Wholesale inventory receivables are receivables of Cat Financial that arise when Cat Financial provides financing for a dealer’s purchase of inventory. These receivables are included in Receivables—trade and other and Long-term receivables—trade and other in Statement 3 and were $1,401 million and $1,308 million, at December 31, 2019 and 2018, respectively.



Contractual maturities of outstanding wholesale inventory receivables:
(Millions of dollars)	December 31, 2019
Amounts Due In	Wholesale Loans			Wholesale Leases			Total
2020	$	630		$	65		$	695
2021	235			48			283
2022	166			32			198
2023	61			22			83
2024	27			14			41
Thereafter	21			16			37
Total	1,140			197			1,337
Guaranteed residual value ¹	25			50			75
Unguaranteed residual value	—			33			33
Less: Unearned income	(10		)	(34		)	(44		)
Total	$	1,155		$	246		$	1,401

¹ For Wholesale loans, represents residual value on failed sale leasebacks.



Contractual maturities of outstanding finance receivables:
(Millions of dollars)	December 31, 2019
Amounts Due In	Retail Loans			Retail Leases			Total
2020	$	6,280		$	3,134		$	9,414
2021	3,582			2,005			5,587
2022	2,610			1,076			3,686
2023	1,634			472			2,106
2024	622			182			804
Thereafter	417			62			479
Total	15,145			6,931			22,076
Guaranteed residual value¹	53			390			443
Unguaranteed residual value	—			798			798
Less: Unearned income	(265		)	(655		)	(920		)
Total	$	14,933		$	7,464		$	22,397

¹For Retail loans, represents residual value on failed sale leasebacks.

The allowance for credit losses is an estimate of the losses inherent in Cat Financial’s finance receivable portfolio and includes consideration of accounts that have been individually identified as impaired, as well as pools of finance receivables where it is probable that certain receivables in the pool are impaired but the individual accounts cannot yet be identified. In identifying and measuring impairment, management takes into consideration past loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of underlying collateral and current economic conditions.

Accounts are identified for individual review based on past-due status and information available about the customer, such as financial statements, news reports and published credit ratings, as well as general information regarding industry trends and the economic environment in which Cat Financial’s customers operate. The allowance for credit losses attributable to finance receivables that are individually evaluated and determined to be impaired is based on the present value of expected future cash flows discounted at the receivables’ effective interest rate, the fair value of the collateral for collateral-dependent receivables or the observable market price of the receivable. In determining collateral value, Cat Financial estimates the current fair market value of the collateral less selling costs. Cat Financial also considers credit enhancements such as additional collateral and contractual third-party guarantees. The allowance for credit losses attributable to the remaining accounts not yet individually identified as impaired is estimated based on loss forecast models utilizing probabilities of default, our estimate of the loss emergence period and the estimated loss given default. In addition, qualitative factors not able to be fully captured in the loss forecast models including industry trends, macroeconomic factors and model imprecision are considered in the evaluation of the adequacy of the allowance for credit losses. These qualitative factors are subjective and require a degree of management judgment.

Cat Financial further evaluates portfolio segments by the class of finance receivables, which is defined as a level of information (below a portfolio segment) in which the finance receivables have the same initial measurement attribute and a similar method for assessing and monitoring credit risk. Typically, Cat Financial’s finance receivables within a geographic area have similar credit risk profiles and methods for assessing and monitoring credit risk. Cat Financial’s classes, which align with management reporting for credit losses, are as follows:



(Millions of dollars)	December 31, 2019
	Customer			Dealer		Total
Allowance for Credit Losses:
Balance at beginning of year	$	486		$	21	$	507
Receivables written off	(281		)	—		(281		)
Recoveries on receivables previously written off	44			—		44
Provision for credit losses	138			24		162
Other	(12		)	—		(12		)
Balance at end of year	$	375		$	45	$	420

Individually evaluated for impairment	$	178		$	39	$	217
Collectively evaluated for impairment	197			6		203
Ending Balance	$	375		$	45	$	420

Recorded Investment in Finance Receivables:
Individually evaluated for impairment	$	594		$	78	$	672
Collectively evaluated for impairment	18,093			3,632		21,725
Ending Balance	$	18,687		$	3,710	$	22,397



(Millions of dollars)	December 31, 2018
	Customer			Dealer		Total
Allowance for Credit Losses:
Balance at beginning of year	$	353		$	9	$	362
Receivables written off	(235		)	—		(235		)
Recoveries on receivables previously written off	46			—		46
Provision for credit losses	337			12		349
Other	(15		)	—		(15		)
Balance at end of year	$	486		$	21	$	507

Individually evaluated for impairment	$	288		$	14	$	302
Collectively evaluated for impairment	198			7		205
Ending Balance	$	486		$	21	$	507

Recorded Investment in Finance Receivables:
Individually evaluated for impairment	$	858		$	78	$	936
Collectively evaluated for impairment	18,152			3,338		21,490
Ending Balance	$	19,010		$	3,416	$	22,426

At origination, Cat Financial evaluates credit risk based on a variety of credit quality factors including prior payment experience, customer financial information, credit-rating agency ratings, loan-to-value ratios and other internal metrics. On an ongoing basis, Cat Financial monitors credit quality based on past-due status and collection experience as there is a meaningful correlation between the past-due status of customers and the risk of loss.



(Millions of dollars)	December 31, 2019
	31-60 Days Past Due		61-90 Days Past Due		91+ Days Past Due		Total Past Due		Current		Total Finance Receivables		91+ Still Accruing
Customer
North America	$	72	$	23	$	55	$	150	$	8,038	$	8,188	$	15
EAME	30		31		141		202		2,955		3,157		4
Asia Pacific	40		14		29		83		2,440		2,523		8
Mining	5		—		19		24		1,851		1,875		—
Latin America	41		23		80		144		1,136		1,280		2
Caterpillar Power Finance	10		10		225		245		1,419		1,664		—
Dealer
North America	—		—		—		—		2,136		2,136		—
EAME	—		—		—		—		342		342		—
Asia Pacific	—		—		—		—		437		437		—
Mining	—		—		—		—		4		4		—
Latin America	—		—		78		78		712		790		—
Caterpillar Power Finance	—		—		—		—		1		1		—
Total	$	198	$	101	$	627	$	926	$	21,471	$	22,397	$	29



(Millions of dollars)	December 31, 2018
	31-60 Days Past Due		61-90 Days Past Due		91+ Days Past Due		Total Past Due		Current		Total Finance Receivables		91+ Still Accruing
Customer
North America	$	65	$	18	$	84	$	167	$	7,825	$	7,992	$	14
EAME	19		9		153		181		2,850		3,031		5
Asia Pacific	24		9		8		41		2,409		2,450		5
Mining	28		1		9		38		1,642		1,680		—
Latin America	38		29		71		138		1,421		1,559		—
Caterpillar Power Finance	10		1		384		395		1,903		2,298		—
Dealer
North America	—		—		—		—		1,895		1,895		—
EAME	—		—		—		—		333		333		—
Asia Pacific	—		—		—		—		466		466		—
Mining	—		—		—		—		4		4		—
Latin America	—		—		78		78		638		716		—
Caterpillar Power Finance	—		—		—		—		2		2		—
Total	$	184	$	67	$	787	$	1,038	$	21,388	$	22,426	$	24

For all classes, a finance receivable is considered impaired, based on current information and events, if it is probable that Cat Financial will be unable to collect all amounts due according to the contractual terms. Impaired finance receivables include finance receivables that have been restructured and are considered to be troubled debt restructurings.

There were $78 million of impaired finance receivables with a related allowance of $39 million and $14 million as of December 31, 2019 and 2018, respectively, for the Dealer portfolio segment, all of which was in Latin America. There were no impaired finance receivables as of December 31, 2017 for the Dealer portfolio segment. Cat Financial’s recorded investment in impaired finance receivables and the related unpaid principal balances and allowances for the Customer portfolio segment were as follows:



	December 31, 2019						December 31, 2018
(Millions of dollars)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
Impaired Finance Receivables With No Allowance Recorded
North America	$	6	$	6	$	—	$	10	$	10	$	—
EAME	—		—		—		1		1		—
Asia Pacific	—		—		—		—		—		—
Mining	22		22		—		33		33		—
Latin America	8		8		—		29		29		—
Caterpillar Power Finance	58		58		—		69		83		—
Total	$	94	$	94	$	—	$	142	$	156	$	—

Impaired Finance Receivables With An Allowance Recorded
North America	$	30	$	30	$	11	$	40	$	41	$	14
EAME	61		61		29		92		92		57
Asia Pacific	8		8		2		4		4		2
Mining	37		36		9		56		55		26
Latin America	58		58		20		75		75		25
Caterpillar Power Finance	306		319		107		449		455		164
Total	$	500	$	512	$	178	$	716	$	722	$	288

Total Impaired Finance Receivables
North America	$	36	$	36	$	11	$	50	$	51	$	14
EAME	61		61		29		93		93		57
Asia Pacific	8		8		2		4		4		2
Mining	59		58		9		89		88		26
Latin America	66		66		20		104		104		25
Caterpillar Power Finance	364		377		107		518		538		164
Total	$	594	$	606	$	178	$	858	$	878	$	288



	Years ended December 31,
	2019				2018				2017
(Millions of dollars)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Impaired Finance Receivables With No Allowance Recorded
North America	$	9	$	—	$	16	$	1	$	13	$	1
EAME	6		—		14		—		48		1
Asia Pacific	—		—		27		3		24		2
Mining	27		1		57		2		126		7
Latin America	21		1		38		2		64		3
Caterpillar Power Finance	54		3		130		7		221		9
Total	$	117	$	5	$	282	$	15	$	496	$	23

Impaired Finance Receivables With An Allowance Recorded
North America	$	34	$	2	$	49	$	2	$	49	$	1
EAME	81		2		53		2		6		—
Asia Pacific	9		1		4		—		31		2
Mining	48		2		46		3		—		—
Latin America	72		5		67		3		99		4
Caterpillar Power Finance	396		11		378		12		180		6
Total	$	640	$	23	$	597	$	22	$	365	$	13

Total Impaired Finance Receivables
North America	$	43	$	2	$	65	$	3	$	62	$	2
EAME	87		2		67		2		54		1
Asia Pacific	9		1		31		3		55		4
Mining	75		3		103		5		126		7
Latin America	93		6		105		5		163		7
Caterpillar Power Finance	450		14		508		19		401		15
Total	$	757	$	28	$	879	$	37	$	861	$	36

Recognition of income is suspended and the finance receivable is placed on non-accrual status when management determines that collection of future income is not probable (generally after 120 days past due). Recognition is resumed and previously suspended income is recognized when the finance receivable becomes current and collection of remaining amounts is considered probable. Payments received while the finance receivable is on non-accrual status are applied to interest and principal in accordance with the contractual terms.

A restructuring of a finance receivable constitutes a troubled debt restructuring (TDR) when the lender grants a concession it would not otherwise consider to a borrower experiencing financial difficulties. Concessions granted may include extended contract maturities, inclusion of interest only periods, below market interest rates, extended skip payment periods and reduction of principal and/or accrued interest.

There were no finance receivables modified as TDRs during the years ended December 31, 2019, 2018 or 2017 for the Dealer portfolio segment. Cat Financial’s recorded investment in finance receivables in the Customer portfolio segment modified as TDRs during the years ended December 31, 2019, 2018 and 2017 were as follows:



(Millions of dollars)	Year ended December 31, 2019
	Number of Contracts	Pre-TDR Recorded Investment		Post-TDR Recorded Investment
North America	15	$	11	$	11
EAME	19	17		17
Asia Pacific	—	—		—
Mining	2	8		8
Latin America	5	5		3
Caterpillar Power Finance	21	168		165
Total	62	$	209	$	204

	Year ended December 31, 2018
	Number of Contracts	Pre-TDR Recorded Investment		Post-TDR Recorded Investment
North America	38	$	21	$	21
EAME	—	—		—
Asia Pacific	—	—		—
Mining	1	29		29
Latin America	1	3		3
Caterpillar Power Finance	12	133		99
Total	52	$	186	$	152

	Year ended December 31, 2017
	Number of Contracts	Pre-TDR Recorded Investment		Post-TDR Recorded Investment
North America	43	$	34	$	35
EAME	4	1		1
Asia Pacific	10	39		31
Mining	2	57		56
Latin America	17	26		27
Caterpillar Power Finance ¹	68	422		407
Total	144	$	579	$	557



(Millions of dollars)	Year ended December 31, 2019			Year ended December 31, 2018			Year ended December 31, 2017
	Number of Contracts	Post-TDR Recorded Investment		Number of Contracts	Post-TDR Recorded Investment		Number of Contracts	Post-TDR Recorded Investment
North America	11	$	5	10	$	10	4	$	3
EAME	—	—		—	—		1	—
Asia Pacific	—	—		—	—		4	1
Latin America¹	—	—		3	1		243	17
Caterpillar Power Finance	1	10		3	33		—	—
Total	12	$	15	16	$	44	252	$	21