Volvo 2012 Annual Report Download - page 128

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Credit loss reserves
The establishment of credit loss provisions for account receivables is recog-
nized as soon as it is probable that a credit loss has incurred. A credit loss has
incurrent when there has been an event that has triggered the customer’s
inability to pay. As of December 31, 2012, the total credit loss reserves for
account receivables amounted to 2.41% (2.57) of total account receivables.
Refer to Note 4 regarding credit risk.
Non-current receivables Dec 31,
2012 Dec 31,
2011
Other interest-bearingloans to external parties 76 98
Other interest-bearing financial receivables 261 596
Other financial receivables 767 2,131
Other receivables 2,552 2,184
Non-current receivables
as of December 3113,656 5,009
1 Of non-current receivables 1,190 (2,822) pertains to financial instruments.
SOURCES OF ESTIMATION UNCERTAINTY
!
NOTE 16
RECEIVABLES
Customer financing receivables
total exposure
Dec 31, 2012 Dec 31, 2011
Not due 1–30 31–90 >90 Total Not due 1–30 31–90 >90 Total
Customer financing receivables 72,068 7,221 2,161 630 82,080 70,085 6,828 1,971 965 79,849
Concentration of credit risk
Customer concentration
The ten largest customers in Customer Finance account for 6.2 % (5.6) of the
total asset portfolio. The rest of the portfolio is pertinent to a large number of
customers. This way the credit risk is spread across many markets and among
many customers.
Concentration by geographical market
The adjacent table discloses the concentration of the customer-financing
portfolio divided into geographical markets.
Read more about the Volvo Group’s overall description credit risks in Note 4,
Financial-risk management.
Read more about Volvo Financial Services’ trend during the year on
page 66.
Geographic market, percentage
of customer-financing portfolio (%).
Europe, 43.0%
North America, 29.5%
Asia, 12.8%
South America, 14.6%
Other markets, 0.1%
Change of valuation allowance for doubtful
customer-financing receivables 2012 2 011
Valuation allowance for doubtful customer-financing
receivables as of December 31, preceding year 1,150 1,325
New valuation allowance charged to income 835 910
Reversal of valuation allowance charged to income (252) (250)
Utilization of valuation allowance related to
actual losses (575) (821)
Translation differences (67) (14)
Valuation allowance for doubtful customer-
financing receivables as of December 31 1,091 1,150
The total contractual amount to which the overdue payments pertain are
presented in the table below. In order to provide for occurred but not yet
identified customer-financing receivables overdue, there are additional
reserves of 833 (776). The remaining exposure is secured by liens on the
purchased equipment and, in certain circumstances, other credit enhance-
ments such as personal guarantees, credit insurance, liens on other property
owned by the borrower etc.
Collaterals taken in possession that meet the recognition criteria amounted
to 200 (412) as of December 31, 2012.
Customer-financing receivables (cont.)
NOTES TO FINANCIAL STATEMENTS
FINANCIAL INFORMATION 2012
124