Customer Funds

3 Months Ended

Mar. 31, 2021

Investments Debt And Equity Securities [Abstract]

5. Customer Funds

In certain jurisdictions, we collect funds for payment of payroll and taxes; temporarily hold such funds until payment is due; remit the funds to the clients’ employees and appropriate taxing authorities; file federal, state, and local tax returns; and handle related regulatory correspondence and amendments. The assets held are intended for the specific purpose of satisfying client fund obligations and therefore are not freely available for our general business use. In the U.S. and Canada, these customer funds are held in a trust.

Investment income from invested customer funds, also referred to as float revenue or float, is a component of our compensation for providing services under agreements with our customers. Investment income from invested customer funds included in recurring revenue was $10.7 million and $19.6 million for the three months ended March 31, 2021, and 2020, respectively. Investment income includes interest income, realized gains and losses from sales of customer funds’ investments, and unrealized credit losses determined to be unrecoverable.

The amortized cost of customer funds as of March 31, 2021, and December 31, 2020, is the original cost of assets acquired. The amortized cost and fair values of investments of customer funds available for sale were as follows:

	March 31, 2021
	Amortized		Gross Unrealized					Fair
	Cost		Gain		Loss			Value
	(Dollars in millions)
Money market securities, investments carried at cost and other cash equivalents	$	2,105.0	$	—	$	—		$	2,105.0
Available for sale investments:
U.S. government and agency securities		541.9		17.7		(2.3	)		557.3
Canadian and provincial government securities		400.2		12.4		(0.1	)		412.5
Corporate debt securities		420.3		15.5		(0.3	)		435.5
Asset-backed securities		192.7		3.9		—			196.6
Mortgage-backed securities		7.4		0.1		—			7.5
Other short-term investments		509.3		—		—			509.3
Other securities		44.5		—		(0.2	)		44.3
Total available for sale investments		2,116.3		49.6		(2.9	)		2,163.0
Invested customer funds		4,221.3	$	49.6	$	(2.9	)		4,268.0
Receivables		16.0							16.0
Total customer funds	$	4,237.3						$	4,284.0

	December 31, 2020
	Amortized		Gross Unrealized					Fair
	Cost		Gain		Loss			Value
	(Dollars in millions)
Money market securities, investments carried at cost and other cash equivalents	$	2,027.1	$	—	$	—		$	2,027.1
Available for sale investments:
U.S. government and agency securities		494.0		21.6		(0.1	)		515.5
Canadian and provincial government securities		396.4		15.5		—			411.9
Corporate debt securities		548.5		19.4		—			567.9
Asset-backed securities		192.2		4.9		—			197.1
Mortgage-backed securities		9.9		0.2		—			10.1
Other securities		16.5		0.1		—			16.6
Total available for sale investments		1,657.5		61.7		(0.1	)		1,719.1
Invested customer funds		3,684.6	$	61.7	$	(0.1	)		3,746.2
Receivables		13.2							13.2
Total customer funds	$	3,697.8						$	3,759.4

The following represents the gross unrealized losses and the related fair value of the investments of customer funds available for sale, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.

	March 31, 2021
	Less than 12 months					12 months or more				Total
	Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses			Fair Value
	(Dollars in millions)
U.S. government and agency securities	$	(2.3	)	$	140.7	$	—	$	—	$	(2.3	)	$	140.7
Canadian and provincial government securities		(0.1	)		7.0		—		—		(0.1	)		7.0
Corporate debt securities		(0.3	)		23.5		—		—		(0.3	)		23.5
Asset-backed securities		—			16.9		—		—		—			16.9
Other securities		(0.2	)		38.4		—		—		(0.2	)		38.4
Total available for sale investments	$	(2.9	)	$	226.5	$	—	$	—	$	(2.9	)	$	226.5

Management does not believe that any individual unrealized loss was unrecoverable as of March 31, 2021. The unrealized losses are primarily attributable to changes in interest rates and not to credit deterioration. We currently do not intend to sell or expect to be required to sell the securities before the time required to recover the amortized cost.

The amortized cost and fair value of investment securities available for sale at March 31, 2021, by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or to prepay obligations with or without call or prepayment penalties.

	March 31, 2021
	Cost		Fair Value
	(Dollars in millions)
Due in one year or less	$	3,000.7	$	3,006.4
Due in one to three years		678.7		705.7
Due in three to five years		403.9		410.9
Due after five years		138.0		145.0
Invested customer funds	$	4,221.3	$	4,268.0