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Financing Receivables (Tables)

3 Months Ended

Mar. 31, 2023

Summary of the components of financing receivables


	Client Financing Receivables
	Client Loan and		Investment in
	Installment Payment		Sales-Type and		Commercial Financing Receivables
(Dollars in millions)	Receivables		Direct Financing		Held for		Held for
At March 31, 2023:	(Loans)		Leases		Investment		Sale*		Total
Financing receivables, gross	$	7,558	$	3,853	$	250	$	605	$	12,265
Unearned income		(410)		(363)		—		—		(773)
Unguaranteed residual value		—		400		—		—		400
Amortized cost	$	7,148	$	3,890	$	250	$	605	$	11,891
Allowance for credit losses		(100)		(58)		(6)		—		(164)
Total financing receivables, net	$	7,047	$	3,831	$	244	$	605	$	11,727
Current portion	$	4,369	$	1,445	$	244	$	605	$	6,662
Noncurrent portion	$	2,678	$	2,387	$	—	$	—	$	5,065

* The carrying value of the receivables classified as held for sale approximates fair value.


	Client Financing Receivables
	Client Loan and		Investment in
	Installment Payment		Sales-Type and		Commercial Financing Receivables
(Dollars in millions)	Receivables		Direct Financing		Held for		Held for
At December 31, 2022:	(Loans)		Leases		Investment		Sale*		Total
Financing receivables, gross	$	8,875	$	4,023	$	299	$	939	$	14,136
Unearned income		(439)		(351)		—		—		(790)
Unguaranteed residual value		—		422		—		—		422
Amortized cost	$	8,437	$	4,094	$	299	$	939	$	13,769
Allowance for credit losses		(108)		(60)		(5)		—		(173)
Total financing receivables, net	$	8,329	$	4,034	$	293	$	939	$	13,596
Current portion	$	5,073	$	1,485	$	293	$	939	$	7,790
Noncurrent portion	$	3,256	$	2,549	$	—	$	—	$	5,806

* The carrying value of the receivables classified as held for sale approximates fair value.

Schedule of transfer of client and commercial financing assets


(Dollars in millions)
For the three months ended March 31:	2023		2022
Commercial financing receivables:
Receivables transferred during the period	$	2,233	$	1,989
Receivables uncollected at end of period*	$	780	$	724

*	Of the total amount of commercial financing receivables sold and derecognized from the Consolidated Balance Sheet, the amounts presented remained uncollected from the business partners as of March 31, 2023 and 2022.

Schedule of financing receivables and allowance for credit losses by class


(Dollars in millions)
At March 31, 2023:	Americas		EMEA		Asia Pacific		Total
Amortized cost	$	6,394	$	3,082	$	1,561	$	11,037
Allowance for credit losses:
Beginning balance at January 1, 2023	$	88	$	60	$	20	$	168
Write-offs		0		0		—		0
Recoveries		—		0		0		0
Additions/(releases)		0		(13)		(1)		(13)
Other*		4		0		0		4
Ending balance at March 31, 2023	$	93	$	47	$	19	$	159


(Dollars in millions)
At December 31, 2022:	Americas		EMEA		Asia Pacific		Total
Amortized cost	$	7,281	$	3,546	$	1,704	$	12,531
Allowance for credit losses:
Beginning balance at January 1, 2022	$	111	$	61	$	23	$	195
Write-offs		(20)		(3)		(2)		(25)
Recoveries		1		0		4		5
Additions/(releases)		(5)		6		(4)		(3)
Other*		2		(5)		(2)		(4)
Ending balance at December 31, 2022	$	88	$	60	$	20	$	168

* Primarily represents translation adjustments.

Schedule of past due financing receivables


					Amortized		Billed		Amortized
	Total		Amortized		Cost		Invoices		Cost
(Dollars in millions)	Amortized		Cost		> 90 Days and		> 90 Days and		Not
At March 31, 2023:	Cost		> 90 Days*		Accruing*		Accruing		Accruing**
Americas	$	6,394	$	183	$	107	$	15	$	76
EMEA		3,082		47		16		16		32
Asia Pacific		1,561		26		9		3		17
Total client financing receivables	$	11,037	$	257	$	133	$	33	$	124


					Amortized		Billed		Amortized
	Total		Amortized		Cost		Invoices		Cost
(Dollars in millions)	Amortized		Cost		> 90 Days and		> 90 Days and		Not
At December 31, 2022:	Cost		> 90 Days*		Accruing*		Accruing		Accruing**
Americas	$	7,281	$	272	$	198	$	22	$	74
EMEA		3,546		52		8		1		46
Asia Pacific		1,704		20		3		1		17
Total client financing receivables	$	12,531	$	344	$	208	$	23	$	137

* At a contract level, which includes total billed and unbilled amounts for financing receivables aged greater than 90 days.

** Of the amortized cost not accruing, there was a related allowance of $121 million and $122 million at March 31, 2023 and December 31, 2022, respectively. Financing income recognized on these receivables was immaterial for the three months ended March 31, 2023 and 2022, respectively.

Schedule of amortized cost by credit quality indicator


(Dollars in millions)	Americas				EMEA				Asia Pacific
At March 31, 2023:	Aaa – Baa3		Ba1 – D		Aaa – Baa3		Ba1 – D		Aaa – Baa3		Ba1 – D
Vintage year:
2023	$	295	$	231	$	157	$	130	$	115	$	48
2022		2,840		764		1,130		618		617		84
2021		1,001		262		381		133		189		58
2020		401		194		170		127		183		37
2019		205		60		94		78		103		18
2018 and prior		72		68		23		42		77		31
Total	$	4,815	$	1,579	$	1,955	$	1,127	$	1,285	$	276


(Dollars in millions)	Americas				EMEA				Asia Pacific
At December 31, 2022:	Aaa – Baa3		Ba1 – D		Aaa – Baa3		Ba1 – D		Aaa – Baa3		Ba1 – D
Vintage year:
2022	$	3,316	$	1,097	$	1,447	$	704	$	799	$	96
2021		1,197		323		451		159		203		65
2020		559		217		258		158		210		49
2019		251		91		161		99		127		22
2018		128		26		42		16		84		21
2017 and prior		32		45		14		38		12		17
Total	$	5,482	$	1,800	$	2,373	$	1,173	$	1,434	$	269