Receivables, Allowance for Credit Losses and Credit Quality of Receivables

9 Months Ended

Sep. 30, 2021

Receivables, Allowance for Credit Losses and Credit Quality of Receivables

Receivables

The following table summarizes the components of current and long-term receivables, net:


	As of
	September 30, 2021		December 31, 2020
Current:
Receivables	$	477	$	514
Allowance for credit losses	(62)		(76)
Current receivables, net	415		438
Long-term:
Receivables	20		24
Allowance for credit losses	(2)		(5)
Long-term receivables, net	18		19
Total receivables, net	$	433	$	457

Allowance for Credit Losses

We manage our receivable portfolios using both geography and delinquency as key credit quality indicators. The following summarizes geographical delinquencies of total receivables, net:


	As of
	September 30, 2021		Balances over 90 days past due		December 31, 2020		Balances over 90 days past due
Receivables:
U.S. and Canada	$	319	$	43	$	339	$	85
International	178		41		199		45
Total receivables	497		84		538		130

Receivables allowance:
U.S. and Canada	(27)		(12)		(42)		(26)
International	(37)		(19)		(39)		(20)
Total receivables allowance	(64)		(31)		(81)		(46)
Receivables, net	$	433	$	53	$	457	$	84

Account balances are charged against the allowances after all internal and external collection efforts have been exhausted and the potential for recovery is considered remote.

The activity in our allowance for receivable credit losses for each of the three and nine months ended September 30, 2021 and 2020 is as follows:


	2021						2020
	Total		U.S. and Canada		International		Total
Beginning allowance for credit losses(1)	$	(81)	$	(43)	$	(38)	$	(45)
Provision	1		—		1		(28)
Charge-offs and recoveries	2		1		1		—
Allowance for credit losses as of March 31	(78)		(42)		(36)		(73)
Provision	(2)		(1)		(1)		(12)
Charge-offs	17		17		—		—
Allowance for credit losses as of June 30	(63)		(26)		(37)		(85)
Provision	(1)		(1)		—		(1)
Charge-offs	—		—		—		10
Allowance for credit losses as of September 30	$	(64)	$	(27)	$	(37)	$	(76)

(1) Reflects $6 million related to implementation of ASC 326 for the 2020 beginning balance.

At September 30, 2021, 12% of our total receivables, net, were past due by over 90 days compared to 18% at December 31, 2020.

Credit Quality of Receivables

We have certain concentrations of outstanding receivables in international locations that impact our assessment of the credit quality of our receivables. We monitor the macroeconomic and political environment in each of these locations in our assessment of the credit quality of our receivables. The international customers with significant concentrations (generally deemed to be exceeding 10%) of our receivables with terms longer than one year are in the Latin America region (“LATAM”) and are primarily comprised of Mexico, Peru and Argentina. The following table summarizes our LATAM receivables:


	As of September 30, 2021
	Total		Current or Not Yet Due		Balances Over 90 days Past Due
Receivables	$	106	$	44	$	62
Allowance for credit losses	(39)		(16)		(23)
Receivables, net	$	67	$	28	$	39

We increased our allowance for credit losses by $1 million and $40 million for the three and nine months ended September 30, 2020, respectively. These increases were primarily related to Gaming customers in LATAM (which transact with both domestic and international subsidiaries) as those customers were particularly affected by COVID-19 closures of gaming operations establishments with COVID-related closures lasting longer than in other geographic regions. We did not have material credit losses during the first half of 2021. We continuously review receivables and as information concerning credit quality arise, reassess our expectations of future losses and record an incremental reserve if warranted at that time. Our current allowance for credit losses represents our current expectation of credit losses; however future expectations could change as the ultimate impact of the COVID-19 disruption remains uncertain, particularly as to the financial stability of our customers during and after the COVID-19 disruption period.

The fair value of receivables is estimated by discounting expected future cash flows using current interest rates at which similar loans would be made to borrowers with similar credit ratings and remaining maturities. As of September 30, 2021 and December 31, 2020, the fair value of receivables, net, approximated the carrying value due to contractual terms of receivables generally being less than 24 months.