Ni Hsin Berhad Annual Report 2018

23. Financial instruments (continued) 23.4 Credit risk Credit risk is the risk of a financial loss if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group’s exposure to credit risk arises principally from the individual characteristics of each customer. The Company’s exposure to credit risk arises principally from loans and advances to subsidiaries and financial guarantees given to banks for credit facilities granted to subsidiaries. There are no significant changes as compared to prior periods. Trade receivables Risk management objectives, policies and processes for managing the risk Management has an informal credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Exposure to credit risk, credit quality and collateral As at the end of the reporting period, the maximum exposure to credit risk for the Group is arising from trade receivables that are represented by the carrying amounts in the statement of financial position. Management has taken reasonable steps to ensure that trade receivables that are neither past due nor impaired are stated at their realisable values. A significant portion of these receivables are regular customers that have been transacting with the Group. The Group uses aging analysis to monitor the credit quality of the receivables. Any receivables having significant balances past due more than 60 days, which are deemed to have higher credit risk, are monitored individually. Concentration of credit risk The exposure of credit risk for trade receivables as at the end of the reporting period by geographic region was: Group 2018 2017 RM’000 RM’000 Domestic 576 372 Others 1,949 1,583 2,525 1,955 Recognition and measurement of impairment losses In managing credit risk of trade receivables, the management has taken reasonable steps to ensure that trade receivables that are neither past due nor impaired are stated at their realisable value. Generally, trade receivables will pay within 60 days. The management measures loss allowance on an individual basis. Notes to the financial statements (continued) Annual Report 2018 87