Trade receivables and other customer-related balances

12 Months Ended

Dec. 31, 2025

Disclosure of detailed information about financial instruments [abstract]

Trade receivables and other customer-related balances

4.5. Trade receivables and other customer-related balances

Accounting policies

Customer contracts

Nokia presents its customer contracts in the statement of

financial position as either a contract asset or a contract

liability, depending on the relationship between Nokia’s

performance and the customer’s payment for each individual

contract. On a net basis, a contract asset position represents

where Nokia has performed by transferring goods or services

to a customer before the customer has provided the

associated consideration or before payment is due.

Conversely, a contract liability position represents where a

customer has paid consideration or payment is due, but

Nokia has not yet transferred goods or services to the

customer. Contract assets presented in the statement of

financial position are current in nature while contract

liabilities can be either current or non-current.

Invoices are generally issued as control transfers and/or as

services are rendered. Invoiced receivables represent an

unconditional right to receive the consideration and only the

passage of time is required before the consideration is

received. Invoiced receivables are presented separately from

contract assets as trade receivables in the statement of

financial position. Trade receivables may be converted to

customer loan receivables in certain cases where extended

payment terms are requested. From time to time Nokia may

also extend loans to other third parties and these loans are

accounted for similarly as customer loan receivables. Nokia

sells trade receivables and customer loan receivables to

various financial institutions primarily without recourse in the

normal course of business, in order to manage credit risk and

working capital cycle.

The business model for managing trade receivables and

customer loan receivables is holding receivables to collect

contractual cash flows and selling receivables. Trade

receivables and customer loan receivables are initially

recognized and subsequently remeasured at fair value using

the discounted cash flow method.

The changes in fair value are recognized in the fair value

reserve through other comprehensive income. Interest

calculated using the effective interest method as well as

foreign exchange gains and losses are recognized in financial

income and expenses.

Discounts without performance obligations presented on the

statement of financial position in other current liabilities

relate to discounts given to customers which will be

executable upon satisfying specific criteria. As these

discounts become executable, they are netted against

related trade receivables or customer loan receivables.

Expected Credit Losses

Loss allowance for expected credit losses (ECL) is recognized

on financial assets measured at amortized cost and financial

assets measured at fair value through other comprehensive

income, as well as on financial guarantee contracts and loan

commitments. Nokia continuously assesses its financial

instruments on a forward-looking basis and accounts for the

changes in ECL on a quarterly basis using the following method:

▪ECL = PD x LGD x EAD

▪Probability of Default (PD) is based on the credit rating

profile of the counterparties as well as specific local

circumstances as applicable, unless there are specific

events that would indicate that the credit rating would

not be an appropriate basis for estimating credit risk at

the reporting date.

▪For Loss Given Default (LGD), the recovery rate is based

on the type of receivable, specific local circumstances as

applicable and related collateral arrangements, if any.

▪Exposure at Default (EAD) is normally the nominal value of

the receivable.

Nokia applies a simplified approach to recognize a loss

allowance based on lifetime ECL on trade receivables and

contract assets without significant financing components.

Based on quantitative and qualitative analysis, Nokia has

determined that the credit risk exposure arising from its

trade receivables is low risk. Quantitative analysis focuses

on historical loss rates, historic and projected sales and

the corresponding trade receivables, and overdue trade

receivables including indicators of any deterioration in the

recovery expectation. Qualitative analysis focuses on all

relevant conditions, including customer and country credit

rating, to improve the accuracy of estimating lifetime ECL.

For customer loan receivables, the ECL is calculated

separately for each significant counterparty using the

method described above, including the impact of any

collateral arrangements or other credit enhancements to

LGD. The estimate is based on 12-month ECL unless there

has been a significant increase in credit risk for the specific

counterparty since the initial recognition, in which case

lifetime ECL is estimated. Breaches of contract, credit

rating downgrades and other credit measures are typical

indicators that Nokia takes into consideration when

assessing whether the credit risk on a financial instrument

has increased significantly since initial recognition. Nokia

considers additional indicators to determine if a financial

asset is credit-impaired including whether the

counterparty is in significant financial difficulties and

whether it is becoming probable that the customer will

enter bankruptcy or financial reorganization. Typically

customer loan credit risk is higher than credit risk of trade

receivables and contract assets on average.

The change in the amount of ECL for trade receivables and

contract assets is recognized in other operating expenses

and for customer loan receivables in financial expenses.

For customer loan receivables, the loss allowance is

recorded as an adjustment in other comprehensive

income instead of adjusting the carrying amount that has

already been recorded at fair value. If trade receivables

and customer loan receivables are sold, the impact of ECL

is reversed and the difference between the carrying

amount derecognized and the consideration received is

recognized in financial expenses.

Customer-related balances

Nokia aims to ensure the highest possible quality in trade receivables and contract assets, as well as customer loan receivables. The

Credit Risk Management Standard Operating Procedure (CRMSOP), approved by Nokia’s Chief Financial Officer, lays out the framework

for the management of business-related credit risks. The CRMSOP sets out that credit decisions are based on credit evaluation in each

business, including credit rating and limits for larger exposures, according to defined principles. Group level limit approvals are

required for material credit exposures. Credit risks are monitored in each business and, where appropriate, mitigated on a case-by-

case basis with the use of letters of credit, collaterals, sponsor guarantees, credit insurance and sale of selected receivables.

Aging of trade receivables, contract assets, and customer financing-related loan receivables at 31 December

		Past due
EURm	Current	1-30 days	31-180 days	> 180 days	Total
2025
Trade receivables(1)	4 710	113	167	161	5 151
Contract assets	805	—	—	—	805
Customer financing-related loan receivables	62	—	—	—	62
Total gross receivables	5 577	113	167	161	6 018
Expected credit loss allowance	(81)	(4)	(30)	(68)	(183)
Total net receivables	5 496	109	137	93	5 835
2024
Trade receivables(1)	4 894	163	195	213	5 465
Contract assets	694	—	—	—	694
Customer financing-related loan receivables	70	—	—	—	70
Total gross receivables	5 658	163	195	213	6 229
Expected credit loss allowance	(78)	(9)	(31)	(108)	(226)
Total net receivables	5 580	154	164	105	6 003

(1)Nokia’s payment terms are 80 days (89 days in 2024) on average.

The reversal of ECL credited to the income statement was EUR 50 million (EUR 137 million 2024 and EUR 16 million in 2023).

At 31 December 2025, the total ECL related to credit-impaired assets amounted to EUR 30 million (EUR 62 million in 2024 and EUR 396

million in 2023). In 2024, the reduction of ECL related to credit-impaired assets of EUR 334 million includes releases of EUR 233 million

related to assets that were written off during the year and EUR 111 million related to assets for which payments were received.

Credit risk exposure by customer and country

Credit exposure is measured as the total of trade receivables, contract assets and loans

outstanding from customers and committed credits. Trade receivables do not include any major

concentrations of credit risk by customer.

Credit risk exposure by customer and country as % of total trade receivables and contract assets

as well as loans and loan commitments to customers:

Customer	2025	2024
Customer 1	4.8%	7.5%
Customer 2	4.2%	4.9%
Customer 3	3.2%	4.7%
Total	12.2%	17.1%
Country	2025	2024
United States	20.3%	21.5%
Country 2	7.1%	10.6%
Country 3	6.0%	5.8%
Total	33.4%	37.9%

Contract assets and contract liabilities

Contract asset balances decrease upon reclassification to trade receivables when Nokia’s right to

payment becomes unconditional. Contract liability balances decrease when Nokia satisfies the

related performance obligations and revenue is recognized. There were no material cumulative

adjustments to revenue recognized arising from changes in transaction prices, changes in

measures of progress or changes in estimated variable consideration.

During the year, Nokia recognized EUR 1.0 billion (EUR 1.5 billion in 2024 of which EUR 0.1 billion

related to discontinued operations sold in 2024) of revenue that was included in the current

contract liability balance at the beginning of the period.