan agreed and payments met
3. Customer claim will be covered by credit note
4. Disputes (Chargeback) leading to credit notes not yet issued (i.e. goods returned, price differences, bonuses for promotions, etc…). In case of disputes not ascertained by BP a provision should be provided.
5. We internally caused overdue (order to cash inefficiencies)
6. Customer is a governmental organization and respective country is solvent