Common use of Dilutions Clause in Contracts

Dilutions. A. Judgmentally select a sample of 30 recent credit memos for the time periods subject to testing and prepare a table outlining the nature of the credit memos. B. For each credit memo selected in the sample, record the related invoice date, credit memo issuance date and rebill date (as applicable). Describe the method by which credits are aged in the AR. C. Calculate and report the simple and weighted average (weighted by dollar value) dilution horizons. The dilution horizon is defined as the number of days between the original invoice date and credit memo issuance date. D. Document the Servicer’s procedures for identifying non-cash credits to AR for purposes of the monthly accounts receivable rollforward, and test the adequacy of such procedures using the Analysis Report tested in the procedures outlined above. E. Document how rebills are reflected in the AR rollforward and whether rebills result in the reaging of receivables.