Nokia 2015 Annual Report Download - page 180

178 NOKIA IN 2015
Notes to consolidated nancial statements continued
Business-related credit risk
The Group aims to ensure the highest possible quality in accounts receivable and loans due from customers and other third parties. The Credit
Policy, approved by the Group President and CEO, and the related procedures approved by the Group CFO, lay out the framework for the
management of the business-related credit risks. The Credit Policy and related procedures set out that credit decisions are based on credit
evaluation in each business, including credit rating for larger exposures, according to dened rating principles. Material credit exposures require
Group-level approval. Credit risks are monitored in each business and, where appropriate, mitigated with the use of letters of credit, collateral,
insurance, and the sale of selected receivables.
Credit exposure is measured as the total of accounts receivable and loans outstanding due from customers and committed credits. Accounts
receivable do not include any major concentrations of credit risk by customer. The top three customers account for approximately 9.6%,
5.9%and 3.5% (3.5%, 2.9% and 2.8% in 2014) of the Group’s accounts receivable and loans due from customers and other third parties at
December 31, 2015. The top three credit exposures by country account for approximately 19.6%, 12.1% and 10.8% (18.0%, 7.4% and 5.6%
in2014) of the Group’s accounts receivable and loans due from customers and other third parties at December 31, 2015. The 19.6% credit
exposure relates to accounts receivable in China (18.0% in 2014).
The Group has provided allowances for doubtful accounts on accounts receivable and loans due from customers and other third parties not
past due based on an analysis of debtors’ credit ratings and credit histories. The Group establishes allowances for doubtful accounts that
represent an estimate of expected losses at the end of the reporting period. All receivables and loans due from customers are considered
onanindividual basis to determine the allowances for doubtful accounts. The total of accounts receivable and loans due from customers is
EUR3 946 million (EUR 3 432 million in 2014). The gross carrying amount of accounts receivable, related to customer balances for which
valuation allowances have been recognized, is EUR 1 150 million (EUR 1 200 million in 2014). The allowances for doubtful accounts for these
accounts receivable as well as amounts expected to be uncollectible for acquired receivables are EUR 62 million (EUR 103 million in 2014).
Referto Note 22, Allowances for doubtful accounts.
Aging of past due receivables not considered to be impaired at December 31:
EURm 2015 2014
Past due 1-30 days 25 68
Past due 31-180 days 53 42
More than 180 days 124 35
Total 202 145
Hazard risk
The Group strives to ensure that all nancial, reputation and other losses to the Group and its customers are managed through preventive
riskmanagement measures. Insurance is purchased for risks which cannot be internally managed eciently and where insurance markets oer
acceptable terms and conditions. The objective is to ensure that hazard risks, whether related to physical assets, such as buildings, intellectual
assets, such as the Nokia brand, or potential liabilities, such as product liabilities, are insured optimally taking into account both cost and
retention levels. The Group purchases both annual insurance policies for specic risks as well as multi-line and/or multi-year insurance policies
where available.