G19 Trade receivables

Age analysis of trade receivables

	2019
	Current	1–30 days past due	31–60 days past due	61–90 days past due	91–180 days past due	181–360 days past due	More than 360 days past due	Total
Expected loss rate, %	–1.2	1.9	4.5	8.5	19.9	40.4	89.7	4.2
Gross carrying amount - trade receivables	11,965	1,586	511	284	346	210	632	15,533
	11,965	1,586	511	284	346	210	632	15,533
Loss allowance	143	–31	–23	–24	–69	–85	–567	–655
Reported value	12,108	1,555	488	260	277	125	65	14,878

	2020
	Current	1–30 days past due	31–60 days past due	61–90 days past due	91–180 days past due	181–360 days past due	More than 360 days past due	Total
Expected loss rate, %	0.7	2.6	7.5	10.7	19.6	47.7	93.5	5.0
Gross carrying amount - trade receivables	10,668	1,132	313	133	187	165	416	13,014
	10,668	1,132	313	133	187	165	416	13,014
Loss allowance	–74	–29	–23	–14	–37	–79	–389	–645
Reported value	10,595	1,103	289	118	151	86	27	12,369

2020 has been a challenging year for several of Sandvik’s markets but despite increased credit risk, the negative impact has been limited. Expected credit losses remain on a low level compared to twelve months rolling revenue.

Accounting principles

Trade receivables

Receivables are recognized at amortized cost.

Expected credit losses

Sandvik evaluates its trade receivables, contract assets and financial leases on a collective basis for each category, respectively. Each reporting entity classifies their receivables in suitable risk categories according to Group policy.

Expected credit loss provisions are based on the full lifetime expected credit loss model with a provision matrix where fixed provision rates are applied depending on the number of days outstanding. The entities consider reasonable and supportable information about past events, current conditions and reasonable and supportable forecasts of future economic conditions when measuring the expected credit losses.

Credit risks are classified based on credit information provided by credit agencies, identified payment behavior of the customer and other relevant information available, such as lost contracts, changes in company management and other customer specific information. Additionally, a macroeconomic evaluation is conducted on the outlook of industries and countries relevant for our customers. Changes to the allowance for expected credit losses for accounts receivables are recognized in selling expenses.

Expected credit loss related to financial leases are presented in note G28, section Credit risk.

Writing off

Sandvik’s principles for the writing off of receivables are based on several prerequisites, such as proof of write-off, insolvency or failed legal and other collection processes. An assessment is made whether one or several of these prerequisites are fulfilled before the write-off takes place.

Credit securites

The Group selectively utilizes different forms of credit securities, such as letters of credit, retention of title or credit insurance.