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Eligible receivable
Also called eligible accounts, eligible AR, qualified receivable.
An invoice that counts toward the borrowing base because it passes the lender's tests on age, customer, concentration, documentation and offset risk.
Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.
What it means
Only eligible receivables generate availability. The standard exclusions in a factoring or ABL agreement:
- Invoices older than a stated number of days from invoice date
- Cross-aging: if a defined share of one customer's balance is past the age limit, that customer's entire balance goes ineligible, current invoices included
- Amounts above a concentration cap, so a customer representing more than a stated share of the ledger is only partly eligible
- Contra accounts, where the customer is also your supplier and can offset what it owes against what you owe
- Related-party and affiliate invoices
- Foreign account debtors without credit insurance or a letter of credit
- Government receivables, which carry assignment restrictions under the federal Assignment of Claims Act and state analogues, and often need a specific procedure to become financeable
- Disputed invoices, progress billings, consignment, bill-and-hold, and anything not yet delivered or performed
Where this one catches people
Ineligible does not mean uncollectible. Perfectly sound invoices go ineligible because one customer grew too large a share of the ledger, or because a single stale invoice cross-aged the whole account. This is why availability can shrink in a month when sales grew, and why the answer is usually a phone call to clear one old invoice rather than a renegotiation of the facility.
Where you will meet this term
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Eligible receivable — common questions
What does eligible receivable mean?
An invoice that counts toward the borrowing base because it passes the lender's tests on age, customer, concentration, documentation and offset risk.
Where does eligible receivable catch people out?
Ineligible does not mean uncollectible. Perfectly sound invoices go ineligible because one customer grew too large a share of the ledger, or because a single stale invoice cross-aged the whole account. This is why availability can shrink in a month when sales grew, and why the answer is usually a phone call to clear one old invoice rather than a renegotiation of the facility.
Is eligible receivable the same as an interest rate?
Eligible receivable is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.
Which products does eligible receivable apply to?
Invoice Financing, Asset-Based Lending.
Is there a worked example of eligible receivable?
Not on this entry. Where a term is arithmetic, the arithmetic is shown; this one is not primarily a calculation.
What else should I read alongside eligible receivable?
Advance rate, Assignment of Claims, Borrowing base, Concentration, Cross-aging.
Has this definition been checked?
Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.
Is this legal advice?
No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.
Can I suggest a term?
Yes — [email protected]. The glossary grows from what people are actually shown in contracts.