Financing Receivables and Operating Leases

Financing receivables represent sales-type and direct-financing leases of the Company and third-party products. These receivables typically have terms ranging from two to five years and are usually collateralized by a security interest in the underlying assets. Financing receivables also include billed receivables from operating leases. The components of financing receivables were as follows:



	As of
	January 31, 2018			October 31, 2017
	In millions
Minimum lease payments receivable	$	8,598		$	8,226
Unguaranteed residual value	290			272
Unearned income	(710		)	(654		)
Financing receivables, gross	8,178			7,844
Allowance for doubtful accounts	(94		)	(86		)
Financing receivables, net	8,084			7,758
Less: current portion⁽¹⁾	(3,515		)	(3,378		)
Amounts due after one year, net⁽¹⁾	$	4,569		$	4,380


(1)	The Company includes the current portion in Financing receivables, and amounts due after one year, net in Long-term financing receivables and other assets, in the accompanying Condensed Consolidated Balance Sheets.

Sale of Financing Receivables

During the three months ended January 31, 2018 and 2017, the Company entered into arrangements to transfer the contractual payments due under certain financing receivables to third party financial institutions. The Company derecognized the carrying value of the receivables transferred and recognized a net gain or loss on the sale. During the three months ended January 31, 2018 and 2017, the Company sold $51 million and $4 million, respectively, of financing receivables. The gains recognized on the sales of financing receivables were not material for the periods presented.

Credit Quality Indicators

The credit risk profile of gross financing receivables, based upon internal risk ratings, was as follows:



	As of
	January 31, 2018		October 31, 2017
	In millions
Risk Rating:
Low	$	4,319	$	4,156
Moderate	3,724		3,556
High	135		132
Total	$	8,178	$	7,844

Accounts rated low risk typically have the equivalent of a Standard & Poor's rating of BBB– or higher, while accounts rated moderate risk generally have the equivalent of BB+ or lower. The Company classifies accounts as high risk when it considers the financing receivable to be impaired or when management believes there is a significant near-term risk of impairment.

Allowance for Doubtful Accounts

The allowance for doubtful accounts for financing receivables as of January 31, 2018 and October 31, 2017 and the respective changes during the three and twelve months then ended were as follows:



	As of
	January 31, 2018		October 31, 2017
	In millions
Balance at beginning of period	$	86	$	89
Provision for doubtful accounts	7		23
Write-offs, net of recoveries	1		(26		)
Balance at end of period	$	94	$	86

The gross financing receivables and related allowance evaluated for loss were as follows:



	As of
	January 31, 2018		October 31, 2017
	In millions
Gross financing receivables collectively evaluated for loss	$	7,768	$	7,523
Gross financing receivables individually evaluated for loss	410		321
Total	$	8,178	$	7,844
Allowance for financing receivables collectively evaluated for loss	$	74	$	67
Allowance for financing receivables individually evaluated for loss	20		19
Total	$	94	$	86

Non-Accrual and Past-Due Financing Receivables

The following table summarizes the aging and non-accrual status of gross financing receivables:



	As of
	January 31, 2018		October 31, 2017
	In millions
Billed:⁽¹⁾
Current 1-30 days	$	298	$	257
Past due 31-60 days	49		52
Past due 61-90 days	25		15
Past due > 90 days	68		58
Unbilled sales-type and direct-financing lease receivables	7,738		7,462
Total gross financing receivables	$	8,178	$	7,844
Gross financing receivables on non-accrual status⁽²⁾	$	256	$	188
Gross financing receivables 90 days past due and still accruing interest⁽²⁾	$	154	$	133


(1)	Includes billed operating lease receivables and billed sales-type and direct-financing lease receivables.


(2)	Includes billed operating lease receivables and billed and unbilled sales-type and direct-financing lease receivables.

Operating Leases

Operating lease assets included in Property, plant and equipment in the Condensed Consolidated Balance Sheets were as follows:



	As of
	January 31, 2018			October 31, 2017
	In millions
Equipment leased to customers	$	7,580		$	7,356
Accumulated depreciation	(3,114		)	(2,943		)
Total	$	4,466		$	4,413