Receivables

12 Months Ended

Dec. 31, 2019

Receivables [Abstract]

Receivables

Receivables

	As of December 31
(Dollars in millions)	2019		2018
Receivables	$	256	$	378
Allowance at beginning of year	(2)		(2)
Reversal of allowance	1		—
Addition to allowance	(2)		—
Allowance at end of year	(3)		(2)
Total receivables, net of allowance	$	253	$	376

The Company receives bank notes generally maturing within six months from certain of its customers in China to settle trade accounts receivable. The Company may hold such bank notes until maturity, exchange them with suppliers to settle liabilities, or sell them to third party financial institutions in exchange for cash.

As of December 31, 2019, the Company had entered into arrangements with financial institutions and sold $81 million of factored trade receivables without recourse and $37 million of bank notes without recourse, which qualify as sales as all rights to the trade and notes receivable have passed to the financial institution. There were no factoring arrangements as of December 31, 2018.

As of December 31, 2019, the Company had $26 million of trade notes receivables which remain outstanding and will mature within the first quarter of 2020. The collections of such bank notes are included in operating cash flows based on the substance of the underlying transactions, which are operating in nature. The fair value of the guaranteed notes receivables in China is determined based on Level 2 inputs including credit ratings and other criteria observable in the market. The fair value of these notes equal their carrying amounts of $26 million as of December 31, 2019.

During the year ended December 31, 2018, the Company entered into arrangements with financial institutions and factored trade receivables of $10 million in France and bank notes of $9 million in China. They were accounted for as secured borrowings with pledged collateral and recorded in the Consolidated Balance Sheets within “Receivable, net” and “Other current liabilities.”