14.1. Trade receivables

Vast majority of trade receivables results from contracts with customers. Invoices are typically issued on a monthly basis, with subscription fee usually invoiced in advance and usage-based fees invoiced in arrears. The payment is due 14 days after the invoice date for most retail customers and up to 30 days for most wholesale customers. Non-current trade receivables relate mainly to sales of mobile handsets in monthly instalments.

The Group considers there is no concentration of credit risk with respect to trade receivables due to its large and diverse customer base consisting of individual and business customers. The Group’s maximum exposure to credit risk at the reporting date is represented by the carrying amounts of receivables recognised in the consolidated statement of financial position.

On 11 September 2020, the Group and BNP Paribas S.A. extended an agreement (concluded on 20 June 2019) under which OPL S.A. sells selected receivables arising from sales of mobile handsets in instalments, based on which sold receivables are derecognised from the consolidated statement of financial position. The impact on cash flows from operating activities for the 12 months ended 31 December 2020 and 2019 amounted to PLN 67 million and PLN 291 million, respectively, and loss on derecognition recognised in other operating expense for the same periods amounted to PLN 6 million and PLN 4 million, respectively. As a result of the agreement, PLN 202 million of trade receivables held at 20 June 2019 were reclassified out of the measured at amortised cost into the measured at fair value through other comprehensive income category, as the business model for those receivables is to collect contractual cash flows and sell them. Part of the price paid by BNP Paribas S.A. amounting to PLN 41 million and PLN 24 million, respectively, is deferred and presented as other assets as at 31 December 2020 and 2019.

The Group applies the present value valuation technique to measure receivables at fair value through other comprehensive income. The expected risk-adjusted cash flows related to the receivables are discounted using market risk-free interest rate. The nominal cash flows are decreased by the expected credit risk based on historical data. Such risk-adjusted discounted cash flows are adjusted by the margin expected to be received by the market participant buyer. The margin is determined based on the last instalment receivables sale transaction with BNP Paribas S.A.

Movements in the impairment of trade receivables during the 12 months ended 31 December 2020 and 2019 were as follows:

As a result of COVID-19 pandemic the Group recognised additional PLN 26 million of impairment of trade receivables in the 12 months ended 31 December 2020 (see Note 5).

Information about the credit risk exposure on the Group’s trade receivables as at 31 December 2020 was as follows:

Information about the credit risk exposure on the Group’s trade receivables as at 31 December 2019 was as follows: