Long-Term Receivables

Category

Balance Sheet

Units

Currency

US-GAAP elements

LongTermAccountsNotesAndLoansReceivableNetNoncurrentAccountsReceivableNetNoncurrentNotesAndLoansReceivableNetNoncurrent

Reference

ASC 310 and ASC 326

Source

Reported in SEC EDGAR filings (US-GAAP XBRL taxonomy)

Long-term receivables are amounts owed to a company that are not due for collection until more than one year, or more than one operating cycle, after the balance-sheet date. They include customer receivables on extended payment terms, long-term notes and loans receivable, and installment and lease receivables, reported net of the allowance for credit losses.

They are noncurrent assets. When part of a long-term receivable falls due within the coming year, that portion moves into current receivables.

Long-term receivables typically come from financing a customer's purchase, such as equipment sold on installment or a multi-year service contract billed over time, from sales-type leases where the company is the lessor, or from loans made to franchisees, suppliers, or affiliates. In XBRL filings the combined noncurrent balance is tagged LongTermAccountsNotesAndLoansReceivableNetNoncurrent. Companies that separate the pieces use AccountsReceivableNetNoncurrent for customer balances and NotesAndLoansReceivableNetNoncurrent for financing receivables.

Receivables are carried at amortized cost under ASC 310, and ASC 326 requires an allowance for credit losses expected over the whole life of the receivable. That requirement weighs heavily on long-dated balances, because the longer the term, the more room there is for the customer's credit to deteriorate. When a receivable carries no stated interest or a below-market rate, the company generally records it at present value and recognizes the implied interest as income over time, so part of what looks like a sale is really financing income. Noncurrent amounts owed by related parties are reported separately under Regulation S-X Rule 5-02.11.

Analysts pay attention to long-term receivables because they can hide the true pace of cash collection. Revenue recognized up front on sales with extended payment terms shows up as profit long before the cash arrives, and it depends on the customer staying solvent for years. A sharp increase in long-term receivables relative to revenue, or a thin allowance against them, can signal aggressive selling terms. Comparing the balance with operating cash flow helps show how much of reported earnings has yet to turn into cash.