Trade and other accounts receivable: Snap-on’s trade and other accounts receivable primarily arise from the sale of tools, diagnostics, and equipment products to a broad range of industrial and commercial customers and to Snap-on’s independent franchise van channel with payment terms generally ranging from 30 to 120 days.

Finance and contract receivables: Snap-on Credit LLC (“SOC”), the company’s financial services operation in the United States, originates extended-term finance and contract receivables on sales of Snap-on’s products sold through the U.S. franchisee network and to certain other customers of Snap-on; Snap-on’s foreign finance subsidiaries provide similar financing internationally. Interest income on finance and contract receivables is included in “Financial services revenue” on the accompanying Consolidated Statements of Earnings.

Finance receivables are comprised of extended-term payment contracts to both technicians and independent shop owners (i.e., franchisees’ customers) to enable them to purchase tools, diagnostics, and equipment products on an extended-term payment plan, with average payment terms of approximately four years.

Contract receivables, with payment terms of up to 10 years, are comprised of extended-term payment contracts to a broad base of customers worldwide, including shop owners, both independents and national chains, for their purchase of tools, diagnostics, and equipment products, as well as extended-term contracts to franchisees to meet a number of financing needs, including working capital loans, loans to enable new franchisees to fund the purchase of the franchise and van leases, or the expansion of an existing franchise. Finance and contract receivables are generally secured by the underlying tools, diagnostics and/or equipment products financed and, for contracts to franchisees, other franchisee assets.


(Amounts in millions)	2023		2022
Finance installment receivables	$	605.2	$	578.6
Finance lease receivables, net of unearned finance charges of $3.4 million and $0.5 million, respectively	10.1		3.2
Total finance receivables	615.3		581.8

Contract installment receivables	59.9		51.3
Contract lease receivables, net of unearned finance charges of $21.1 million and $19.1 million, respectively	62.7		60.3
Total contract receivables	122.6		111.6
Total	737.9		693.4

Allowances for credit losses:
Finance installment receivables	(21.1)		(19.5)
Finance lease receivables	(0.1)		(0.1)
Total finance allowance for credit losses	(21.2)		(19.6)

Contract installment receivables	(0.9)		(0.8)
Contract lease receivables	(0.9)		(0.9)
Total contract allowance for credit losses	(1.8)		(1.7)
Total allowances for credit losses	(23.0)		(21.3)
Total current finance and contract receivables – net	$	714.9	$	672.1

Finance receivables – net	$	594.1	$	562.2
Contract receivables – net	120.8		109.9
Total current finance and contract receivables – net	$	714.9	$	672.1


(Amounts in millions)	2023		2022
Finance installment receivables	$	1,318.5	$	1,210.4
Finance lease receivables, net of unearned finance charges of $2.8 million and $0.2 million, respectively	12.3		1.7
Total finance receivables	1,330.8		1,212.1

Contract installment receivables	216.0		202.1
Contract lease receivables, net of unearned finance charges of $35.1 million and $30.7 million, respectively	196.8		186.6
Total contract receivables	412.8		388.7
Total	1,743.6		1,600.8

Allowances for credit losses:
Finance installment receivables	(46.4)		(41.3)
Finance lease receivables	(0.2)		—
Total finance allowance for credit losses	(46.6)		(41.3)

Contract installment receivables	(3.1)		(3.1)
Contract lease receivables	(1.8)		(1.8)
Total contract allowance for credit losses	(4.9)		(4.9)
Total allowances for credit losses	(51.5)		(46.2)
Total long-term finance and contract receivables – net	$	1,692.1	$	1,554.6

Finance receivables – net	$	1,284.2	$	1,170.8
Contract receivables – net	407.9		383.8
Total long-term finance and contract receivables – net	$	1,692.1	$	1,554.6


	2023				2022
(Amounts in millions)	Finance Receivables		Contract Receivables		Finance Receivables		Contract Receivables
Due in Months:
13 – 24	$	475.0	$	95.0	$	441.6	$	92.6
25 – 36	405.7		84.8		374.3		80.1
37 – 48	288.8		72.7		256.2		67.5
49 – 60	156.7		57.0		135.8		53.9
Thereafter	4.6		103.3		4.2		94.6
Total	$	1,330.8	$	412.8	$	1,212.1	$	388.7

Credit quality: The company’s receivable portfolio is comprised of two portfolio segments, finance and contract receivables, which are the same segments used to estimate expected credit losses reported in the allowances for credit losses. The amortized cost basis for finance and contract receivables is the amount originated adjusted for applicable accrued interest and net of deferred fees or costs, collections, and write-offs. The company monitors and assesses credit risk based on the characteristics of each portfolio segment.

When extending credit, Snap-on evaluates the collectability of the receivables based on a combination of various financial and qualitative factors that may affect a customer’s ability to pay. These factors may include the customer’s financial condition, past payment experience, and credit bureau and proprietary Snap-on credit model information, as well as the value of the underlying collateral.

For finance and contract receivables, Snap-on assesses quantitative and qualitative factors through the use of credit quality indicators consisting primarily of delinquency classification, collection experience and credit exposure by customer. Delinquency is the primary indicator of credit quality for finance and contract receivables. Snap-on conducts monthly reviews of credit and collection performance for both the finance and contract receivable portfolios focusing on data such as delinquency trends, nonaccrual receivables, and write-off and recovery activity. These reviews allow for the formulation of collection strategies and potential collection policy modifications in response to changing risk profiles in the finance and contract receivable portfolios. The company also maintains a system that aggregates credit exposure and provides delinquency data by days past due aging categories. A receivable 30 days or more past due is considered delinquent. However, customer receivables are monitored prior to becoming 30 days past due.


(Amounts in millions)	2023		2022		2021		2020		2019		Prior		Total
Finance Receivables:
Delinquent	$	22.2	$	18.6	$	9.3	$	5.2	$	2.2	$	0.8	$	58.3
Non-delinquent	1,299.6		374.8		136.3		59.3		14.9		2.9		1,887.8
Total Finance receivables	$	1,321.8	$	393.4	$	145.6	$	64.5	$	17.1	$	3.7	$	1,946.1

Finance receivables charge-offs	$	6.3	$	25.3	$	13.9	$	7.6	$	3.2	$	2.5	$	58.8

Contract receivables:
Delinquent	$	0.4	$	0.9	$	1.3	$	0.3	$	0.2	$	0.2	$	3.3
Non-delinquent	195.3		126.6		86.4		58.5		35.4		29.9		532.1
Total Contract receivables	$	195.7	$	127.5	$	87.7	$	58.8	$	35.6	$	30.1	$	535.4

Contract receivables charge-offs	$	0.1	$	0.4	$	0.9	$	0.5	$	0.1	$	0.3	$	2.3

Allowances for credit losses: The allowances for credit losses are maintained at levels that are considered adequate to cover expected credit losses over the remaining contractual life of the receivables using historical loss experience, asset specific risk characteristics, current conditions, reasonable and supportable forecasts, and an appropriate reversion period, when applicable. Management performs detailed reviews of its receivables on a monthly and/or quarterly basis to assess the adequacy of the allowances and to determine if any impairment has occurred. A receivable generally has credit losses when it is expected that all amounts related to the receivable will not be collected according to the contractual terms of the agreement. Amounts determined to be uncollectable are charged directly against the allowances, while amounts recovered on previously written off accounts increase the allowances.

For both finance and contract receivables, write-offs include the uncollectable principal amount of the receivable as well as the uncollectable accrued interest and fees, net of repossessions. For finance receivables only, write-offs are partially offset by recourse from franchisees. Recovered interest and fees previously written off are recorded through the allowances for credit losses and increase the allowances. Absent a repossession, finance receivables are typically written off when an account reaches 120 days past due. Repossessed accounts are typically written off within 60 days of asset repossession. Contract receivables related to equipment leases are generally written off when an account becomes 150 days past due, while contract receivables related to franchise finance and van leases are generally written off no later than when the receivable becomes 180 days past the asset return date. For finance and contract receivables, customer bankruptcies are generally written off upon notification that the associated debt is not being reaffirmed or, in any event, no later than when the receivable becomes 180 days past due. Changes to the allowances for credit losses are maintained through adjustments to the provisions for credit losses.

For finance receivables, the company uses a vintage loss rate methodology to determine expected losses. Vintage analysis aims to calculate losses based on the timing of the losses relative to the origination of the receivables. The finance receivable portfolio contains a substantial amount of homogeneous contracts which fits well with the vintage analysis.

For contract receivables the company primarily uses a WARM methodology. The WARM methodology calculates the average annual write-off rate and applies it to the remaining term of the receivables. The WARM methodology is used since contract receivables have limited loss experience over generally longer terms and, therefore, the predictive loss patterns are more difficult to estimate.

The company performed a correlation analysis to compare historical losses to many economic factors. The primary economic factors considered were real gross domestic product, civilian unemployment, industrial production index, and repair and maintenance employment rate; the company determined that there is limited correlation between the historical losses and economic factors. As a result, consideration was given to qualitative factors to adjust the reserve balance for asset specific risk characteristics, current conditions and future expectations. Similar qualitative factors are considered for both finance and contract receivables. The qualitative factors used in determining the estimate of expected credit losses are influenced by the changes in the composition of the portfolio, underwriting practices, and other relevant conditions that were different from the historical periods.


	2023				2022
(Amounts in millions)	Finance Receivables		Contract Receivables		Finance Receivables		Contract Receivables
Allowances for credit losses:
Beginning of year	$	60.9	$	6.6	$	67.3	$	8.4

Provision for credit losses	57.2		1.9		37.7		0.5
Charge-offs	(58.8)		(2.3)		(52.7)		(2.5)
Recoveries	8.4		0.4		8.9		0.3
Currency translation	0.1		0.1		(0.3)		(0.1)
End of year	$	67.8	$	6.7	$	60.9	$	6.6

Past due: Depending on the contract, payments for finance and contract receivables are due on a monthly or weekly basis. Weekly payments are converted into a monthly equivalent for purposes of calculating delinquency. Delinquencies are assessed at the end of each month following the monthly equivalent contractual payment due date. The entire receivable balance of a contract is considered delinquent when contractual payments become 30 days past due. Removal from delinquent status occurs when the cumulative amount of monthly contractual payments then due have been received by the company.

It is the general practice of Snap-on’s financial services business not to engage in contract or loan modifications. In limited instances, Snap-on’s financial services business may modify certain receivables. The amount and number of finance and contract receivable modifications as of 2023 and 2022 year end were immaterial to both the financial services portfolio and the company’s results of operations and financial position.


(Amounts in millions)	30-59 Days Past Due		60-90 Days Past Due		Greater Than 90 Days Past Due		Total Past Due		Total Not Past Due		Total		Greater Than 90 Days Past Due and Accruing
2023 year end:
Finance receivables	$	21.5	$	13.6	$	23.2	$	58.3	$	1,887.8	$	1,946.1	$	19.9
Contract receivables	1.5		0.6		1.2		3.3		532.1		535.4		0.2

2022 year end:
Finance receivables	$	17.2	$	11.2	$	19.5	$	47.9	$	1,746.0	$	1,793.9	$	16.5
Contract receivables	1.2		0.3		2.2		3.7		496.6		500.3		0.3

Nonaccrual: SOC maintains the accrual of interest income during the progression through the various stages of delinquency prior to processing for write-off. At the time of write-off, the entire balance including the accrued but unpaid interest income amount is recorded as a loss.

Finance receivables are generally placed on nonaccrual status (nonaccrual of interest and other fees): (i) when a customer is placed on repossession status; (ii) upon receipt of notification of bankruptcy; (iii) upon notification of the death of a customer; or (iv) in other instances in which management concludes collectability is not reasonably assured.

Contract receivables are generally placed on nonaccrual status: (i) when a receivable is more than 90 days past due or at the point a customer’s account is placed on terminated status regardless of its delinquency status; (ii) upon notification of the death of a customer; or (iii) in other instances in which management concludes collectability is not reasonably assured.

The accrual of interest and other fees is resumed when the finance or contract receivable becomes contractually current and collection of all remaining contractual amounts due is reasonably assured. A receivable may have credit losses when it is expected that all amounts related to the receivable will not be collected according to the contractual terms of the applicable agreement. Such finance and contract receivables are covered by the company’s respective allowances for credit losses and are written off against the allowances when appropriate.