
	2022		2021
Balance at January 1st	$	58	$	69
Provision	9		4
Charge-offs	(3)		(5)
Recoveries and other(1)	(1)		0
Balance at March 31st	63		68
Provision	3		1
Charge-offs	(2)		(2)
Recoveries and other(1)	(1)		1
Balance at June 30th	63		68
Provision	(1)		0
Charge-offs	(5)		(5)
Recoveries and other(1)	(6)		(1)
Balance at September 30th	$	51	$	62

_____________

We perform ongoing credit evaluations of our customers and adjust credit limits based upon customer payment history and current creditworthiness. 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 the allowance for doubtful accounts as a percent of gross accounts receivable was 5.8% at September 30, 2022 and 6.6% at December 31, 2021. The decrease in the allowance is primarily due to a reduction in estimated losses for customer accommodations and other billing adjustments.

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. Of the accounts receivable sold and derecognized from our balance sheet, $119 and $102 remained uncollected as of September 30, 2022 and December 31, 2021, respectively.

(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.


	September 30, 2022		December 31, 2021
Gross receivables	$	3,368	$	3,568
Unearned income	(351)		(380)
Subtotal	3,017		3,188
Residual values	—		—
Allowance for doubtful accounts	(117)		(118)
Finance receivables, net	2,900		3,070
Less: Billed portion of finance receivables, net	91		94
Less: Current portion of finance receivables not billed, net	995		1,042
Finance receivables due after one year, net	$	1,814	$	1,934

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.

The allowance for doubtful credit losses is principally determined 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, the allowance for doubtful credit losses as a percentage of gross finance receivables (net of unearned income) was 3.9% at September 30, 2022 and 3.7% and 4.0% at December 31, 2021 and 2020, respectively. In determining the level of reserve required we critically assessed current and forecasted economic conditions and trends to ensure we objectively considered those expected impacts in the determination of our reserve. Our assessment also included a review of current portfolio credit metrics and the level of write-offs incurred over the past year.

Our allowance for doubtful finance receivables is effectively determined by geography. The risk characteristics in our finance receivable portfolio segments are generally 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.

Although write-offs incurred to date continue to lag expectations, we believe our current reserve position remains sufficient to cover expected future losses that may result from current and future macro-economic conditions including higher inflation and interest rates. In addition, there continues to be uncertainty regarding the effects from the Russia/Ukraine war and its impact on the macro or global economy. As a result of these uncertainties, our reserves as a percent of receivables have remained largely consistent since to the first quarter 2020 increase to initially record expected losses from the COVID-19 pandemic. We continue to monitor developments in future economic conditions and trends, and as a result, our reserves may need to be updated in future periods.


	United States		Canada		EMEA(1)		Total
Balance at December 31, 2021	$	77	$	11	$	30	$	118
Provision	3		—		3		6
Charge-offs	(2)		(1)		(1)		(4)
Recoveries and other(2)	—		1		(1)		—
Balance at March 31, 2022	78		11		31		120
Provision	—		1		3		4
Charge-offs	(3)		(1)		(2)		(6)
Recoveries and other(2)	—		—		(2)		(2)
Balance at June 30, 2022	75		11		30		116
Provision	6		1		2		9
Charge-offs	(4)		(1)		(1)		(6)
Recoveries and other(2)	—		—		(2)		(2)

Balance at September 30, 2022	$	77	$	11	$	29	$	117
Finance receivables as of September 30, 2022 collectively evaluated for impairment (3)	$	1,883	$	214	$	920	$	3,017

Balance at December 31, 2020	$	77	$	15	$	41	$	133
Provision	2		1		3		6
Charge-offs	(2)		—		(1)		(3)
Recoveries and other(2)	1		—		(2)		(1)
Balance at March 31, 2021	78		16		41		135
Provision	6		(1)		(3)		2
Charge-offs	(3)		(1)		(1)		(5)
Recoveries and other(2)	—		1		—		1
Balance at June 30, 2021	81		15		37		133
Provision	—		(3)		(1)		(4)
Charge-offs	(1)		(1)		—		(2)
Recoveries and other(2)	—		—		—		—

Balance at September 30, 2021	$	80	$	11	$	36	$	127
Finance receivables as of September 30, 2021 collectively evaluated for impairment(3)	$	1,866	$	262	$	1,074	$	3,202

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 primarily includes leases originated through our XBS sales channel and lease financing to end-user customers who purchased equipment we sold to distributors or resellers.

•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%.


	September 30, 2022
	2022		2021		2020		2019		2018		Prior		Total Finance Receivables
United States (Direct)
Low Credit Risk	$	116	$	115	$	92	$	64	$	33	$	4	$	424
Average Credit Risk	53		39		30		36		11		3		172
High Credit Risk	50		76		55		21		8		3		213
Total	$	219	$	230	$	177	$	121	$	52	$	10	$	809

United States (Indirect)
Low Credit Risk	$	183	$	182	$	101	$	63	$	18	$	2	$	549
Average Credit Risk	147		169		84		46		17		1		464
High Credit Risk	18		24		11		5		3		—		61
Total	$	348	$	375	$	196	$	114	$	38	$	3	$	1,074

Canada
Low Credit Risk	$	18	$	24	$	18	$	14	$	7	$	1	$	82
Average Credit Risk	28		26		24		18		7		2		105
High Credit Risk	5		5		9		4		3		1		27
Total	$	51	$	55	$	51	$	36	$	17	$	4	$	214

EMEA(1)
Low Credit Risk	$	170	$	165	$	93	$	65	$	32	$	6	$	531
Average Credit Risk	103		104		67		48		18		3		343
High Credit Risk	11		12		10		9		3		1		46
Total	$	284	$	281	$	170	$	122	$	53	$	10	$	920







Total Finance Receivables
Low Credit Risk	$	487	$	486	$	304	$	206	$	90	$	13	$	1,586
Average Credit Risk	331		338		205		148		53		9		1,084
High Credit Risk	84		117		85		39		17		5		347
Total	$	902	$	941	$	594	$	393	$	160	$	27	$	3,017


	December 31, 2021
	2021		2020		2019		2018		2017		Prior		Total Finance Receivables
United States (Direct)
Low Credit Risk	$	148	$	121	$	98	$	68	$	21	$	3	$	459
Average Credit Risk	60		40		57		23		8		2		190
High Credit Risk	91		73		31		16		6		1		218
Total	$	299	$	234	$	186	$	107	$	35	$	6	$	867

United States (Indirect)
Low Credit Risk	$	235	$	145	$	100	$	43	$	11	$	—	$	534
Average Credit Risk	201		103		74		35		10		—		423
High Credit Risk	24		15		8		4		1		—		52
Total	$	460	$	263	$	182	$	82	$	22	$	—	$	1,009

Canada
Low Credit Risk	$	32	$	27	$	22	$	13	$	3	$	1	$	98
Average Credit Risk	34		34		27		15		6		1		117
High Credit Risk	8		12		7		5		4		—		36
Total	$	74	$	73	$	56	$	33	$	13	$	2	$	251

EMEA(1)
Low Credit Risk	$	229	$	143	$	121	$	71	$	22	$	6	$	592
Average Credit Risk	156		109		84		45		15		3		412
High Credit Risk	18		15		13		8		3		—		57
Total	$	403	$	267	$	218	$	124	$	40	$	9	$	1,061







Total Finance Receivables
Low Credit Risk	$	644	$	436	$	341	$	195	$	57	$	10	$	1,683
Average Credit Risk	451		286		242		118		39		6		1,142
High Credit Risk	141		115		59		33		14		1		363
Total	$	1,236	$	837	$	642	$	346	$	110	$	17	$	3,188

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 probable.


	September 30, 2022
	Current		31-90 Days Past Due		>90 Days Past Due		Total Billed		Unbilled		Total Finance Receivables		>90 Days and Accruing
Direct	$	29	$	5	$	6	$	40	$	769	$	809	$	48
Indirect	27		6		4		37		1,037		1,074		—






Total United States	56		11		10		77		1,806		1,883		48
Canada	6		1		—		7		207		214		6





EMEA(1)	8		2		1		11		909		920		11

Total	$	70	$	14	$	11	$	95	$	2,922	$	3,017	$	65

	December 31, 2021
	Current		31-90 Days Past Due		>90 Days Past Due		Total Billed		Unbilled		Total Finance Receivables		>90 Days and Accruing
Direct	$	28	$	7	$	7	$	42	$	825	$	867	$	61
Indirect	28		5		4		37		972		1,009		—






Total United States	56		12		11		79		1,797		1,876		61
Canada	6		1		—		7		244		251		9





EMEA(1)	9		2		1		12		1,049		1,061		13

Total	$	71	$	15	$	12	$	98	$	3,090	$	3,188	$	83