Borrowing Base Brief

What is cash dominion in an ABL facility and when does it trigger?

Cash dominion (also called a lockbox or cash sweep) is a mechanism where customer payments are deposited into a lender-controlled account and automatically applied to pay down the revolver balance. Many ABL credit agreements include a springing cash dominion provision that triggers when availability falls below a specified threshold. The OCC Comptroller's Handbook on Asset-Based Lending states that cash dominion may trigger when availability "falls below an established threshold."

Last updated: August 27, 2026

How does cash dominion work?

Under cash dominion, the borrower directs its customers to send AR payments to a lockbox account controlled by the ABL lender. Each day, the lender sweeps the lockbox deposits and applies them to pay down the outstanding revolver balance. This automatically reduces the revolver borrowing and frees up availability (if the borrowing base supports it). The borrower must then re-draw on the revolver to fund operations, giving the lender daily visibility into cash flow.

What is a springing cash dominion trigger?

Many credit agreements do not impose cash dominion at closing. Instead, they include a springing cash dominion provision that activates when certain conditions occur. The OCC Comptroller's Handbook on Asset-Based Lending states that cash dominion may trigger when availability "falls below an established threshold." Other common triggers include:

Why do ABL lenders use cash dominion?

Cash dominion gives the lender control over AR collections when the borrower's financial condition deteriorates. By automatically applying collections to pay down the revolver, the lender reduces its credit exposure and ensures that AR turns into cash rather than being used for purposes other than debt repayment. Cash dominion is a protective mechanism that allows the lender to monitor daily cash flow and limit further lending risk.

Cash dominion statusCustomer paymentsLender control
Not triggered (normal operations)Deposited into borrower's operating account; borrower has direct accessLender monitors via monthly BBC; no daily sweep
Triggered (availability below threshold or default)Deposited into lender-controlled lockbox; swept daily to pay down revolverLender controls collections; borrower must re-draw on revolver to fund operations

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Frequently asked questions

What is cash dominion in an ABL facility and when does it trigger?

Cash dominion (also called a lockbox or cash sweep) is a mechanism where customer payments are deposited into a lender-controlled account and automatically applied to pay down the revolver balance. Many ABL credit agreements include a springing cash dominion provision that triggers when availability falls below a specified threshold. The OCC Comptroller's Handbook on Asset-Based Lending states that cash dominion may trigger when availability "falls below an established threshold." Once triggered, the borrower loses direct access to incoming AR collections until availability improves or the trigger is cured.