Company: GVH
Filing Date: 2025-02-12
Form Type: 20-F
Source: 0001493152-25-006117
Chunk: 230

Company: Globavend Holdings Ltd
Filing Date: 2025-02-12
Form: 20-F
Item: Item 19
Chunk 230
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8000                7.8000                7.8000  

Credit Risk

On October 1,
2020, the Company adopted ASC 326. The Company estimates expected credit losses over the contractual period in which the Company is exposed
to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. Assets
that potentially subject the Company to a significant concentration of credit risk primarily consist of cash and cash equivalents, accounts
receivable, deposits and contract assets. The Company has designed their credit policies with an objective to minimize their exposure
to credit risk.

The exposure to credit risk, which will
cause a financial loss to us due to failure to discharge an obligation by the counterparties, relates primarily to our bank deposits
(including our own cash at banks), accounts receivable, deposits and contract assets. The Company considers the maximum exposure to credit
risk equals to the carrying amount of these financial assets in the consolidated statement of financial position. As of September 30,
2023 and 2024, the cash balances of $554,132and $2,296,462, respectively, were substantially maintained at financial institutions in
Hong Kong, respectively.

The Company believes that there is no
significant credit risk associated with cash, which was held by reputable financial institutions in the jurisdictions where the Company
and its subsidiaries are located.

The Company has adopted a credit policy
of dealing with creditworthy counterparties to mitigate the credit risk from defaults. The credit exposure is controlled by counterparty
limits that are reviewed and approved by the senior management of the Company periodically. The management team periodically evaluates
the creditworthiness of the existing customers in determining an allowance for expected credit loss primarily based on many factors,
including the age of the balance, customer’s historical payment history, its current creditworthiness and current or future economic
trends.

Liquidity Risk

Liquidity risk is the risk that the Company
will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or
another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have
sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses
or risking damage to the Company’s reputation.

Typically, the Company ensures that it
has sufficient cash on demand to meet expected operational expenses for a period of 60 days, including the servicing of financial obligations;
this