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 clients for postage and supplies. Loan receivables are generally due each month; however, customers may rollover outstanding balances. Interest is recognized on loan receivables using the effective interest method and related annual fees are initially deferred and recognized ratably over the annual period covered. Customer acquisition costs are expensed as incurred.

Finance receivables at December 31, 2014 and 2013 consisted of the following:



	December 31, 2014									December 31, 2013
	North America			International			Total			North America			International			Total
Sales-type lease receivables
Gross finance receivables	$	1,286,624		$	366,669		$	1,653,293		$	1,456,420		$	456,759		$	1,913,179
Unguaranteed residual values	105,205			18,291			123,496			121,339			21,553			142,892
Unearned income	(270,196		)	(83,110		)	(353,306		)	(299,396		)	(101,311		)	(400,707		)
Allowance for credit losses	(10,281		)	(5,129		)	(15,410		)	(14,165		)	(9,703		)	(23,868		)
Net investment in sales-type lease receivables	1,111,352			296,721			1,408,073			1,264,198			367,298			1,631,496
Loan receivables
Loan receivables	376,987			47,665			424,652			397,815			49,054			446,869
Allowance for credit losses	(10,912		)	(1,788		)	(12,700		)	(11,165		)	(1,916		)	(13,081		)
Net investment in loan receivables	366,075			45,877			411,952			386,650			47,138			433,788
Net investment in finance receivables	$	1,477,427		$	342,598		$	1,820,025		$	1,650,848		$	414,436		$	2,065,284

Finance receivables with a net investment of $62 million were included in the sale of DIS.

Loans receivables are due within one year. Maturities of gross sales-type lease finance receivables at December 31, 2014 were as follows:



	Sales-type Lease Receivables
	North America		International		Total
2015	$	580,232	$	146,670	$	726,902
2016	362,876		104,442		467,318
2017	214,582		67,824		282,406
2018	97,914		36,227		134,141
2019	25,497		10,760		36,257
Thereafter	5,523		746		6,269
Total	$	1,286,624	$	366,669	$	1,653,293

Allowance for Credit Losses

Activity in the allowance for credit losses for the years ended December 31, 2014, 2013 and 2012 was as follows:



	Sales-type Lease Receivables						Loan Receivables
	North America			International			North America			International			Total
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
Amounts charged to expense	4,346			866			10,237			1,626			17,075
Accounts written off	(8,230		)	(5,440		)	(10,490		)	(1,754		)	(25,914		)
Balance at December 31, 2014	$	10,281		$	5,129		$	10,912		$	1,788		$	28,110

Aging of Receivables

The aging of finance receivables at December 31, 2014 and 2013 was as follows:



	Sales-type Lease Receivables				Loan Receivables
	North America		International		North America		International		Total
December 31, 2014
1 - 30 days	$	1,217,623	$	347,236	$	359,672	$	45,678	$	1,970,209
31 - 60 days	23,242		6,207		9,245		1,201		39,895
61 - 90 days	24,198		4,494		3,498		413		32,603
> 90 days	21,561		8,732		4,572		373		35,238
Total	$	1,286,624	$	366,669	$	376,987	$	47,665	$	2,077,945
Past due amounts > 90 days
Still accruing interest	$	5,931	$	2,517	$	—	$	—	$	8,448
Not accruing interest	15,630		6,215		4,572		373		26,790
Total	$	21,561	$	8,732	$	4,572	$	373	$	35,238



	Sales-type Lease Receivables				Loan Receivables
	North America		International		North America		International		Total
December 31, 2013
1 - 30 days	$	1,383,253	$	425,923	$	379,502	$	42,573	$	2,231,251
31 - 60 days	32,102		11,760		10,464		4,391		58,717
61 - 90 days	20,830		5,724		3,330		1,363		31,247
> 90 days	20,235		13,352		4,519		727		38,833
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

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, 2014 and 2013 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,
	2014		2013
Sales-type lease receivables
Low	$	936,979	$	1,081,853
Medium	230,799		244,379
High	45,202		51,851
Not Scored	73,644		78,337
Total	$	1,286,624	$	1,456,420
Loan receivables
Low	$	259,436	$	279,607
Medium	96,243		95,524
High	10,913		11,511
Not Scored	10,395		11,173
Total	$	376,987	$	397,815