Annual and transition report of foreign private issuers pursuant to Section 13 or 15(d)

Trade Account Receivables

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Trade Account Receivables
 12 Months Ended
Dec. 31, 2023
Trade Account Receivables [Abstract]  
Trade account receivables
6. Trade account receivables

 

    2023     2022     2021  
                   
Trade account receivables   Ps. 1,404,541       1,092,855       835,757  
                         
Expected credit loss     (332,086 )     (121,792 )     (90,164 )
                         
    Ps. 1,072,455       971,063       745,593  

 

The average, with respect to Betterware´s the turnover of accounts receivable, is from 14 to 28 days as of December 31, 2023, 2022 and 2021; and JAFRA´s the turnover of accounts receivable, is from 30 to 120 days as of December 31, 2023, and 2022. No interest is charged on outstanding accounts receivable.

 

The Group measures the loss reserve for commercial accounts receivable in an amount equal to the expected lifetime credit loss. Expected credit losses in accounts receivable are estimated using a provisions matrix with reference to the debtor’s previous default history and an analysis of the debtor’s current financial situation, adjusted for factors specific to the debtors and the general economic conditions of the industry in which the debtors operate, and assessing both current and predicted conditions as of the reporting date.

 

The Group’s significant growth in recent years have caused volatility in collections. Because of this, management has applied significant estimation to determine the estimated expected credit losses as of December 31, 2023, 2022 and 2021; where the weighting of the historical behavior was analyzed, given what happened due to the extraordinary events of the COVID-19 pandemic, thus normalizing the expectation of future credit losses for the year 2024.

 

The Group cancels an account receivable when there is information that indicates that the debtor is experiencing serious financial difficulties and there is no realistic prospect of recovery, e.g. when the debtor has been placed in liquidation or has entered bankruptcy proceedings, or when a commercial account receivable is more than one year old, whichever occurs first. For the years ended December 31, 2023, 2022 and 2021, Ps.94,194, Ps.237,928 and Ps.117,414 have been canceled, respectively.

 

The following table shows the expected lifetime credit loss recognized for accounts receivable in accordance with the simplified approach established in IFRS 9.

 

Trade receivables – days past due  
    Betterware de México     JAFRA in Mexico and United States        
As of December 31, 2023   Not past
due		     14-21     21-28     >28     Not past
due		     >30-59     >60-120     >120     Total  
                                                       
Expected credit loss rate     2 %     8 %     14 %     58 %     8 %     26 %     57 %     76 %        
Gross amount of account receivable   Ps. 456,616       25,165       16,939       175,534       418,654       79,281       61,568       170,784       1,404,541  
Expected credit loss   Ps. 8,935       2,104       2,455       101,305       31,511       20,622       35,281       129,873       332,086  

 

 

Trade receivables – days past due  
    Betterware de México     JAFRA in Mexico and United States        
As of December 31, 2022   Not past
due		     14-21     21-28     >28     Not past
due		     >30-59     >60-120     >120     Total  
                                                       
Expected credit loss rate     1 %     18 %     39 %     41 %     1 %     7 %     21 %     61 %        
Gross amount of account receivable   Ps. 365,978       24,198       15,592       161,204       374,039       77,509       31,366       42,969       1,092,855  
Expected credit loss   Ps. 3,561       4,337       6,142       66,126       3,589       5,130       6,735       26,172       121,792  

 

As of December 31, 2021   Not past
due		     14-21     21 – 28     >28     Total  
                               
Expected credit loss rate     1 %     27 %     60 %     28 %        
Estimated total gross carrying amount at default   Ps. 560,642       31,439       22,463       221,213       835,757  
Expected credit loss   Ps. 6,814       8,338       13,386       61,626       90,164  

The following table shows the movement in lifetime expected credit loss that has been recognized for trade account receivables in accordance with the simplified approach set out in IFRS 9.

 

    Total  
Balance as of January 1, 2021   Ps. (9,083 )
Expected credit loss     (198,495 )
Amounts written off     117,414  
Balance as of December 31, 2021     (90,164 )
Expected credit loss     (269,595 )
Amounts written off     237,928  
Foreign currency translation     39  
Balance as of December 31, 2022     (121,792 )
Expected credit loss     (304,501 )
Amounts written off     94,194  
Foreign currency translation     13  
Balance as of December 31, 2023   Ps. (332,086 )