ACCOUNTS RECEIVABLE AND OTHER FINANCIAL ASSETS

3 Months Ended

Mar. 31, 2022

ACCOUNTS RECEIVABLE AND OTHER FINANCIAL ASSETS

Accounts receivable in the Consolidated Balance Sheets at March 31, 2022 and December 31, 2021 includes receivables from customers of $1.1 billion and receivables from payment processors and networks of $545 million and $343 million, respectively. The remaining balance principally relates to receivables from marketing affiliates. The Company’s receivables are short-term in nature. In addition, the Company had prepayments to certain customers of $51 million and $67 million included in "Prepaid expenses, net" and $20 million and $18 million included in "Other assets, net" in the Consolidated Balance Sheets at March 31, 2022 and December 31, 2021, respectively. The amounts mentioned above are stated on gross basis, before deducting the allowance for expected credit losses.

Significant judgments and assumptions are required to estimate the allowance for expected credit losses and such assumptions may change in future periods, particularly the assumptions related to the business prospects and financial condition of customers and marketing affiliates, including the impact of the COVID-19 pandemic, and the Company’s ability to collect the receivable or recover the prepayment.

The following table summarizes the activity of the allowance for expected credit losses on receivables (in millions):


	Three Months Ended March 31,
	2022		2021
Balance, beginning of year	$	101	$	166
Provision charged to expense	30		(12)
Write-offs and adjustments	(28)		(57)
Foreign currency translation adjustments	(1)		(3)
Balance, end of period	$	102	$	94

In addition to the allowance for expected credit losses on receivables, the Company recorded an allowance for expected credit losses on prepayments to certain customers, which are included in "Prepaid expenses, net" and "Other assets, net" in the Consolidated Balance Sheets. The following table summarizes the activity of the allowance for expected credit losses on prepayments to customers (in millions):


	Three Months Ended March 31,
	2022		2021
Balance, beginning of year	$	47	$	55
Provision charged to expense	(3)		2
Write-offs and adjustments	(1)		(1)

Balance, end of period	$	43	$	56