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Finance Receivables
 12 Months Ended
Dec. 31, 2023
Receivables [Abstract]  
Finance Receivables FINANCE RECEIVABLES
A summary of finance receivables included in the Consolidated Statements of Financial Position as of December 31, was as follows:
(Millions of dollars)20232022
Retail loans(1)
$16,501 $14,973 
Retail leases6,554 6,965 
Caterpillar purchased receivables3,949 4,297 
Wholesale loans(1)
1,069 545 
Wholesale leases4 7 
Total finance receivables28,077 26,787 
Less: Allowance for credit losses(331)(346)
Total finance receivables, net$27,746 $26,441 
(1) Includes failed sale leasebacks.
Maturities of our finance receivables, as of December 31, 2023, reflect contractual repayments due from borrowers and were as follows:
(Millions of dollars)      
Amounts due inRetail
loans		Retail
leases		Caterpillar
purchased
receivables		Wholesale
loans		Wholesale
leases		Total
2024$7,316 $2,603 $3,986 $769 $1 $14,675 
20254,207 1,749 — 112 1 6,069 
20262,884 1,063 — 145 — 4,092 
20271,571 505 — 11 — 2,087 
2028719 179 — 1 — 899 
Thereafter170 47 — — — 217 
Total16,867 6,146 3,986 1,038 2 28,039 
Guaranteed residual value(1)
10 415 — 33 1 459 
Unguaranteed residual value(1)
1 634 — 2 1 638 
Unearned income(377)(641)(37)(4)— (1,059)
Total$16,501 $6,554 $3,949 $1,069 $4 $28,077 
(1) For Retail loans and Wholesale loans, represents residual value on failed sale leasebacks.

Our finance receivables generally may be repaid or refinanced without penalty prior to contractual maturity and we also sell finance receivables to third parties to mitigate the concentration of credit risk with certain customers.

Finance leases
Revenues from finance leases were $419 million, $429 million and $481 million for the years ended December 31, 2023, 2022, and 2021 respectively, and are included in retail and wholesale finance revenue in the Consolidated Statements of Profit. The residual values for finance leases are included in Finance receivables, net in the Consolidated Statements of Financial Position. Residual value adjustments are recognized through a reduction of finance revenue over the remaining lease term.
Allowance for credit losses 

Portfolio segments
A portfolio segment is the level at which we develop a systematic methodology for determining our allowance for credit losses. Our portfolio segments and related methods for estimating expected credit losses are as follows:

Customer
We provide loans and finance leases to end-user customers primarily for the purpose of financing new and used Caterpillar machinery, engines and equipment for commercial use. We also provide financing for power generation facilities that, in most cases, incorporate Caterpillar products. The average original term of our customer finance receivable portfolio was approximately 51 months with an average remaining term of approximately 27 months as of December 31, 2023.

We typically maintain a security interest in financed equipment and we generally require physical damage insurance coverage on the financed equipment, both of which provide us with certain rights and protections. If our collection efforts fail to bring a defaulted account current, we generally can repossess the financed equipment, after satisfying local legal requirements, and sell it within the Caterpillar dealer network or through third-party auctions.

We estimate the allowance for credit losses related to our customer finance receivables based on loss forecast models utilizing probabilities of default and our estimated loss given default based on past loss experience adjusted for current conditions and reasonable and supportable forecasts capturing country and industry-specific economic factors.

During the year ended December 31, 2023, our forecasts reflected a continuation of the trend of relatively low unemployment rates as well as low delinquencies within our portfolio. However, industry delinquencies show an increasing trend as the central bank actions aimed at reducing inflation have weakened global economic growth. We believe the economic forecasts employed represent reasonable and supportable forecasts, followed by a reversion to long-term trends.
Dealer
We provide financing to Caterpillar dealers in the form of wholesale financing plans. Our wholesale financing plans provide assistance to dealers by financing their mostly new Caterpillar equipment inventory and rental fleets on a secured and unsecured basis. In addition, we provide a variety of secured and unsecured loans to Caterpillar dealers.
    
We estimate the allowance for credit losses for dealer finance receivables based on historical loss rates with consideration of current economic conditions and reasonable and supportable forecasts.

In general, our Dealer portfolio segment has not historically experienced large increases or decreases in credit losses based on changes in economic conditions due to our close working relationships with the dealers and their financial strength. Therefore, we made no adjustments to historical loss rates during the year ended December 31, 2023.

Caterpillar Purchased Receivables
We purchase receivables from Caterpillar, primarily related to the sale of equipment and parts to dealers. Caterpillar purchased receivables are non-interest-bearing short-term trade receivables that are purchased at a discount.

We estimate the allowance for credit losses for Caterpillar purchased receivables based on historical loss rates with consideration of current economic conditions and reasonable and supportable forecasts.

In general, our Caterpillar Purchased Receivables portfolio segment has not historically experienced large increases or decreases in credit losses based on changes in economic conditions due to the short-term maturities of the receivables, our close working relationships with the dealers and their financial strength. Therefore, we made no adjustments to historical loss rates during the year ended December 31, 2023.

Classes of finance receivables
We further evaluate our 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. Our classes, which align with management reporting for credit losses, are as follows:

•North America - Finance receivables originated in the United States and Canada.
•EAME - Finance receivables originated in Europe, Africa, the Middle East and Eurasia.
•Asia/Pacific - Finance receivables originated in Australia, New Zealand, China, Japan, Southeast Asia and India.
•Mining - Finance receivables related to large mining customers worldwide.
•Latin America - Finance receivables originated in Mexico and Central and South American countries.
•Power - Finance receivables originated worldwide related to Caterpillar electrical power generation, gas compression and co-generation systems and non-Caterpillar equipment that is powered by these systems.

An analysis of the allowance for credit losses as of December 31, was as follows:
(Millions of dollars)20232022
Allowance for Credit Losses:CustomerDealerCaterpillar
Purchased
Receivables		TotalCustomerDealerCaterpillar
Purchased
Receivables		Total
Beginning Balance$277 $65 $4 $346 $251 $82 $4 $337 
Write-offs(115)— — (115)(108)— — (108)
Recoveries50 — — 50 62 — — 62 
Provision for credit losses(1)
61 (14)— 47 75 (17)— 58 
Other3 — — 3 (3)— — (3)
Ending Balance$276 $51 $4 $331 $277 $65 $4 $346 
Finance Receivables$21,177 $2,951 $3,949 $28,077 $20,353 $2,137 $4,297 $26,787 
(1) Excludes provision for credit losses on unfunded commitments and other miscellaneous receivables.
Gross write-offs by origination year for the Customer portfolio segment were as follows:
(Millions of Dollars)Year Ended December 31, 2023
20232022202120202019PriorRevolving
Finance
Receivables		Total
North America$2 $11 $11 $5 $3 $2 $12 $46 
EAME1 5 6 4 1 — — 17 
Asia/Pacific2 5 8 5 1 — — 21 
Latin America— 8 5 6 1 10 — 30 
Power— — — — — 1 — 1 
Total$5 $29 $30 $20 $6 $13 $12 $115 

Credit quality of finance receivables

At origination, we evaluate credit risk based on a variety of credit quality factors including prior payment experience, customer financial information, credit ratings, loan-to-value ratios, probabilities of default, industry trends, macroeconomic factors and other internal metrics. On an ongoing basis, we monitor credit quality based on past-due status as there is a meaningful correlation between the past-due status of customers and the risk of loss. In determining past-due status, we consider the entire finance receivable past due when any installment is over 30 days past due.
Customer
The tables below summarize the aging category of our amortized cost of finance receivables in the Customer portfolio segment by origination year.
(Millions of dollars)December 31, 2023
20232022202120202019PriorRevolving
Finance
Receivables		Total
Finance
Receivables
North America
Current$4,430 $2,628 $2,000 $745 $220 $32 $312 $10,367 
31-60 days past due28 31 24 14 7 1 4 109 
61-90 days past due10 11 8 4 1 — 2 36 
91+ days past due12 23 18 9 4 1 2 69 
EAME
Current1,336 895 588 258 111 105 — 3,293 
31-60 days past due10 9 7 3 1 — — 30 
61-90 days past due4 3 3 1 1 — — 12 
91+ days past due7 17 15 8 3 1 — 51 
Asia/Pacific
Current1,134 690 368 115 37 7 45 2,396 
31-60 days past due5 7 8 2 — — — 22 
61-90 days past due2 3 3 2 — — — 10 
91+ days past due1 5 3 3 1 — — 13 
Mining
Current1,106 694 396 126 86 27 66 2,501 
31-60 days past due— — — — — — — — 
61-90 days past due— — — — 1 1 — 2 
91+ days past due— — 1 — — 1 — 2 
Latin America
Current750 520 219 59 23 6 — 1,577 
31-60 days past due9 10 6 1 — — — 26 
61-90 days past due2 4 1 — — — — 7 
91+ days past due2 10 8 5 8 11 — 44 
Power
Current152 52 65 75 42 59 162 607 
31-60 days past due— — — — — — — — 
61-90 days past due— — — — — — — — 
91+ days past due— — — — — 3 — 3 
Totals by Aging Category
Current8,908 5,479 3,636 1,378 519 236 585 20,741 
31-60 days past due52 57 45 20 8 1 4 187 
61-90 days past due18 21 15 7 3 1 2 67 
91+ days past due22 55 45 25 16 17 2 182 
Total$9,000 $5,612 $3,741 $1,430 $546 $255 $593 $21,177 
(Millions of dollars)December 31, 2022
20222021202020192018PriorRevolving
Finance
Receivables		Total
Finance
Receivables
North America
Current$3,915 $3,276 $1,525 $653 $206 $34 $240 $9,849 
31-60 days past due25 26 18 12 4 1 4 90 
61-90 days past due9 15 7 3 1 — 3 38 
91+ days past due11 16 12 6 4 3 4 56 
EAME
Current1,270 953 477 280 155 68 — 3,203 
31-60 days past due10 12 7 1 1 — — 31 
61-90 days past due8 4 3 1 — — — 16 
91+ days past due6 25 16 4 1 1 — 53 
Asia/Pacific
Current1,174 805 393 124 37 5 40 2,578 
31-60 days past due10 12 8 1 1 — — 32 
61-90 days past due2 5 4 2 — — — 13 
91+ days past due2 6 6 4 — — — 18 
Mining
Current875 627 227 193 94 108 80 2,204 
31-60 days past due— 1 — — — — — 1 
61-90 days past due— — — — — — — — 
91+ days past due— — — — — 1 — 1 
Latin America
Current770 400 150 69 26 20 — 1,435 
31-60 days past due7 8 4 2 — 1 — 22 
61-90 days past due2 5 1 1 — — — 9 
91+ days past due2 13 11 2 1 — — 29 
Power
Current82 87 146 51 18 161 125 670 
31-60 days past due— — — — — — — — 
61-90 days past due— — — — — — — — 
91+ days past due— — — — — 5 — 5 
Totals by Aging Category
Current8,086 6,148 2,918 1,370 536 396 485 19,939 
31-60 days past due52 59 37 16 6 2 4 176 
61-90 days past due21 29 15 7 1 — 3 76 
91+ days past due21 60 45 16 6 10 4 162 
Total$8,180 $6,296 $3,015 $1,409 $549 $408 $496 $20,353 

Finance receivables in the Customer portfolio segment are substantially secured by collateral, primarily in the form of Caterpillar and other equipment. For those contracts where the borrower is experiencing financial difficulty, repayment of the outstanding amounts is generally expected to be provided through the operation or repossession and sale of the equipment.
Dealer
As of December 31, 2023 and 2022, our total amortized cost of finance receivables within the Dealer portfolio segment was current, with the exception of $47 million and $62 million, respectively, that was 91+ days past due in Latin America, all of which was originated prior to 2018.

Caterpillar Purchased Receivables
The tables below summarize the aging category of our amortized cost of finance receivables in the Caterpillar Purchased Receivables portfolio segment as of December 31.
(Millions of dollars)2023
 31-60
Days
Past Due		61-90
Days
Past Due		91+
Days
Past Due		Total
Past Due		CurrentTotal Finance
Receivables
North America$15 $5 $4 $24 $2,212 $2,236 
EAME3 1 1 5 732 737 
Asia/Pacific2 — — 2 593 595 
Latin America1 4 18 23 348 371 
Power— — — — 10 10 
Total$21 $10 $23 $54 $3,895 $3,949 

(Millions of dollars)2022
 31-60
Days
Past Due		61-90
Days
Past Due		91+
Days
Past Due		Total
Past Due		CurrentTotal Finance
Receivables
North America$11 $7 $4 $22 $2,458 $2,480 
EAME1 — 2 3 812 815 
Asia/Pacific6 2 2 10 555 565 
Latin America9 2 14 25 406 431 
Power1 — — 1 5 6 
Total$28 $11 $22 $61 $4,236 $4,297 
 
Non-accrual finance receivables
In our Customer portfolio segment, finance receivables which were on non-accrual status and finance receivables over 90 days past due and still accruing income as of December 31, were as follows:
(Millions of dollars)20232022
Amortized CostAmortized Cost
Non-accrual
With an
Allowance		Non-accrual
Without an
Allowance		91+ Still
Accruing		Non-accrual
With an
Allowance		Non-accrual
Without an
Allowance		91+ Still
Accruing
North America$52 $— $20 $52 $4 $11 
EAME34 — 18 43 — 10 
Asia/Pacific8 — 5 11 — 7 
Mining2 — — — 1 — 
Latin America48 — 1 45 — — 
Power8 — — 5 11 — 
Total$152 $— $44 $156 $16 $28 
    
There were $47 million and $62 million, respectively, in finance receivables in our Dealer portfolio segment on non-accrual status as of December 31, 2023 and 2022, all of which was in Latin America.
Modifications
We periodically modify the terms of our finance receivable agreements in response to borrowers’ financial difficulty. Typically, the types of modifications granted are payment deferrals, interest only payment periods and/or term extensions. Many modifications we grant are for commercial reasons or for borrowers experiencing some form of short-term financial stress and may result in insignificant payment delays. We do not consider these borrowers to be experiencing financial difficulty. Modifications for borrowers we do consider to be experiencing financial difficulty typically result in payment deferrals and/or reduced payments for a period of four months or longer, term extension of six months or longer or a combination of both.

During the year ended December 31, 2023, there were no finance receivable modifications granted to borrowers experiencing financial difficulty in the Dealer or Caterpillar Purchased Receivables portfolio segments. The amortized cost basis of finance receivables modified for borrowers experiencing financial difficulty in the Customer portfolio segment during the year ended December 31, 2023, was $47 million, or 0.17 percent of our finance receivable portfolio.

For the year ended December 31, 2023, the financial effects of term extensions for borrowers experiencing financial difficulty added a weighted average of 15 months to the terms of modified contracts. For the year ended December 31, 2023, the financial effects of payment delays for borrowers experiencing financial difficulty resulted in weighted average payment deferral and/or interest only periods of 7 months.

After we modify a finance receivable, we continue to track its performance under its most recent modified terms. As of December 31, 2023, all finance receivables modified with borrowers experiencing financial difficulty are current except for in EAME where there was $2 million that was 31-60 days past due, $1 million that was 61-90 days past due, and $1 million that was 91+ days past due.

The effect of most modifications made to finance receivables for borrowers experiencing financial difficulty is already included in the allowance for credit losses based on the methodologies used to estimate the allowance; therefore, a change to the allowance for credit losses is generally not recorded upon modification. On rare occasions when principal forgiveness is provided, the amount forgiven is written off against the allowance for credit losses.

Troubled debt restructurings
Prior to the adoption of ASU 2022-02, a modification constituted a TDR when the lender granted a concession it would not otherwise consider to a borrower experiencing financial difficulties. Concessions granted may have included extended contract maturities, inclusion of interest only periods, below market interest rates, payment deferrals and reduction of principal and/or accrued interest.

There were no finance receivables modified as TDRs during the years ended December 31, 2022 and 2021 for the Dealer or Caterpillar Purchased Receivables portfolio segments. Finance receivables in the Customer portfolio segment modified as TDRs for the years ended December 31, were as follows:
(Millions of dollars)20222021
 Pre-TDR
Amortized
Cost		Post-TDR
Amortized
Cost
Pre-TDR
Amortized
Cost
Post-TDR
Amortized Cost
North America$6 $6 $6 $6 
EAME1 1 3 3 
Asia/Pacific— — 4 4 
Mining16 16 11 5 
Latin America22 22 12 12 
Power20 19 26 22 
Total$65 $64 $62 $52 
TDRs in the Customer portfolio segment with a payment default (defined as 91+ days past due) which had been modified within twelve months prior to the default date for the years ended December 31, were as follows:
(Millions of dollars)20222021
Post-TDR
Amortized
Cost		Post-TDR
Amortized Cost
North America$— $1 
Asia/Pacific— 6 
Mining5 — 
Latin America— 15 
 Power— 7 
Total$5 $29 
Concentration Risk Disclosure, Finance Receivables
Concentration of Credit Risk
As of December 31, 2023 and 2022, receivables from customers in construction-related industries made up approximately 40 percent of our total portfolio. No single customer or dealer represented a significant concentration of credit risk.