|Receivables from customers||623||545|
|Allowances for credit losses||(11)||(7)|
The Group’s credit risk is diversified due to the large number of entities comprising the Lonza customer base and the dispersion across many different industries and regions. Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. At 31 December 2016, there were no significant concentrations of credit risk. The maximum exposure to credit risk is equal to the carrying amounts.
Aging of Trade Receivables
|Not past due||515||429|
|Past due 1–30 days||76||89|
|Past due 31–120 days||28||16|
|Past due more than 120 days||4||11|
Reconciliation of changes in allowance accounts for credit losses
|Balance at the beginning of the year||7||7|
|Increase in provision for credit losses||9||5|
|Decrease in provision for credit losses||(2)||(4)|
|Balance at the end of the year||11||7|
In general, Lonza does not require collateral in respect of trade and other receivables, but uses credit insurance for country risk where appropriate.
Accounts Receivable Securitization Program
Lonza has a securitization program with Market Street Funding LLC and PNC Bank, National Association. Under the program Lonza sells U.S. trade accounts receivable, and certain Canadian trade accounts receivable, to Market Street Funding LLC through its wholly owned subsidiary, Arch Chemicals Receivables LLC.
The amount of funding that Lonza can obtain under the program is subject to change based upon the level of eligible receivables, with a maximum funding amount of USD 28 million (2015: USD 47 million).
Under the program, the payment by Market Street Funding LLC for a portion of the purchase price is deferred until the transferred underlying receivables have been completely settled. Lonza’s maximum exposure related to the receivables sold is equal to the deferred purchase price component, which is substantially higher than the average expected credit loss on the receivables. As a result, Lonza continues to recognize all of the transferred receivables in the consolidated balance sheet.
As of 31 December 2016, the consolidated balance sheet includes receivables of USD 73 million (2015: USD 79 million) which Lonza sold to Market Street Funding LLC and for which it obtained funds of USD 22 million (2015: USD 30 million). These are disclosed as “Other current liabilities” (note 15).