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.


	Client Financing Receivables
	Client Loan and Installment Payment Receivables		Investment in Sales-Type and Direct Financing
					Commercial Financing Receivables
(Dollars in millions)					Held for		Held for
At September 30, 2025	(Loans)		Leases		Investment		Sale (1)		Total
Financing receivables, gross	$	7,912	$	3,704	$	479	$	745	$	12,840
Unearned income	(631)		(405)		—		—		(1,036)
Unguaranteed residual value	—		485		—		—		485
Amortized cost	$	7,281	$	3,784	$	479	$	745	$	12,289
Allowance for credit losses	(74)		(51)		(5)		—		(130)
Total financing receivables, net	$	7,207	$	3,733	$	475	$	745	$	12,159
Current portion	$	3,396	$	1,286	$	475	$	745	$	5,901
Noncurrent portion	$	3,811	$	2,447	$	—	$	—	$	6,258


	Client Financing Receivables
	Client Loan and Installment Payment Receivables		Investment in Sales-Type and Direct Financing
					Commercial Financing Receivables
(Dollars in millions)					Held for		Held for
At December 31, 2024	(Loans)		Leases		Investment		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

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 equipment under operating lease. Sale of receivables arrangements are also utilized in the normal course of business as part of the company’s cash and liquidity management.

Financing receivables pledged as collateral for secured borrowings were $128 million and $213 million at September 30, 2025 and December 31, 2024, respectively. These borrowings are included in note 12, “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 nine months ended September 30, 2025 and 2024.


(Dollars in millions)
For the nine months ended September 30:	2025		2024




Commercial financing receivables:
Receivables transferred during the period	$	5,681	$	5,590
Receivables uncollected at end of period (1)	$	712	$	691

(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 September 30, 2025 and 2024.

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 nine months ended September 30, 2025 and 2024, the net loss, including fees, associated with the transfer of commercial financing receivables was $35 million and $49 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,” in the company’s 2024 Annual Report.

The following tables present the amortized cost basis for client financing receivables at September 30, 2025 and December 31, 2024, 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.


(Dollars in millions)
At September 30, 2025:	Americas		EMEA		Asia Pacific		Total
Amortized cost	$	6,306	$	3,347	$	1,412	$	11,065
Allowance for credit losses:
Beginning balance at January 1, 2025	$	69	$	45	$	9	$	123
Write-offs	$	(14)	$	0	$	(5)	$	(19)
Recoveries	0		0		0		0
Additions/(releases)	7		0		2		10
Other (1)	6		6		0		12
Ending balance at September 30, 2025	$	68	$	51	$	7	$	125


(Dollars 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

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,” in the company’s 2024 Annual Report.

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.


(Dollars in millions)	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)
At September 30, 2025:
Americas	$	6,306	$	57	$	6	$	1	$	51
EMEA	3,347		33		1		0		32
Asia Pacific	1,412		3		1		0		3
Total client financing receivables	$	11,065	$	93	$	9	$	2	$	86


(Dollars in millions)	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)
At December 31, 2024:
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

(2)Of the amortized cost not accruing, there was a related allowance of $84 million and $94 million at September 30, 2025 and December 31, 2024, respectively. Financing income recognized on these receivables was immaterial for the three and nine months ended September 30, 2025 and 2024, respectively.

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 September 30, 2025 and December 31, 2024, 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 September 30, 2025 and December 31, 2024 were not material.


(Dollars in millions)	Americas				EMEA				Asia Pacific
At September 30, 2025:	Aaa – Baa3		Ba1 – C		Aaa – Baa3		Ba1 – C		Aaa – Baa3		Ba1 – C
Vintage year:
2025	$	2,637	$	406	$	991	$	275	$	446	$	97
2024	1,329		267		743		378		373		49
2023	817		238		287		167		207		12
2022	395		43		262		104		146		17
2021	87		9		54		13		34		2
2020 and prior	27		51		31		44		22		7
Total	$	5,292	$	1,014	$	2,368	$	980	$	1,228	$	184


(Dollars 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

The company did not have any significant modifications due to clients experiencing financial difficulty during the nine months ended September 30, 2025 or for the year ended December 31, 2024.