What AR aging buckets are ineligible in the Eligible Receivable definition?
Last updated: August 27, 2026
How do ABL lenders measure AR aging?
The OCC Comptroller's Handbook on Asset-Based Lending defines the standard: "an account is considered ineligible collateral when it is past due by three times the terms, e.g., 90 days for 30-day terms and 21 days for seven-day terms."
The credit agreement's Eligible Receivable definition specifies the aging cutoff and measurement method.
Common aging cutoffs in ABL facilities
The credit agreement's Eligible Receivable definition specifies the aging cutoff for ineligible AR. Each lender applies its own standards based on historical collection data and industry norms.
Why do lenders exclude cross-aged invoices?
The longer an invoice remains unpaid, the higher the statistical probability it will never be collected. Customers who do not pay within standard commercial terms may be experiencing financial distress, disputing the invoice, or refusing to pay. ABL lenders exclude cross-aged AR to avoid advancing against receivables that may prove uncollectible.
Source: OCC Comptroller's Handbook: Asset-Based Lending
Related topics
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Frequently asked questions
What AR aging buckets are ineligible in the Eligible Receivable definition?
Each credit agreement specifies the aging cutoff for ineligible AR. Invoices older than the cutoff are excluded from the borrowing base because they are statistically more likely to be uncollectible.