5. Trade Accounts Receivable
Total trade receivables (net of allowances) at December 31, 2007 amounted to TEUR 405,231 (2006: TEUR 350,123), whereas the long-term portion is included in the balance sheet item non-current receivables and other non-current assets.
| (in TEUR) | 2007 | 2006 | ||
| Trade accounts receivable - short-term | 400,163 | 347,368 | ||
| Trade accounts receivable - long-term | 5,068 | 2,755 | ||
| 405,231 | 350,123 | |||
| Thereof neither past due nor impaired | 268,334 | 244,484 | ||
| Thereof past due but not impaired | 115,452 | 88,783 | ||
| Therof impaired | 36,115 | 29,420 | ||
| Valuation allowance | (14,670) | (12,564) | ||
| 405,231 | 350,123 |
Trade receivables (Download size 30 KB)
The average credit period on Sales of goods depending on the business area is 30 to 90 days. Before accepting any new customer, the Group uses an internal credit scoring system to assess the potential customer’s credit quality and defines credit limits by customer. Limits and scoring attributed to customers are reviewed on an ongoing basis. About two thirds of the trade receivables are neither past due nor impaired.
Included in the Group’s trade receivable balance are debtors with a carrying amount of TEUR 115,452 (2006: TEUR 88,783) which are past due at the reporting date for which the Group has not recognized any allowance as there has not been a significant change in credit quality and the amounts are still considered recoverable.
The roll-forward of the allowance for trade accounts receivable is as follows:
| (in TEUR) | 2007 | 2006 | ||
| Allowance at beginning of the year | (12,564) | (5,130) | ||
| Foreign currency adjustment | (664) | (690) | ||
| Change in consolidation range | 0 | (3,010) | ||
| Charged to expenses | (4,469) | (5,679) | ||
| Amounts written-off | 1,671 | 929 | ||
| Released | 1,356 | 1,016 | ||
| Allowance at the end of the year | (14,670) | (12,564) | ||
Allowance receivables (Download size 14 KB)
In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The Executive Board believes that no further credit provision is required in excess of the allowance for doubtful debts already recognized.