Accounts Receivable

12 Months Ended

Dec. 31, 2020

Accounts receivable and allowance for credit losses

We extend credit on an unsecured basis to most of our customers. Our exposure to expected credit losses depends on the financial condition of our customers and other macroeconomic factors beyond our control, such as deteriorating conditions in the world economy or in the industries we serve, changes in oil prices and political instability. While we actively manage our credit exposure and work to respond to both changes in our customers’ financial conditions or macroeconomic events, there can be no guarantee we will be able to mitigate all of these risks successfully.

We perform ongoing credit evaluations of our customers and adjust credit limits based upon payment history and the customer’s current creditworthiness based on expected exposure. Our payment terms with customers are based on each customers' creditworthiness and are generally 30-60 days, although certain markets and other customer-specific factors may warrant longer payment terms. Accounts receivable balances that are not paid within the terms of the sales agreement may be subject to finance fees based on the outstanding balance. Although we analyze customers’ payment history and expected creditworthiness, since we extend credit on an unsecured basis to most of our customers, there is a possibility that any accounts receivable not collected may ultimately need to be written off.

We had accounts receivable of $1.2 billion and $2.9 billion as of December 31, 2020 and 2019, respectively. We also had an allowance for credit losses, primarily related to accounts receivable, of $57.3 million and $35.5 million, as of December 31, 2020 and 2019, respectively. Changes to the expected credit loss provision during the year ended December 31, 2020 include global economic outlook considerations as a result of the Company’s assessment of reasonable and supportable forward-looking information including the expected overall impact of the pandemic mainly to the aviation segment. Write-off of uncollectible receivables during the year ended December 31, 2020 resulted from negative impacts of the pandemic combined with pre-existing financial difficulties experienced by certain customers. Based on an aging analysis as of December 31, 2020, 91% of our net accounts receivable were outstanding less than 60 days.

The following table sets forth activities in our allowance for credit losses (in millions):


	2020		2019		2018
Balance as of beginning of period*	$	46.6	$	39.4	$	27.8
Charges to provision for credit losses	63.7		25.9		25.1
Write-off of uncollectible receivables	(53.7)		(32.2)		(16.2)
Recoveries of credit losses	1.0		2.4		2.9
Translation adjustments	(0.3)		—		(0.1)
Balance as of end of period	$	57.3	$	35.5	$	39.4

* For 2020, the balance as of the beginning of the period includes the $11.1 million cumulative transition adjustment related to the implementation of ASU 2016-13.

Trade Accounts Receivable Sale Programs

We have accounts receivable financing programs under receivables purchase agreements (“RPAs”) with Wells Fargo Bank, N.A. and Citibank, N.A. that allow for the sale of our accounts receivable in an amount up to 100% of our outstanding qualifying accounts receivable balances and receive cash consideration equal to the total balance, less a discount margin equal to LIBOR plus 1.00% to 3.25%, which varies based on the outstanding accounts receivable at any given time and assumes maximum utilization of the RPA facilities. During the third quarter of 2020, we amended our RPA with Citibank N.A. to, among other things, extend the renewal option term of the RPA through 2024. Accounts receivable sold under the RPAs are accounted for as sales, in accordance with ASC Topic 860, Transfers and Servicing, and excluded from Accounts receivable, net of allowance for credit losses on the accompanying Consolidated Balance Sheets. Fees and interest paid under the RPAs are recorded within Interest expense and other financing costs, net on the Consolidated Statements of Income and Comprehensive Income.

Under the RPAs, sold accounts receivable which remained outstanding at December 31, 2020 and 2019, were $306.9 million and $405.9 million, respectively. The fees and interest paid under the RPA were $11.8 million, $25.9 million, and $19.9 million, for years ended 2020, 2019 and 2018, respectively. For the years ended December 31, 2020, 2019 and 2018, cash payments to the owners of account receivables were $4.4 billion, $8.2 billion and $7.9 billion respectively and cash proceeds from the sale of account receivables were $4.3 billion, $8.2 billion and $7.9 billion respectively.