
Balance at December 31, 2020	$	69
Provision	8
Charge-offs	(18)
Recoveries and other(1)	(1)
Balance at December 31, 2021	$	58
Provision	17
Charge-offs	(14)
Recoveries and other(1)	(9)
Balance at December 31, 2022	$	52

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 percentage of gross receivables was 5.7% at December 31, 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 sale 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.

Finance receivables include sales-type leases and installment loans arising from the marketing of our equipment. These receivables are typically collateralized by a security interest in the underlying equipment.


	December 31,
	2022		2021
Gross receivables	$	3,593	$	3,568
Unearned income	(374)		(380)
Subtotal	3,219		3,188
Residual values	—		—
Allowance for doubtful accounts	(117)		(118)
Finance Receivables, Net	3,102		3,070
Less: Billed portion of finance receivables, net	93		94
Less: Current portion of finance receivables not billed, net	1,061		1,042
Finance Receivables Due After One Year, Net	$	1,948	$	1,934

A summary of our gross finance receivables' future contractual maturities, including those previously billed, is as follows:


	December 31,
	2022		2021
2022			$	1,357
2023	$	1,325	972
2024	967		668
2025	690		396
2026	411		157
2027	169
Thereafter	31		18
Total	$	3,593	$	3,568

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 3.6% at December 31, 2022 and 3.7% at December 31, 2021. 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.

The bad debt provision was $26 for the year ended December 31, 2022. This compares to the bad debt provision of $(1) for the year ended December 31, 2021. The provision for the year ended December 31, 2021 included a reserve reduction of approximately $31, which was the result of improvements in the macroeconomic environment in 2021 as well as lower write-offs as a result of the COVID-19 pandemic.

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 macroeconomic conditions including higher inflation, interest rates and the potential for recessions in the geographic areas of our customers. In addition, there continues to be geopolitical uncertainty in Europe from the Ukraine/Russia conflict and continued impacts from the COVID-19 recovery. As a result of these uncertainties, our reserve as a percent of receivables has remained elevated as compared to our reserve prior to the onset of 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.


Allowance for Credit Losses:	United States		Canada		Europe(1)		Total
Balance at December 31, 2020	$	77	$	15	$	41	$	133
Provision	5		(3)		(3)		(1)
Charge-offs	(7)		(3)		(6)		(16)
Recoveries and other(2)	2		2		(2)		2

Balance at December 31, 2021	$	77	$	11	$	30	$	118
Provision	20		(2)		8		26
Charge-offs	(15)		(3)		(8)		(26)
Recoveries and other(2)	1		1		(3)		(1)

Balance at December 31, 2022	$	83	$	7	$	27	$	117
Finance Receivables Collectively Evaluated for Impairment:
December 31, 2021(3)	$	1,876	$	251	$	1,061	$	3,188
December 31, 2022(3)	$	1,948	$	228	$	1,043	$	3,219

_____________

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-user 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%.

Credit quality indicators are updated at least annually, or more frequently to the extent required by economic conditions, and the credit quality of any given customer can change during the life of the portfolio.


	December 31, 2022
	2022		2021		2020		2019		2018		Prior		Total Finance Receivables
United States (Direct):
Low Credit Risk	$	173	$	104	$	80	$	53	$	23	$	2	$	435
Average Credit Risk	83		36		26		28		7		2		182
High Credit Risk	71		70		49		18		6		2		216
Total	327		210		155		99		36		6		833

United States (Indirect):
Low Credit Risk	249		165		91		49		12		1		567
Average Credit Risk	210		156		73		40		11		—		490
High Credit Risk	22		20		9		5		2		—		58
Total	481		341		173		94		25		1		1,115

Canada
Low Credit Risk	31		22		17		12		5		—		87
Average Credit Risk	46		25		22		16		5		—		114
High Credit Risk	6		6		8		4		2		1		27
Total	83		53		47		32		12		1		228

EMEA(1)
Low Credit Risk	269		167		90		59		24		5		614
Average Credit Risk	152		105		63		43		15		3		381
High Credit Risk	17		13		9		7		2		—		48
Total	438		285		162		109		41		8		1,043

Total Finance Receivables
Low Credit Risk	722		458		278		173		64		8		1,703
Average Credit Risk	491		322		184		127		38		5		1,167
High Credit Risk	116		109		75		34		12		3		349
Total	$	1,329	$	889	$	537	$	334	$	114	$	16	$	3,219


	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 reasonably assured. The aging of our billed finance receivables is as follows:


	December 31, 2022
	Current		31-90 Days Past Due		>90 Days Past Due		Total Billed		Unbilled		Total Finance Receivables		>90 Days and Accruing






Direct	$	30	$	6	$	6	$	42	$	791	$	833	$	47
Indirect	27		6		4		37		1,078		1,115		—
Total United States	57		12		10		79		1,869		1,948		47
Canada	5		1		—		6		222		228		6





EMEA (1)	9		2		1		12		1,031		1,043		12

Total	$	71	$	15	$	11	$	97	$	3,122	$	3,219	$	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

In December 2022, the Company entered into a Receivables Funding Agreement with an affiliate of HPS Investment Partners (the Purchaser) pursuant to which the Company agreed to offer for sale, and Purchaser agreed to purchase, certain eligible pools of finance receivables on a monthly basis in transactions intended to be structured as "true sales at law," and we have received an opinion to that effect from outside legal counsel. Accordingly, the receivables sold were derecognized from our financial statements and the Purchaser does not have recourse back to the Company for uncollectible receivables.

The Receivables Funding Agreement has an initial term through January 31, 2024, with automatic one-year extensions thereafter, unless terminated by either the Company or the Purchaser. The Receivables Funding Agreement contemplates lease receivable sales totaling approximately $600 during the initial term. Additionally, the Company will continue to service the lease receivables for a specified fee and will also be paid a commission on lease receivables sold under the Receivables Funding Agreement.

During the year ended December 31, 2022, the Company sold approximately $60 in principal balances of lease receivables under the Receivables Funding Agreement for approximately $60 in cash and received and recognized commissions of approximately $2, which are recorded in Services, maintenance and rentals as Other revenue. The cash proceeds were recorded in Net cash provided by operating activities.