7.	Transfers of Financial Assets

In the fourth quarter of 2016, we executed receivables purchase arrangements to liquidate portions of our trade accounts receivable balance with unrelated third parties. The receivables relate to products sold to customers and are short-term in nature. The factorings were treated as sales of our accounts receivable. Proceeds from the transfers reflect either the face value of the accounts receivable or the face value less factoring fees.

In the U.S. and Japan, our programs are executed on a revolving basis with a maximum funding limit as of December 31, 2017 of $350 million. We act as the collection agent on behalf of the third party, but have no significant retained interests or servicing liabilities related to the accounts receivable sold. In order to mitigate credit risk, 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. Additionally, we have provided guarantees for the factored accounts receivable. The maximum exposures to loss associated with these arrangements were $22.9 million and $5.2 million as of December 31, 2017 and 2016, respectively.

In Europe, we sell to a third party and have no continuing involvement or significant risk with the factored accounts receivable.

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 in cash flows from operating activities in our consolidated statements of cash flows. Net expenses resulting from the sales of receivables are recognized in selling, general and administrative expense. Net expenses include any resulting gains or losses from the sales of receivables, credit insurance and factoring fees.

For the years ended December 31, 2017 and 2016, we sold receivables having an aggregate face value of $1,456.9 million and $103.1 million to third parties in exchange for cash proceeds of $1,455.6 million and $103.1 million, respectively. Expenses recognized on these sales during the years ended December 31, 2017 and 2016, were not significant. For the year ended December 31, 2017, under the U.S. and Japan programs, we collected $1,031.2 million from our customers and remitted that amount to the third party, and we effectively repurchased $96.3 million of previously sold accounts receivable from the third party due to the programs’ revolving nature. At December 31, 2017, we collected $103.5 million that was unremitted to the third party, which is reflected in our balance sheet under other current liabilities. We estimate the incremental operating cash inflows related to all of our programs were approximately $174 million and $103 million for the years ended December 31, 2017 and 2016.

At December 31, 2017, the outstanding principal amount of receivables that has been derecognized under the U.S. and Japan revolving arrangements amounted to $197.0 million and $64.2 million, respectively.