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 on loan receivables is recognized using the effective interest method. 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, 2018 and 2017 consisted of the following:



	December 31, 2018									December 31, 2017
	North America			International			Total			North America			International			Total
Sales-type lease receivables
Gross finance receivables	$	1,004,491		$	268,199		$	1,272,690		$	1,023,549		$	292,059		$	1,315,608
Unguaranteed residual values	53,793			12,772			66,565			74,093			14,202			88,295
Unearned income	(211,683		)	(55,113		)	(266,796		)	(216,720		)	(62,325		)	(279,045		)
Allowance for credit losses	(10,253		)	(2,355		)	(12,608		)	(7,721		)	(2,794		)	(10,515		)
Net investment in sales-type lease receivables	836,348			223,503			1,059,851			873,201			241,142			1,114,343
Loan receivables
Loan receivables	300,319			29,270			329,589			339,373			34,492			373,865
Allowance for credit losses	(6,777		)	(837		)	(7,614		)	(7,098		)	(1,020		)	(8,118		)
Net investment in loan receivables	293,542			28,433			321,975			332,275			33,472			365,747
Net investment in finance receivables	$	1,129,890		$	251,936		$	1,381,826		$	1,205,476		$	274,614		$	1,480,090

Loans receivable are due within one year. Maturities of gross sales-type lease finance receivables at December 31, 2018 were as follows:



	Sales-type Lease Receivables
	North America		International		Total
2019	$	469,288	$	108,481	$	577,769
2020	254,781		74,469		329,250
2021	163,481		48,136		211,617
2022	87,674		26,968		114,642
2023	29,086		9,143		38,229
Thereafter	181		1,002		1,183
Total	$	1,004,491	$	268,199	$	1,272,690

Allowance for Credit Losses

Activity in the allowance for credit losses for the years ended December 31, 2018, 2017 and 2016 was as follows:



	Sales-type Lease Receivables						Loan Receivables
	North America			International			North America			International			Total
Balance at December 31, 2015	$	6,606		$	3,542		$	10,024		$	1,518		$	21,690
Amounts charged to expense	5,136			1,161			6,238			836			13,371
Accounts written off	(3,495		)	(2,056		)	(7,745		)	(1,265		)	(14,561		)
Balance at December 31, 2016	8,247			2,647			8,517			1,089			20,500
Amounts charged to expense	7,544			1,280			6,273			510			15,607
Accounts written off	(8,070		)	(1,133		)	(7,692		)	(579		)	(17,474		)
Balance at December 31, 2017	7,721			2,794			7,098			1,020			18,633
Amounts charged to expense	7,928			1,315			6,825			532			16,600
Accounts written off	(5,396		)	(1,754		)	(7,146		)	(715		)	(15,011		)
Balance at December 31, 2018	$	10,253		$	2,355		$	6,777		$	837		$	20,222

Aging of Receivables

The aging of finance receivables at December 31, 2018 and 2017 was as follows:



	Sales-type Lease Receivables				Loan Receivables
	North America		International		North America		International		Total
December 31, 2018
1 - 90 days	$	966,868	$	263,954	$	294,126	$	29,079	$	1,554,027
> 90 days	37,623		4,245		6,193		191		48,252
Total	$	1,004,491	$	268,199	$	300,319	$	29,270	$	1,602,279
Past due amounts > 90 days
Still accruing interest	$	7,159	$	1,202	$	1,769	$	72	$	10,202
Not accruing interest	30,464		3,043		4,424		119		38,050
Total	$	37,623	$	4,245	$	6,193	$	191	$	48,252



	Sales-type Lease Receivables				Loan Receivables
	North America		International		North America		International		Total
December 31, 2017
1 - 90 days	$	971,002	$	286,170	$	330,503	$	34,239	$	1,621,914
> 90 days	52,547		5,889		8,870		253		67,559
Total	$	1,023,549	$	292,059	$	339,373	$	34,492	$	1,689,473
Past due amounts > 90 days
Still accruing interest	$	10,807	$	1,738	$	—	$	—	$	12,545
Not accruing interest	41,740		4,151		8,870		253		55,014
Total	$	52,547	$	5,889	$	8,870	$	253	$	67,559

Credit Quality

The extension 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, given that 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, 2018 and 2017 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. Some accounts are not scored; however, 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 may become delinquent in the next 12 month period.


•	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,
	2018		2017
Sales-type lease receivables
Low	$	834,230	$	819,776
Medium	118,945		148,000
High	19,981		21,728
Not Scored	31,335		34,045
Total	$	1,004,491	$	1,023,549
Loan receivables
Low	$	238,620	$	262,646
Medium	43,952		56,744
High	5,947		6,791
Not Scored	11,800		13,192
Total	$	300,319	$	339,373