Finance Receivables

12 Months Ended

Oct. 31, 2020

Finance receivables are receivables of our Financial Services operations. Finance receivables generally consist of wholesale notes and accounts, as well as retail notes, finance leases and accounts. Total finance receivables reported on the Consolidated Balance Sheets are net of an allowance for doubtful accounts. Total assets of our Financial Services operations net of intercompany balances were $2.2 billion and $2.8 billion as of October 31, 2020 and 2019, respectively.

Included in total assets of our Financial Services operations are finance receivables of $1.6 billion and $2.2 billion as of October 31, 2020 and 2019, respectively. We have two portfolio segments of finance receivables that we distinguish based on the type of customer and nature of the financing inherent to each portfolio. The retail portfolio segment represents loans or leases to end-users for the purchase or lease of vehicles. The wholesale portfolio segment represents loans to dealers to finance their inventory.

In connection with the COVID-19 pandemic, we have received extension requests from certain customers in the retail note and finance lease portfolios. These requests were generally granted for short-term extensions (6 months or less), without interest or principal forgiveness. The related credit exposure was not material to the consolidated financial statements. We will continue to monitor our portfolios in light of the ongoing economic uncertainties resulting from the COVID-19 pandemic. We may offer additional extensions and modifications to customers going forward in order to maximize the recoverability of outstanding receivable balances.

Our Finance receivables, net in our Consolidated Balance Sheets consist of the following:



	As of October 31,
(in millions)	2020		2019
Retail portfolio	$	622	$	854
Wholesale portfolio	1,025		1,366
Total finance receivables	1,647		2,220
Less: Allowance for doubtful accounts	25		23
Total finance receivables, net	1,622		2,197
Less: Current portion, net^(A)	1,371		1,923
Noncurrent portion, net	$	251	$	274

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(A)	The current portion of finance receivables is computed based on contractual maturities. Actual cash collections typically vary from the contractual cash flows because of prepayments, extensions, delinquencies, credit losses, and renewals.

As of October 31, 2020, contractual maturities of our finance receivables are as follows:



(in millions)	Retail Portfolio		Wholesale Portfolio		Total
Due in:
2021	$	384	$	1,025	$	1,409
2022	133		—		133
2023	87		—		87
2024	49		—		49
2025	19		—		19
Thereafter	4		—		4
Gross finance receivables	676		1,025		1,701
Less: Unearned finance income	54		—		54
Total finance receivables	$	622	$	1,025	$	1,647

Securitizations

Our Financial Services operations transfer wholesale notes, retail accounts receivable, finance leases, and operating leases to special purpose entities ("SPEs"), which generally are only permitted to purchase these assets, issue asset-backed securities, and make payments on the securities issued. In addition to servicing receivables, our continued involvement in the SPEs may include an economic interest in the transferred receivables and, in some cases, managing exposure to interest rate changes on the securities using interest rate swaps or interest rate caps. There were no transfers of finance receivables that qualified for sale accounting treatment as of October 31, 2020 and 2019, and as a result, the transferred finance receivables are included in our Consolidated Balance Sheets and the related interest earned is included in Finance revenues.

We transfer eligible finance receivables into trusts in order to issue asset-backed securities. These trusts are VIEs of which we are determined to be the primary beneficiary and, therefore, the assets and liabilities of the trusts are included in our Consolidated Balance Sheets. The outstanding balance of finance receivables transferred into these VIEs was $649 million and $874 million as of October 31, 2020 and 2019, respectively.

Other finance receivables related to secured transactions that do not qualify for sale accounting treatment were $182 million and $358 million as of October 31, 2020 and 2019, respectively. For more information on assets and liabilities of consolidated VIEs and other securitizations accounted for as secured borrowings by our Financial Services segment, see Note 1, Summary of Significant Accounting Policies.

Finance Revenues

The following table presents the portion of Finance revenues from our Financial Services segment:



	As of October 31,
(in millions)	2020		2019		2018
Retail notes and finance leases revenue	$	63	$	60	$	50
Wholesale notes interest	59		118		105
Operating lease revenue	85		86		72
Retail and wholesale accounts interest	10		33		30
Gross finance revenues	217		297		257
Less: Intercompany revenues	40		104		97
Finance revenues	$	177	$	193	$	160