You are the CEO of a building supply company that sells on account to both commercial builders and hardware stores across Western Canada. You are reviewing the financial statements with the CFO. She notes that the company has used the length of time a receivable is outstanding as the credit risk characteristic that best determines the company’s expected credit losses. She notes that the company collects extensive data on its customers and their transactions with the company, including payment history. She thinks that the company can refine the process by which it estimates expected credit losses and has asked for your thoughts on this.

Required 

a. Aside from the length of time a receivable is outstanding, what other credit risk factors might the CFO consider using to group receivables when determining expected credit losses? 

b. Is it possible for the company to use more than one credit risk factor to determine expected credit losses? Provide an example of how this might be done.