Term Receivables and Trade Accounts Receivable

We have long-term installment receivables that are attributable to multi-year, multi-element term license sales agreements. Balances for term agreements that are due within one year of the balance sheet date are included in trade accounts receivable, net and balances that are due more than one year from the balance sheet date are included in term receivables, long-term. We discount the total product portion of the agreements to reflect the interest component of the transaction. We amortize the interest component of the transaction to system and software revenues over the period in which payments are made and balances are outstanding, using the effective interest method. We determine the discount rate at the outset of the arrangement based upon the current credit rating of the customer. We reset the discount rate periodically considering changes in prevailing interest rates but do not adjust previously discounted balances.

Trade accounts receivable and term receivable balances were as follows:



As of January 31,	2017		2016
Trade accounts receivable	$	214,651	$	176,021
Term receivables, short-term	$	297,993	$	317,188
Term receivables, long-term	$	303,686	$	268,657

Trade accounts receivable include billed amounts whereas term receivables, short-term are comprised of unbilled amounts. Term receivables, short term represent the portion of long-term installment agreements that are due within one year of the balance sheet date. Billings for term agreements typically occur thirty days prior to the contractual due date, in accordance with individual contract installment terms. Term receivables, long-term represent unbilled amounts which are scheduled to be billed beyond one year from the balance sheet date.

We perform a credit risk assessment of all customers using the Standard & Poor’s (S&P) credit rating as our primary credit-quality indicator. The S&P credit ratings are based on the most recent S&P score available at the time of assessment. For customers that do not have an S&P credit rating, we base our credit risk assessment on results provided in the customer's most recent financial statements at the time of assessment. We determine whether or not to extend credit to these customers based on the results of our internal credit assessment, thus mitigating our risk of loss.

The credit risk assessment for our long-term receivables was as follows:



As of January 31,	2017		2016
S&P credit rating:
AAA+ through BBB-	$	143,315	$	195,764
BB+ and lower	54,639		22,520
	197,954		218,284
Internal credit assessment	105,732		50,373
Total long-term term receivables	$	303,686	$	268,657

As discussed in Note 2. “Summary of Significant Accounting Policies”, we maintain allowances for doubtful accounts on trade accounts receivable and term receivables, long-term for estimated losses resulting from the inability of our customers to make required payments.

We reduced our allowance for doubtful accounts during the fiscal year ended January 31, 2015 by $(1,691), to reflect a change in estimate of our unspecified reserves resulting from sustained low write-off experience and strong collections. The adjustment was recorded in marketing and selling expense in our statement of income.

The following shows the change in allowance for doubtful accounts for the fiscal years ended January 31, 2017, 2016, and 2015:



Allowance for doubtful accounts	Beginning balance		Expense adjustment			Other deductions⁽¹⁾			Ending balance
Fiscal year ended January 31, 2017	$	3,826	$	(58	)	$	321		$	4,089
Fiscal year ended January 31, 2016	$	4,217	$	(349	)	$	(42	)	$	3,826
Fiscal year ended January 31, 2015	$	5,469	$	(988	)	$	(264	)	$	4,217


⁽¹⁾	Specific account write-offs and foreign exchange.

We enter into agreements to sell qualifying accounts receivable from time to time to certain financing institutions on a non-recourse basis. Amounts collected from customers on accounts receivable previously sold on a non-recourse basis to financial institutions are included in short-term borrowings on the balance sheet. These amounts are remitted to the financial institutions in the month following quarter-end.

We sold the following receivables to financing institutions on a non-recourse basis and recognized the following gain on the sale of those receivables:



Fiscal year ended January 31,	2017			2016			2015
Net proceeds	$	45,658		$	42,661		$	22,572

Trade receivables, short-term	$	26,920		$	16,344		$	12,715
Term receivables, long-term	20,064			27,770			10,461
Total receivables sold	$	46,984		$	44,114		$	23,176

Discount on sold receivables	$	(1,326	)	$	(1,453	)	$	(604	)
Unaccreted interest on sold receivables	1,897			2,723			922
Gain on sale of receivables	$	571		$	1,270		$	318