|Receivables from customers||848||623|
|Allowances for credit losses||(23)||(11)|
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 2017, 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||644||515|
|Past due 1–30 days||124||76|
|Past due 31–120 days||51||28|
|Past due more than 120 days||29||4|
Reconciliation of changes in allowance accounts for credit losses
|Balance at the beginning of the year||11||7|
|Increase in provision for credit losses||25||9|
|Decrease in provision for credit losses||0||(2)|
|Disposal of subsidiary||(9)||0|
|Balance at the end of the year||23||11|
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 Programs
Lonza maintains two securitization programs for its US businesses, one with PNC Bank, National Association and another with Wells Fargo Bank, N.A.
Under the programs, Lonza sells certain U.S. and Canadian trade accounts receivable to PNC Bank (for the Arch Chemicals business and Lonza Walkersville Inc) and to Wells Fargo Bank, N.A. (for the Capsugel business) through two wholly owned subsidiaries, Arch Chemicals Receivables LLC and Capsugel Funding LLC.
The amount of receivables that Lonza can fund under the programs is subject to change based upon the level of eligible receivables, with a maximum amount of USD 105 million (2016: USD 50 million) at 31 December 2017 in the aggregate.
Under the programs, the payment by PNC Bank and Wells Fargo Bank, N.A. 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 2017, the consolidated balance sheet includes receivables which Lonza sold to PNC Bank / Wells Fargo Bank, N.A. for which it obtained funds of USD 69 million (2016: USD 22 million). These are disclosed as “Other current liabilities” (note 15).