Customer receivables are subject to impairment risk. Consequently, Bondora evaluates every delinquency "bucket" each month to gauge impairment levels; for each reporting period, it applies a formula to calculate net impairment losses. Relative to the growth of its operations, Bondora's net impairment charges have increased substantially in recent years. Because Bondora plans to continue expanding in future, there is a risk that impairment charges will keep rising. Bondora continually monitors factors that may be relevant to its business, including consumer behavior, general economic conditions and the market prices for its products, and the potential impact that any of them may have on receivable valuations. If Bondora is required to recognize additional impairment charges, it may have a material adverse effect on Bondora's business, financial condition, operational results or prospects, or cash flow.
Bondora closely monitors potentially doubtful accounts and carries out regular reviews of its impairment policy. This policy is reviewed annually by Bondora's internal and external auditors.