Wholesale inventory receivables are receivables of Cat Financial that arise when Cat Financial provides financing for a dealer’s purchase of inventory. We include these receivables in Receivables—trade and other and Long-term receivables—trade and other in Statement 3 and were $1,233 million and $1,401 million, at December 31, 2020 and 2019, respectively.


Contractual maturities of outstanding wholesale inventory receivables:
(Millions of dollars)	December 31, 2020
Amounts Due In	Wholesale Loans		Wholesale Leases		Total
2021	$	516	$	52	$	568
2022	241		37		278
2023	141		27		168
2024	62		20		82
2025	23		13		36
Thereafter	10		4		14
Total	993		153		1,146
Guaranteed residual value 1	51		36		87
Unguaranteed residual value	2		33		35
Less: Unearned income	(11)		(24)		(35)
Total	$	1,035	$	198	$	1,233

1 For Wholesale loans, represents residual value on failed sale leasebacks.


Contractual maturities of outstanding finance receivables:
(Millions of dollars)	December 31, 2020
Amounts Due In	Retail Loans		Retail Leases		Total
2021	$	6,305	$	3,222	$	9,527
2022	3,617		2,032		5,649
2023	2,621		1,107		3,728
2024	1,378		467		1,845
2025	464		171		635
Thereafter	384		56		440
Total	14,769		7,055		21,824
Guaranteed residual value 1	44		412		456
Unguaranteed residual value	2		771		773
Less: Unearned income	(280)		(613)		(893)
Total	$	14,535	$	7,625	$	22,160

1 For Retail loans, represents residual value on failed sale leasebacks.

Effective January 1, 2020, we implemented the new credit loss guidance using a modified retrospective approach. Prior period comparative information has not been recast and continues to be reported under the accounting guidance in effect for those periods. See Note 1J for additional information.

Cat Financial provides loans and finance leases to end-user customers primarily for the purpose of financing new and used Caterpillar machinery, engines and equipment for commercial use, the majority of which operate in construction-related industries. Cat Financial also provides financing for vehicles, power generation facilities and marine vessels that, in most cases, incorporate Caterpillar products. The average original term of Cat Financial's customer finance receivable portfolio was approximately 46 months with an average remaining term of approximately 26 months as of December 31, 2020.

Cat Financial typically maintains a security interest in financed equipment and requires physical damage insurance coverage on the financed equipment, both of which provide Cat Financial with certain rights and protections. If Cat Financial's collection efforts fail to bring a defaulted account current, Cat Financial generally can repossess the financed equipment, after satisfying local legal requirements, and sell it within the Caterpillar dealer network or through third-party auctions.

Cat Financial estimates the allowance for credit losses related to its customer finance receivables based on loss forecast models utilizing probabilities of default and the estimated loss given default based on past loss experience adjusted for current conditions and reasonable and supportable forecasts capturing country and industry-specific economic factors.

During the year ended December 31, 2020, Cat Financial's forecasts for the markets in which it operates reflected an overall decline in economic conditions resulting from a contracting economy, elevated unemployment rates and an increase in delinquencies due to the COVID-19 pandemic. The company believes the economic forecasts employed represent reasonable and supportable forecasts, followed by a reversion to long-term trends.

Cat Financial provides financing to Caterpillar dealers in the form of wholesale financing plans. Cat Financial's wholesale financing plans provide assistance to dealers by financing their mostly new Caterpillar equipment inventory and rental fleets on a secured and unsecured basis. In addition, Cat Financial provides unsecured loans to Caterpillar dealers for working capital.

Although our forecasts continued to indicate a decline in economic conditions, Cat Financial's Dealer portfolio segment has not historically experienced increased credit losses during prior economic downturns due to its close working relationships with the dealers and their financial strength. Therefore, we made no adjustments to historical loss rates during the year ended December 31, 2020.

Cat Financial further evaluates portfolio segments by the class of finance receivables, which is defined as a level of information (below a portfolio segment) in which the finance receivables have the same initial measurement attribute and a similar method for assessing and monitoring credit risk. Typically, Cat Financial's finance receivables within a geographic area have similar credit risk profiles and methods for assessing and monitoring credit risk. Cat Financial's classes, which align with management reporting for credit losses, are as follows:

•Caterpillar Power Finance - Finance receivables originated worldwide related to marine vessels with Caterpillar engines and Caterpillar electrical power generation, gas compression and co-generation systems and non-Caterpillar equipment that is powered by these systems.

Receivable balances, including accrued interest, are written off against the allowance for credit losses when, in the judgment of management, they are considered uncollectible (generally upon repossession of the collateral). The amount of the write-off is determined by comparing the fair value of the collateral, less cost to sell, to the amortized cost. Subsequent recoveries, if any, are credited to the allowance for credit losses when received.


(Millions of dollars)	December 31, 2020
	Customer		Dealer		Total
Allowance for Credit Losses:
Balance at beginning of year	$	375	$	45	$	420
Adjustment to adopt new accounting guidance 1	12		—		12
Receivables written off	(263)		—		(263)
Recoveries on receivables previously written off	41		—		41
Provision for credit losses	262		(1)		261
Other	4		—		4
Balance at end of year	$	431	$	44	$	475

Individually evaluated	$	187	$	39	$	226
Collectively evaluated	244		5		249
Ending Balance	$	431	$	44	$	475

Finance Receivables:
Individually evaluated	$	594	$	78	$	672
Collectively evaluated	18,644		2,844		21,488
Ending Balance	$	19,238	$	2,922	$	22,160

1 See Note 1J regarding new accounting guidance related to credit losses.



(Millions of dollars)	December 31, 2019
	Customer		Dealer		Total
Allowance for Credit Losses:
Balance at beginning of year	$	486	$	21	$	507
Receivables written off	(281)		—		(281)
Recoveries on receivables previously written off	44		—		44
Provision for credit losses	138		24		162
Other	(12)		—		(12)
Balance at end of year	$	375	$	45	$	420

Individually evaluated	$	178	$	39	$	217
Collectively evaluated	197		6		203
Ending Balance	$	375	$	45	$	420

Finance Receivables:
Individually evaluated	$	594	$	78	$	672
Collectively evaluated	18,093		3,632		21,725
Ending Balance	$	18,687	$	3,710	$	22,397

At origination, Cat Financial evaluates credit risk based on a variety of credit quality factors including prior payment experience, customer financial information, credit ratings, loan-to-value ratios, probabilities of default, industry trends, macroeconomic factors and other internal metrics. On an ongoing basis, Cat Financial monitors credit quality based on past-due status as there is a meaningful correlation between the past-due status of customers and the risk of loss. In determining past-due status, Cat Financial considers the entire finance receivable past due when any installment is over 30 days past due.



(Millions of dollars)	December 31, 2020
	2020		2019		2018		2017		2016		Prior		Revolving Finance Receivables		Total Finance Receivables
North America
Current	$	3,777	$	2,423	$	1,344	$	522	$	212	$	27	$	89	$	8,394
31-60 days past due	52		49		33		16		7		2		—		159
61-90 days past due	22		25		16		9		2		1		—		75
91+ days past due	14		35		31		20		9		4		2		115

EAME
Current	1,605		931		501		203		60		18		—		3,318
31-60 days past due	5		15		3		2		—		—		—		25
61-90 days past due	1		1		2		1		—		—		—		5
91+ days past due	7		7		12		4		39		43		—		112

Asia/Pacific
Current	1,375		745		321		61		10		3		—		2,515
31-60 days past due	12		22		13		6		—		—		—		53
61-90 days past due	7		11		7		1		—		—		—		26
91+ days past due	4		10		9		3		—		—		—		26

Mining
Current	490		571		287		152		92		151		137		1,880
31-60 days past due	5		—		5		1		—		—		—		11
61-90 days past due	—		—		—		—		—		—		—		—
91+ days past due	—		11		8		2		—		—		1		22

Latin America
Current	561		348		151		48		13		34		—		1,155
31-60 days past due	3		6		4		3		—		—		—		16
61-90 days past due	1		7		6		3		2		—		—		19
91+ days past due	2		14		11		24		5		4		—		60

Caterpillar Power Finance
Current	217		172		111		273		99		117		119		1,108
31-60 days past due	—		—		6		—		—		—		—		6
61-90 days past due	—		—		—		—		—		9		—		9
91+ days past due	2		—		20		3		25		79		—		129
Total Customer	$	8,162	$	5,403	$	2,901	$	1,357	$	575	$	492	$	348	$	19,238

Finance receivables in the Customer portfolio segment are substantially secured by collateral, primarily in the form of Caterpillar and other machinery. For those contracts where the borrower is experiencing financial difficulty, repayment of the outstanding amounts is generally expected to be provided through the operation or repossession and sale of the machinery.

As of December 31, 2020, Cat Financial's total amortized cost of finance receivables within the Dealer portfolio segment was current, with the exception of $81 million that was 91+ days past due in Latin America. Of these past due receivables, $78 million were originated in 2017 and $3 million were originated prior to 2016.


(Millions of dollars)	December 31, 2019
	31-60 Days Past Due		61-90 Days Past Due		91+ Days Past Due		Total Past Due		Current		Total Finance Receivables
Customer
North America	$	72	$	23	$	55	$	150	$	8,002	$	8,152
EAME	30		31		141		202		2,882		3,084
Asia/Pacific	40		14		29		83		2,181		2,264
Mining	5		—		19		24		2,266		2,290
Latin America	41		23		80		144		1,089		1,233
Caterpillar Power Finance	10		10		225		245		1,419		1,664
Dealer
North America	—		—		—		—		2,136		2,136
EAME	—		—		—		—		342		342
Asia/Pacific	—		—		—		—		437		437
Mining	—		—		—		—		4		4
Latin America	—		—		78		78		712		790
Caterpillar Power Finance	—		—		—		—		1		1
Total	$	198	$	101	$	627	$	926	$	21,471	$	22,397

A finance receivable is considered impaired, based on current information and events, if it is probable that Cat Financial will be unable to collect all amounts due according to the contractual terms. Impaired finance receivables include finance receivables that have been restructured and are considered to be troubled debt restructurings.


	December 31, 2019
(Millions of dollars)		Recorded Investment		Unpaid Principal Balance		Related Allowance
Impaired Finance Receivables With No Allowance Recorded

North America		$	6	$	6	$	—
EAME		—		—		—
Asia/Pacific		—		—		—
Mining		22		22		—
Latin America		8		8		—
Caterpillar Power Finance		58		58		—
Total		$	94	$	94	$	—

Impaired Finance Receivables With An Allowance Recorded

North America		$	30	$	30	$	11
EAME		61		61		29
Asia/Pacific		8		8		2
Mining		37		36		9
Latin America		58		58		20
Caterpillar Power Finance		306		319		107
Total		$	500	$	512	$	178

Total Impaired Finance Receivables

North America		$	36	$	36	$	11
EAME		61		61		29
Asia/Pacific		8		8		2
Mining		59		58		9
Latin America		66		66		20
Caterpillar Power Finance		364		377		107
Total		$	594	$	606	$	178


	Years ended December 31,
	2019				2018
(Millions of dollars)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Impaired Finance Receivables With No Allowance Recorded
North America	$	9	$	—	$	16	$	1
EAME	6		—		14		—
Asia/Pacific	—		—		27		3
Mining	27		1		57		2
Latin America	21		1		38		2
Caterpillar Power Finance	54		3		130		7
Total	$	117	$	5	$	282	$	15

Impaired Finance Receivables With An Allowance Recorded
North America	$	34	$	2	$	49	$	2
EAME	81		2		53		2
Asia/Pacific	9		1		4		—
Mining	48		2		46		3
Latin America	72		5		67		3
Caterpillar Power Finance	396		11		378		12
Total	$	640	$	23	$	597	$	22

Total Impaired Finance Receivables
North America	$	43	$	2	$	65	$	3
EAME	87		2		67		2
Asia/Pacific	9		1		31		3
Mining	75		3		103		5
Latin America	93		6		105		5
Caterpillar Power Finance	450		14		508		19
Total	$	757	$	28	$	879	$	37

Recognition of income is suspended and the finance receivable is placed on non-accrual status when management determines that collection of future income is not probable. Contracts on non-accrual status are generally more than 120 days past due or have been restructured in a troubled debt restructuring (TDR). Recognition is resumed and previously suspended income is recognized when the finance receivable becomes current and collection of remaining amounts is considered probable. Payments received while the finance receivable is on non-accrual status are applied to interest and principal in accordance with the contractual terms. Interest earned but uncollected prior to the receivable being placed on non-accrual status is written off through Provision for credit losses when, in the judgment of management, it is considered uncollectible.



	December 31, 2020
	Amortized Cost
(Millions of dollars)	Non-accrual With an Allowance		Non-accrual Without an Allowance		91+ Still Accruing

North America	$	86	$	1	$	34
EAME	113		1		1
Asia/Pacific	13		—		13
Mining	21		1		—
Latin America	63		—		1
Caterpillar Power Finance	170		17		—
Total	$	466	$	20	$	49

As of December 31, 2020 and 2019, finance receivables in our Dealer portfolio segment on non-accrual status were $81 million and $78 million, respectively, all of which was in Latin America. There were no finance receivables in Cat Financial's Dealer portfolio segment more than 90 days past due and still accruing income as of December 31, 2020 and 2019 and no interest income was recognized on dealer finance receivables on non-accrual status during the years ended December 31, 2020 and 2019.

A restructuring of a finance receivable constitutes a TDR when the lender grants a concession it would not otherwise consider to a borrower experiencing financial difficulties. Concessions granted may include extended contract maturities, inclusion of interest only periods, below market interest rates, payment deferrals and reduction of principal and/or accrued interest.


(Millions of dollars)	Year ended December 31, 2020
	Number of Contracts	Pre-TDR Amortized Cost		Post-TDR Amortized Cost
North America	40	$	13	$	13
EAME	4	—		—
Asia/Pacific1	183	12		12
Mining2	63	35		35
Latin America3	77	45		45
Caterpillar Power Finance	22	115		115
Total	389	$	220	$	220

	Year ended December 31, 2019
	Number of Contracts	Pre-TDR Recorded Investment		Post-TDR Recorded Investment
North America	15	$	11	$	11
EAME	19	17		17
Asia/Pacific	—	—		—
Mining	2	8		8
Latin America	5	5		3
Caterpillar Power Finance	21	168		165
Total	62	$	209	$	204

	Year ended December 31, 2018
	Number of Contracts	Pre-TDR Recorded Investment		Post-TDR Recorded Investment
North America	38	$	21	$	21
EAME	—	—		—
Asia/Pacific	—	—		—
Mining	1	29		29
Latin America	1	3		3
Caterpillar Power Finance	12	133		99
Total	52	$	186	$	152


(Millions of dollars)	Year ended December 31, 2020			Year ended December 31, 2019			Year ended December 31, 2018
	Number of Contracts	Post-TDR Amortized Cost		Number of Contracts	Post-TDR Recorded Investment		Number of Contracts	Post-TDR Recorded Investment
North America	4	$	8	11	$	5	10	$	10
EAME	2	10		—	—		—	—
Asia/Pacific	27	2		—	—		—	—
Mining	21	10		—	—		—	—
Latin America	4	1		—	—		3	1
Caterpillar Power Finance	2	18		1	10		3	33
Total	60	$	49	12	$	15	16	$	44