We perform ongoing credit evaluations of our customers and adjust credit limits based upon customer payment history and current creditworthiness. Consistent with our adoption of ASU 2016-13 effective January 1, 2020 (refer to Note 1 - Basis of Presentation and Summary of Significant Accounting Policies), the allowance for uncollectible accounts receivable is determined based on an assessment of past collection experience as well as consideration of current and future economic conditions and changes in our customer collection trends. Based on that assessment, and primarily as a result of the macroeconomic and market disruption caused by the COVID-19 pandemic, the allowance for doubtful accounts as a percentage of gross receivables increased to 7.2% at December 31, 2020 from 4.3% at December 31, 2019.

Accounts receivable sales arrangements are utilized in the normal course of business as part of our cash and liquidity management. The accounts receivable sold are generally short-term trade receivables with payment due dates of less than 60 days. We have one facility in Europe that enables us to sell accounts receivable associated with our distributor network on an ongoing basis without recourse. Under this arrangement, we sell our entire interest in the related accounts receivable for cash and no portion of the payment is held back or deferred by the purchaser.

(1)Losses on sales were not material. Customers may also enter into structured-payable arrangements that require us to sell our receivables from that customer to a third-party financial institution, which then makes payments to us to settle the customer's receivable. In these instances, we ensure the sale of the receivables are bankruptcy-remote and the payment made to us is without recourse. The activity associated with these arrangements is not reflected in this disclosure, as payments under these arrangements have not been material and these are customer directed arrangements.


	December 31,
	2020		2019
Gross receivables	$	3,691	$	3,865
Unearned income	(393)		(425)
Subtotal	3,298		3,440
Residual values	—		—
Allowance for doubtful accounts	(133)		(89)
Finance Receivables, Net	3,165		3,351
Less: Billed portion of finance receivables, net	99		111
Less: Current portion of finance receivables not billed, net	1,082		1,158
Finance Receivables Due After One Year, Net	$	1,984	$	2,082

Our finance receivable portfolios are primarily in the U.S., Canada and EMEA. We generally establish customer credit limits and estimate the allowance for credit losses on a country or geographic basis. Customer credit limits are based upon an initial evaluation of the customer's credit quality and we adjust that limit accordingly based upon ongoing credit assessments of the customer, including payment history and changes in credit quality.

Consistent with our adoption of ASU 2016-13 effective January 1, 2020 (refer to Note 1 - Basis of Presentation and Summary of Significant Accounting Policies), the allowance for credit losses is determined principally based on an assessment of origination year and past collection experience as well as consideration of current and future economic conditions and changes in our customer collection trends. Based on that assessment, and primarily as a result of the macroeconomic and market turmoil caused by the COVID-19 pandemic, the allowance for doubtful credit losses was increased to 4.0% of gross finance receivables (net of unearned income) at December 31, 2020 from 2.6% at December 31, 2019. In determining the level of reserve required as of December 31, 2020, we critically assessed current and forecasted economic conditions in light of the COVID-19 pandemic to ensure we objectively included those expected impacts in the determination of our reserve. Our assessment also included current portfolio credit metrics and the level of reserves and write-offs we recorded on our receivables portfolio during the credit crisis in 2008/09 as additional reference points to objectively determine the adequacy of our allowance.

The allowance for doubtful accounts and provision for credit losses represents an estimate of the losses expected to be incurred by the Company from its finance receivable portfolio. The level of the allowance is determined on a collective basis by applying projected loss rates to our different portfolios by country, which represent our portfolio segments. This is the level at which we develop and document our methodology to determine the allowance for credit losses. These projected loss rates are primarily based upon historical loss experience adjusted for judgments about the probable effects of relevant observable data including current and future economic conditions as well as delinquency trends, resolution rates, the aging of receivables, credit quality indicators and the financial health of specific customer classes or groups.

The allowance for doubtful finance receivables is inherently more difficult to estimate than the allowance for trade accounts receivable because the underlying lease portfolio has an average maturity, at any time, of approximately two to three years and contains past due billed amounts, as well as unbilled amounts. We consider all available

information in our quarterly assessments of the adequacy of the allowance for doubtful accounts. We believe our estimates, including any qualitative adjustments, are reasonable and have considered all reasonably available information about past events, current conditions, and reasonable and supportable forecasts of future events and economic conditions. The identification of account-specific exposure is not a significant factor in establishing the allowance for doubtful finance receivables. Our policy and methodology used to establish our allowance for doubtful accounts has been consistently applied over all periods presented, with the exception of the updates required as part of our adoption of ASU 2016-13 effective January 1, 2020.

Our allowance for doubtful finance receivables is effectively determined by geography, so the risk characteristics in our finance receivable portfolio segments will generally be consistent with the risk factors associated with the economies of the countries/regions included in those geographies. Since EMEA is comprised of various countries and regional economies, the risk profile within that portfolio segment is somewhat more diversified due to the varying economic conditions among and within the countries.

The increase in charge-offs in 2020 as compared to 2019 was primarily in the U.S. and reflected the impacts from the COVID-19 pandemic and the lower level of government subsidy and support to U.S. based customers as compared to support provided to Europe based customers. However, as reflected in our allowance for doubtful receivables, charge-offs are expected to increase into 2021 as a result of the follow-on economic disruption related to the COVID-19 pandemic and as the level of government subsidies and support decreases in 2021.

Amounts disclosed below for the year ended December 31, 2020 reflect the adoption of ASU 2016-13 in January 2020. Amounts disclosed below for comparable periods in 2019 reflect superseded guidance. The allowance for doubtful accounts as well as the related investment in finance receivables were as follows:


Allowance for Credit Losses:	United States		Canada(1)		Europe(1)(2)		Total
Balance at December 31, 2018	$	53	$	12	$	27	$	92
Provision	20		1		7		28
Charge-offs	(15)		(5)		(14)		(34)
Recoveries and other(3)	1		2		—		3

Balance at December 31, 2019	$	59	$	10	$	20	$	89
Provision	41		8		32		81
Charge-offs	(23)		(5)		(14)		(42)
Recoveries and other(3)	—		2		3		5

Balance at December 31, 2020	$	77	$	15	$	41	$	133
Finance Receivables Collectively Evaluated for Impairment:
December 31, 2019(4)	$	1,922	$	326	$	1,192	$	3,440
December 31, 2020(4)	$	1,823	$	297	$	1,178	$	3,298

In the U.S., customers are further evaluated by class based on the type of lease origination. The primary categories are direct, which primarily includes leases originated directly with end customers through bundled lease arrangements, and indirect, which includes lease financing to end-user customers who purchased equipment we sold to distributors or resellers. Indirect also includes leases originated through our XBS sales channel, which utilizes a combination of internal and third party leasing in its lease arrangements with end customers.

•Low Credit Risk: This rating includes accounts with excellent to good business credit, asset quality and capacity to meet financial obligations. These customers are less susceptible to adverse effects due to shifts in economic conditions or changes in circumstance. The rating generally equates to a Standard & Poor's (S&P) rating of BBB- or better. Loss rates in this category in the normal course are generally less than 1%.

•Average Credit Risk: This rating includes accounts with average credit risk that are more susceptible to loss in the event of adverse business or economic conditions. This rating generally equates to a BB S&P rating. Although we experience higher loss rates associated with this customer class, we believe the risk is somewhat mitigated by the fact that our leases are fairly well dispersed across a large and diverse customer base. In addition, the higher loss rates are largely offset by the higher rates of return we obtain with such leases. Loss rates in this category in the normal course are generally in the range of 2% to 5%.

•High Credit Risk: This rating includes accounts that have marginal credit risk such that the customer’s ability to make repayment is impaired or may likely become impaired. We use numerous strategies to mitigate risk including higher rates of interest, prepayments, personal guarantees, etc. Accounts in this category include customers who were downgraded during the term of the lease from low and average credit risk evaluation when the lease was originated. Accordingly, there is a distinct possibility for a loss of principal and interest or customer default. The loss rates in this category in the normal course are generally in the range of 7% to 10%.


	December 31, 2020														December 31, 2019
	2020		2019		2018		2017		2016		Prior		Total Finance Receivables		Total Finance Receivables
Total United States (Direct):
Low Credit Risk	$	164	$	151	$	128	$	71	$	32	$	4	$	550	$	640
Average Credit Risk	54		95		52		26		8		2		237		331
High Credit Risk	90		42		27		13		5		3		180		132
Total	308		288		207		110		45		9		967		1,103

Total United States (Indirect):
Low Credit Risk	193		140		79		33		7		—		452		258
Average Credit Risk	129		124		71		31		8		—		363		445
High Credit Risk	19		9		9		3		1		—		41		116
Total	341		273		159		67		16		—		856		819

Canada(1)
Low Credit Risk	37		34		24		10		5		1		111		163
Average Credit Risk	46		39		26		17		6		1		135		97
High Credit Risk	18		10		10		10		3		—		51		66
Total	101		83		60		37		14		2		297		326

EMEA(1)(2)
Low Credit Risk	197		177		131		62		20		4		591		655
Average Credit Risk	170		160		108		51		17		4		510		479
High Credit Risk	23		24		15		10		4		1		77		58
Total	390		361		254		123		41		9		1,178		1,192

Total Finance Receivables
Low Credit Risk	591		502		362		176		64		9		1,704		1,716
Average Credit Risk	399		418		257		125		39		7		1,245		1,352
High Credit Risk	150		85		61		36		13		4		349		372
Total	$	1,140	$	1,005	$	680	$	337	$	116	$	20	$	3,298	$	3,440

The aging of our receivables portfolio is based upon the number of days an invoice is past due. Receivables that are more than 90 days past due are considered delinquent. Receivable losses are charged against the allowance when management believes the uncollectibility of the receivable is confirmed and is generally based on individual credit evaluations, results of collection efforts and specific circumstances of the customer. Subsequent recoveries, if any, are credited to the allowance.

We generally continue to maintain equipment on lease and provide services to customers that have invoices for finance receivables that are 90 days or more past due and, as a result of the bundled nature of billings, we also continue to accrue interest on those receivables. However, interest revenue for such billings is only recognized if collectability is deemed reasonably assured.


	December 31, 2020
	Current		31-90 Days Past Due		>90 Days Past Due		Total Billed		Unbilled		Total Finance Receivables		>90 Days and Accruing






Direct	$	33	$	6	$	9	$	48	$	919	$	967	$	74
Indirect	21		4		3		28		828		856		—
Total United States	54		10		12		76		1,747		1,823		74
Canada	8		2		—		10		287		297		12





EMEA (1)	12		3		2		17		1,161		1,178		23

Total	$	74	$	15	$	14	$	103	$	3,195	$	3,298	$	109


	December 31, 2019
	Current		31-90 Days Past Due		>90 Days Past Due		Total Billed		Unbilled		Total Finance Receivables		>90 Days and Accruing






Direct	$	37	$	11	$	8	$	56	$	1,047	$	1,103	$	57
Indirect	25		5		3		33		786		819		—
Total United States	62		16		11		89		1,833		1,922		57
Canada(1)	8		2		1		11		315		326		17





EMEA(1)(2)	12		1		2		15		1,177		1,192		32

Total	$	82	$	19	$	14	$	115	$	3,325	$	3,440	$	106

In July 2020, we sold $355 of U.S. based finance receivables to a consolidated special purpose entity (SPE), which funded the purchase through a secured loan agreement with a financial institution. As of December 31, 2020 the SPE held $286 of total Finance receivables, net, which are included in our Consolidated Balance Sheet as collateral for the secured loan agreement.

In December 2020, we sold $610 of U.S. based finance receivables to a consolidated SPE, which funded the purchase through a secured loan agreement with a financial institution. As of December 31, 2020 the SPE held $602 of total Finance receivables, net, which are included in our Consolidated Balance Sheet as collateral for the secured loan agreement.