Financing receivables primarily consist of client loan and installment payment receivables (loans), investment in sales-type and direct financing leases (collectively referred to as client financing receivables) and commercial financing receivables. Loans are provided primarily to clients to finance the purchase of IBM hardware, software and services. Payment terms on these financing arrangements are for terms generally up to seven years. Investment in sales-type and direct financing leases relate principally to the company’s Infrastructure products and are for terms generally up to five years. Commercial financing receivables, which consist of both held-for-investment and held-for-sale receivables, relate primarily to working capital financing for business partners and distributors of IBM products and services. Payment terms for working capital financing generally range from 30 to 60 days.


($ in millions)
	Client Financing Receivables
	Client Loan and Installment Payment Receivables (Loans)		Investment in Sales-Type and Direct Financing Leases		Commercial Financing Receivables
At December 31, 2024:					Held for Investment		Held for Sale (1)		Total
Financing receivables, gross	$	7,425	$	3,406	$	1,322	$	900	$	13,052
Unearned income	(547)		(344)		—		—		(891)
Unguaranteed residual value	—		479		—		—		479
Amortized cost	$	6,878	$	3,540	$	1,322	$	900	$	12,639
Allowance for credit losses	(73)		(50)		(5)		—		(128)
Total financing receivables, net	$	6,804	$	3,491	$	1,317	$	900	$	12,512
Current portion	$	3,535	$	1,408	$	1,317	$	900	$	7,159
Noncurrent portion	$	3,269	$	2,083	$	—	$	—	$	5,353


($ in millions)
	Client Financing Receivables
	Client Loan and Installment Payment Receivables (Loans)		Investment in Sales-Type and Direct Financing Leases		Commercial Financing Receivables
At December 31, 2023:					Held for Investment		Held for Sale (1)		Total
Financing receivables, gross	$	7,060	$	4,261	$	1,160	$	692	$	13,173
Unearned income	(486)		(429)		—		—		(915)
Unguaranteed residual value	—		458		—		—		458
Amortized cost	$	6,574	$	4,290	$	1,160	$	692	$	12,716
Allowance for credit losses	(87)		(63)		(6)		—		(156)
Total financing receivables, net	$	6,486	$	4,227	$	1,155	$	692	$	12,560
Current portion	$	3,427	$	1,520	$	1,155	$	692	$	6,793
Noncurrent portion	$	3,059	$	2,707	$	—	$	—	$	5,766

The company has a long-standing practice of taking mitigation actions, in certain circumstances, to transfer credit risk to third parties. These actions may include credit insurance, financial guarantees, nonrecourse secured borrowings, true sales or sales of

Financing receivables pledged as collateral for secured borrowings were $213 million and $232 million at December 31, 2024 and 2023, respectively. These borrowings are included in note O, “Borrowings.”

Effective January 1, 2025, the company extended its existing agreement for a 26-month term with a third-party investor to sell up to $1.3 billion of IBM short-term commercial financing receivables on a revolving basis. In addition, the company enters into agreements with third-party financial institutions to sell certain of its client financing receivables, including both loan and lease receivables, for cash proceeds. There were no material client financing receivables transferred for the years ended December 31, 2024 and 2023.


($ in millions)
For the year ended December 31:	2024		2023
Commercial financing receivables
Receivables transferred during the period	$	7,860	$	9,248
Receivables uncollected at end of period (1)	$	1,150	$	1,600

(1)Of the total amount of commercial financing receivables sold and derecognized from the Consolidated Balance Sheet, the amounts presented remained uncollected from business partners as of December 31, 2024 and 2023.

The transfer of these receivables qualified as true sales and therefore reduced financing receivables. The cash proceeds from the sales are included in cash flows from operating activities. For the years ended December 31, 2024 and 2023, the net loss, including fees, associated with the transfer of commercial financing receivables was $68 million and $98 million, respectively, and is included in other (income) and expense in the Consolidated Income Statement. For the company’s policy on determining treatment for transfer of financial assets, refer to note A, “Significant Accounting Policies.”

The following tables present the amortized cost basis for client financing receivables at December 31, 2024 and 2023, further segmented by three classes: Americas, Europe/Middle East/Africa (EMEA) and Asia Pacific. The commercial financing receivables portfolio segment is excluded from the tables in the sections below as the receivables are short term in nature and the current estimated risk of loss and resulting impact to the company’s financial results are not material.


($ in millions)
At December 31, 2024:	Americas		EMEA		Asia Pacific		Total
Amortized cost	$	5,861	$	3,128	$	1,429	$	10,418
Allowance for credit losses
Beginning balance at January 1, 2024	$	92	$	48	$	11	$	150
Write-offs	(2)		(1)		0		(3)
Recoveries	1		0		0		1
Additions/(releases)	(10)		0		(2)		(12)
Other (1)	(11)		(2)		0		(14)
Ending balance at December 31, 2024	$	69	$	45	$	9	$	123


($ in millions)
At December 31, 2023:	Americas		EMEA		Asia Pacific		Total
Amortized cost	$	6,488	$	3,007	$	1,368	$	10,863
Allowance for credit losses
Beginning balance at January 1, 2023	$	88	$	60	$	20	$	168
Write-offs	(9)		(1)		(8)		(18)
Recoveries	0		2		3		5
Additions/(releases)	5		(14)		(4)		(12)
Other (1)	7		1		(1)		8
Ending balance at December 31, 2023	$	92	$	48	$	11	$	150

When determining the allowances, financing receivables are evaluated either on an individual or a collective basis. For the company’s policy on determining allowances for credit losses, refer to note A, “Significant Accounting Policies.”

The company summarizes information about the amortized cost basis for client financing receivables, including amortized cost aged over 90 days and still accruing, billed invoices aged over 90 days and still accruing, and amortized cost not accruing.


($ in millions)
At December 31, 2024:	Total Amortized Cost		Amortized Cost > 90 Days (1)		Amortized Cost > 90 Days and Accruing (1)		Billed Invoices > 90 Days and Accruing		Amortized Cost Not Accruing (2)
Americas	$	5,861	$	66	$	7	$	1	$	62
EMEA	3,128		29		1		0		28
Asia Pacific	1,429		8		0		0		7
Total client financing receivables	$	10,418	$	103	$	8	$	1	$	97


($ in millions)
At December 31, 2023:	Total Amortized Cost		Amortized Cost > 90 Days (1)		Amortized Cost > 90 Days and Accruing (1)		Billed Invoices > 90 Days and Accruing		Amortized Cost Not Accruing (2)
Americas	$	6,488	$	111	$	40	$	6	$	71
EMEA	3,007		31		1		1		31
Asia Pacific	1,368		9		1		0		8
Total client financing receivables	$	10,863	$	151	$	43	$	7	$	110

(2)Of the amortized cost not accruing, there was a related allowance of $94 million and $106 million at December 31, 2024 and 2023, respectively. Financing income recognized on these receivables was immaterial for the years ended December 31, 2024 and 2023.

The company’s credit quality indicators, which are based on rating agency data, publicly available information and information provided by customers, are reviewed periodically based on the relative level of risk. The resulting indicators are a numerical rating system that maps to Moody’s Investors Service credit ratings as shown below. The company uses information provided by Moody’s, where available, as one of many inputs in its determination of customer credit ratings. The credit quality of the customer is evaluated based on these indicators and is assigned the same risk rating whether the receivable is a lease or a loan.

The following tables present the amortized cost basis for client financing receivables by credit quality indicator at December 31, 2024 and 2023, respectively. Receivables with a credit quality indicator ranging from Aaa to Baa3 are considered investment grade. All others are considered non-investment grade. The credit quality indicators reflect mitigating credit enhancement actions taken by customers which reduce the risk to IBM. Gross write-offs by vintage year at December 31, 2024 were not material.


($ in millions)
	Americas				EMEA				Asia Pacific
At December 31, 2024:	Aaa - Baa3		Ba1 - C		Aaa - Baa3		Ba1 - C		Aaa - Baa3		Ba1 - C
Vintage year
2024	$	2,080	$	621	$	1,145	$	514	$	616	$	77
2023	1,372		310		341		258		285		19
2022	950		113		408		194		254		26
2021	233		24		125		27		69		5
2020	43		17		29		15		36		8
2019 and prior	53		44		37		35		26		7
Total	$	4,732	$	1,129	$	2,085	$	1,043	$	1,287	$	142


($ in millions)
	Americas				EMEA				Asia Pacific
At December 31, 2023:	Aaa - Baa3		Ba1 - C		Aaa - Baa3		Ba1 - C		Aaa - Baa3		Ba1 - C
Vintage year
2023	$	2,292	$	1,028	$	750	$	520	$	501	$	70
2022	1,645		268		687		374		386		42
2021	655		85		284		83		110		40
2020	205		79		106		60		97		22
2019	104		23		58		38		40		8
2018 and prior	55		50		16		30		39		12
Total	$	4,955	$	1,533	$	1,901	$	1,106	$	1,174	$	195