Chemical Company of Malaysia Berhad Annual Report 2019

25. Financial instruments (continued) 25.4Credit risk (continued) (i) Trade receivables (continued) Recognition and measurement of impairment loss Inmanaging credit risk of trade receivables, the Groupmanages its debtors and takes appropriate actions (including but not limited to legal actions) to recover long overdue balances. Generally, trade receivables will pay within 180 days. The Group’s debt recovery process is as follows: (a) Immediately after past due date, the Group will start to initiate a structured debt recovery process which is monitored by sales management team; and (b) Above 180 days past due, the Group will commence a legal proceeding against the customer. The Group uses an allowance matrix to measure expected credit losses (“ECLs”) of trade receivables for all segments. Consistent with the debt recovery process, invoices which are past due 180 days will be considered as credit impaired. Loss rates are calculated using a ‘roll rate’ method based on the probability of a receivable progressing through successive stages of delinquency to 180 days past due. Loss rates are based on actual credit loss experience over the past three years. The Group also considers differences between (a) economic conditions during the period over which the historic data has been collected, (b) current conditions and (c) the Group’s view of economic conditions over the expected lives of the receivables. Nevertheless, the Group believes that these factors are immaterial for the purpose of impairment calculation for the year. The following table provides information about the exposure to credit risk and ECLs for trade receivables. Group Gross carrying amount Loss allowance Net balance 2019 Current (not past due) 49,727 (126) 49,601 1-30 days past due 14,328 (72) 14,256 31-180 days past due 7,653 (1,067) 6,586 71,708 (1,265) 70,443 Credit impaired More than 180 days past due 19,731 (19,731) - 91,439 (20,996) 70,443 | Notes to the Financial Statements (continued) | 190 CHEMICAL COMPANY OF MALAYSIA BERHAD