Finance Assets

Finance Receivables

Finance receivables are comprised of sales-type lease receivables and unsecured revolving loan receivables. Sales-type lease receivables are generally due in monthly, quarterly or semi-annual installments over periods ranging from three to five years. Loan receivables arise primarily from financing services offered to our customers for postage and related supplies. Loan receivables are generally due each month; however, customers may rollover outstanding balances.

Finance receivables at December 31, 2013 and 2012 consisted of the following:



	December 31, 2013									December 31, 2012
	North America			International			Total			North America			International			Total
Sales-type lease receivables
Gross finance receivables	$	1,456,420		$	456,759		$	1,913,179		$	1,581,711		$	461,510		$	2,043,221
Unguaranteed residual values	121,339			21,553			142,892			148,664			21,025			169,689
Unearned income	(299,396		)	(101,311		)	(400,707		)	(316,030		)	(104,258		)	(420,288		)
Allowance for credit losses	(14,165		)	(9,703		)	(23,868		)	(16,979		)	(8,662		)	(25,641		)
Net investment in sales-type lease receivables	1,264,198			367,298			1,631,496			1,397,366			369,615			1,766,981
Loan receivables
Loan receivables	397,815			49,054			446,869			414,960			47,293			462,253
Allowance for credit losses	(11,165		)	(1,916		)	(13,081		)	(12,322		)	(2,131		)	(14,453		)
Net investment in loan receivables	386,650			47,138			433,788			402,638			45,162			447,800
Net investment in finance receivables	$	1,650,848		$	414,436		$	2,065,284		$	1,800,004		$	414,777		$	2,214,781

Loan receivables are due in less than one year. Maturities of gross sales-type lease finance receivables at December 31, 2013 were as follows:



	Sales-type Lease Receivables
	North America		International		Total
2014	$	653,699	$	163,361	$	817,060
2015	407,850		135,496		543,346
2016	243,598		88,134		331,732
2017	113,614		49,026		162,640
2018	31,406		18,806		50,212
Thereafter	6,253		1,936		8,189
Total	$	1,456,420	$	456,759	$	1,913,179

Allowance for Credit Losses

Activity in the allowance for credit losses for finance receivables for the years ended December 31, 2013, 2012 and 2011 was as follows:



	Sales-type Lease Receivables						Loan Receivables
	North America			International			North America			International			Total
Balance at December 31, 2010	$	27,792		$	13,318		$	26,208		$	2,112		$	69,430
Amounts charged to expense	13,726			5,087			7,631			1,610			28,054
Accounts written off	(12,857		)	(6,366		)	(13,567		)	(1,264		)	(34,054		)
Balance at December 31, 2011	28,661			12,039			20,272			2,458			63,430
Amounts charged to expense	2,276			994			3,278			903			7,451
Accounts written off	(13,958		)	(4,371		)	(11,228		)	(1,230		)	(30,787		)
Balance at December 31, 2012	16,979			8,662			12,322			2,131			40,094
Amounts charged to expense	4,584			4,553			9,663			1,254			20,054
Accounts written off	(7,398		)	(3,512		)	(10,820		)	(1,469		)	(23,199		)
Balance at December 31, 2013	$	14,165		$	9,703		$	11,165		$	1,916		$	36,949

Aging of Receivables

The aging of finance receivables at December 31, 2013 and 2012 was as follows:



	Sales-type Lease Receivables				Loan Receivables
	North America		International		North America		International		Total
December 31, 2013
< 31 days	$	1,383,253	$	425,923	$	379,502	$	42,573	$	2,231,251
> 30 days and < 61 days	32,102		11,760		10,464		4,391		58,717
> 60 days and < 91 days	20,830		5,724		3,330		1,363		31,247
> 90 days and < 121 days	6,413		3,979		1,809		311		12,512
> 120 days	13,822		9,373		2,710		416		26,321
Total	$	1,456,420	$	456,759	$	397,815	$	49,054	$	2,360,048
Past due amounts > 90 days
Still accruing interest	$	6,413	$	3,979	$	—	$	—	$	10,392
Not accruing interest	13,822		9,373		4,519		727		28,441
Total	$	20,235	$	13,352	$	4,519	$	727	$	38,833



	Sales-type Lease Receivables				Loan Receivables
	North America		International		North America		International		Total
December 31, 2012
< 31 days	$	1,497,797	$	435,780	$	392,108	$	45,324	$	2,371,009
> 30 days and < 61 days	37,348		9,994		12,666		1,368		61,376
> 60 days and < 91 days	24,059		5,198		4,577		285		34,119
> 90 days and < 121 days	6,665		3,327		2,319		179		12,490
> 120 days	15,842		7,211		3,290		137		26,480
Total	$	1,581,711	$	461,510	$	414,960	$	47,293	$	2,505,474
Past due amounts > 90 days
Still accruing interest	$	6,665	$	3,327	$	—	$	—	$	9,992
Not accruing interest	15,842		7,211		5,609		316		28,978
Total	$	22,507	$	10,538	$	5,609	$	316	$	38,970

Credit Quality

The extension of credit and management of credit lines to new and existing clients uses a combination of an automated credit score, where available, and a detailed manual review of the client's financial condition and, when applicable, payment history. Once credit is granted, the payment performance of the client is managed through automated collections processes and is supplemented with direct follow up should an account become delinquent. We have robust automated collections and extensive portfolio management processes. The portfolio management processes ensure that our global strategy is executed, collection resources are allocated appropriately and enhanced tools and processes are implemented as needed.

We use a third party to score the majority of the North America portfolio on a quarterly basis using a commercial credit score. We do not use a third party to score our International portfolio because the cost to do so is prohibitive, it is a localized process and there is no single credit score model that covers all countries.

The table below shows the North America portfolio at December 31, 2013 and 2012 by relative risk class (low, medium, high) based on the relative scores of the accounts within each class. The relative scores are determined based on a number of factors, including the company type, ownership structure, payment history and financial information. A fourth class is shown for accounts that are not scored. Absence of a score is not indicative of the credit quality of the account. The degree of risk, as defined by the third party, refers to the relative risk that an account in the next 12 month period may become delinquent.


•	Low risk accounts are companies with very good credit scores and are considered to approximate the top 30% of all commercial borrowers.


•	Medium risk accounts are companies with average to good credit scores and are considered to approximate the middle 40% of all commercial borrowers.


•	High risk accounts are companies with poor credit scores, are delinquent or are at risk of becoming delinquent and are considered to approximate the bottom 30% of all commercial borrowers.



	December 31,
	2013		2012
Sales-type lease receivables
Risk Level
Low	$	1,081,853	$	1,016,413
Medium	244,379		450,432
High	51,851		43,658
Not Scored	78,337		71,208
Total	$	1,456,420	$	1,581,711
Loan receivables
Risk Level
Low	$	279,607	$	254,567
Medium	95,524		136,069
High	11,511		14,624
Not Scored	11,173		9,700
Total	$	397,815	$	414,960

Troubled Debt

We maintain a program for U.S. clients in our North America loan portfolio who are experiencing financial difficulties, but are able to make reduced payments over an extended period of time. Upon acceptance into the program, the client’s credit line is closed and interest accrual is suspended. There is generally no forgiveness of debt or reduction of balances owed. The balance of loans in this program, related loan loss allowance and write-offs are insignificant to the overall portfolio.

Leveraged Leases

Our investment in leveraged lease assets consisted of the following:



	December 31,
	2013			2012
Rental receivables	$	61,721		$	83,254
Unguaranteed residual values	13,235			14,177
Principal and interest on non-recourse loans	(35,449		)	(55,092		)
Unearned income	(5,097		)	(7,793		)
Investment in leveraged leases	34,410			34,546
Less: deferred taxes related to leveraged leases	(15,078		)	(19,372		)
Net investment in leveraged leases	$	19,332		$	15,174