ACCOUNTS RECEIVABLE AND OTHER FINANCIAL ASSETS

12 Months Ended

Dec. 31, 2022

ACCOUNTS RECEIVABLE AND OTHER FINANCIAL ASSETS

Accounts receivable in the Consolidated Balance Sheets at December 31, 2022 and 2021 includes receivables from customers of $1.5 billion and $1.1 billion, respectively, and receivables from payment processors and networks of $730 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 $29 million and $67 million, included in "Prepaid expenses, net," and $5 million and $18 million, included in "Other assets, net" in the Consolidated Balance Sheets at December 31, 2022 and 2021, respectively. The amounts mentioned above are stated on a gross basis, before deducting the allowance for expected credit losses.

In 2020, due to the impact of the COVID-19 pandemic (see Note 2), given the severe downturn in the global travel industry and the financial difficulties faced by many of the Company’s travel service provider and restaurant customers and marketing affiliates, the Company increased its provision for expected credit losses on receivables from and prepayments to its customers and marketing affiliates. 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, macroeconomic conditions, inflationary pressures, potential recession, 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):


	Year Ended December 31,
	2022		2021		2020
Balance, beginning of year	$	101	$	166	$	49
Provision charged to earnings	130		48		216
Write-offs and adjustments	(110)		(107)		(116)
Foreign currency translation adjustments	(4)		(6)		17
Balance, end of year	$	117	$	101	$	166

The allowance for expected credit losses on receivables includes a portion of the amounts related to refunds paid or payable to certain travelers without a corresponding estimated expected recovery from the travel service providers. For the years ended December 31, 2022, 2021, and 2020, the Company recorded a reduction in revenue of $37 million, $13 million, and $37 million, respectively, for such refunds, which is included in "Provision charged to earnings" in the table above.

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):


	Year Ended December 31,
	2022		2021		2020
Balance, beginning of year	$	47	$	55	$	6
Provision charged to expense	(20)		(4)		51
Write-offs and adjustments	(4)		(5)		(2)
Currency translation adjustments	—		1		—
Balance, end of year	$	23	$	47	$	55