9. Trade and other receivables
Allowance for expected credit loss
Total current trade and other receivables
Total non-current trade and other receivables
Allowance for expected credit loss
Balance as at 1 July
Impairment losses recognised on receivables
Amounts written off as uncollectible
Balance at end of the financial year
The allowance for expected credit loss associated with unbilled revenue and the ageing of trade receivables at the reporting date is detailed below:
Not past due
Past due 0 – 30 days
Past due 31 – 60 days
Past due 61 – 90 days
Past 90 days
At the end of the reporting period, trade receivables with a carrying amount of $245 million (2019: $208 million) were past due but not considered impaired. These trade receivables relate to customers for whom there has not been a significant change in credit quality and the amounts are considered recoverable.
Other balances within trade and other receivables are neither impaired nor past due. It is expected that these other balances will be received when due.
Trade and other receivables
Trade and other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Trade and other receivables are recognised at amortised cost, less an allowance for expected credit loss. AGL's policy requires customers to pay in accordance within agreed payment terms. Depending on the customer segment, trade receivables are generally due for settlement within 30 days.
AGL assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at amortised cost and fair value through other comprehensive income (FVOCI). The impairment methodology applied depends on whether there has been a significant increase in credit risk.
For trade receivables, unbilled revenue, contract assets and lease receivables, AGL applies the simplified approach, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
Unbilled revenue represents estimated gas and electricity services supplied to customers but unbilled at the end of the reporting period. Unbilled gas and electricity revenue is not collectible until such time as customers’ meters are read and bills rendered.
CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS
Expected credit loss on trade receivables and unbilled revenue
AGL uses an allowance matrix to measure expected credit losses of trade receivables and unbilled revenue from its customers. Trade receivable amounts are disaggregated into customer segments.
Loss rates are estimated in each age category and are based on the probability of a receivable progressing through to write-off. Factors to estimate the loss rate are based on risk assessment performed for each customer segment and economic factors such as wholesale electricity forward curves, commodity fuel forward curves and prevailing macro-economic information.
The methodology for calculating the allowance for expected credit loss has not changed as a result of COVID-19, however certain assumptions have been updated and further segmentation of the customer base has been introduced to reflect observed payment behaviours. The key assumptions impacted are external macro-economic trends such as unemployment and small business impacts.
AGL recognises revenue from gas and electricity sales once the gas and/or electricity has been consumed by the customer. Management estimates customer consumption between the last invoice date and the end of the reporting period when determining gas and electricity revenue for the financial period. Various assumptions and financial models are used to determine the estimated unbilled consumption.
Some of the assumptions and estimates include:
- Volume and timing of energy consumed by the customers
- Various pricing plans prevalent and allocation of the estimated volume to such pricing plans
- Loss factors
- Behavioural discounts