Transfers of Financial Assets

12 Months Ended

Dec. 31, 2016

Transfers and Servicing [Abstract]

Transfers of Financial Assets

8. Transfers of Financial Assets

In 2016, we executed receivables purchase arrangements to liquidate portions of our accounts receivable balance with unrelated third parties for factoring of specific accounts receivable. The factorings were treated as sales of our accounts receivable in accordance with FASB ASC 860, Transfers and Servicing.

Proceeds from the transfers reflect either the face value of the account or the face value less factoring fees. Interest charged on the transferred account balance and factoring fees are recorded as a charge to interest expense in our consolidated statements of earnings in the period the expenses are incurred. We act as the collection agent on behalf of the third party for portions of the arrangements, but have no significant retained interests or servicing liabilities related to the accounts receivable sold. In order to mitigate credit risk related to portions of our factoring of accounts receivable, we purchased credit insurance for the factored accounts receivable. The result is our risk of loss being limited to the factored accounts receivable not covered by the insurance, which we do not believe to be significant.

Funds received from the transfers are recorded as an increase to cash and a reduction to accounts receivable outstanding in the consolidated balance sheets. We report the cash flows attributable to the sale of receivables to third parties and the cash receipts from collections made on behalf of and paid to third parties as trade accounts receivables in cash flows from operating activities in our consolidated statements of cash flows.

In the year ended December 31, 2016, the Company factored approximately $103.1 million of accounts receivable pursuant to the arrangements. For the year ended December 31, 2016, the Company incurred minimal expenses related to the factoring.