Does cross-aged AR count toward the borrowing base at term sheet?
Last updated: August 27, 2026
What is cross-aged AR?
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 OCC further notes that "most underwriting agreements specify that all of a party's accounts are designated ineligible collateral when any (or some percentage) of that customer's receivables become ineligible. This is referred to as cross-aging."
Cross-aged AR refers to accounts receivable that have been outstanding for a specified period. Each ABL credit agreement defines the aging cutoff in its Eligible Receivable definition. Invoices older than the cutoff are excluded from the borrowing base because they are statistically more likely to be uncollectible.
Why do lenders exclude cross-aged invoices?
The longer an invoice remains unpaid, the higher the risk that it will never be collected. Customers who do not pay within standard terms may be experiencing financial distress, disputing the invoice, or refusing to pay for other reasons. ABL lenders exclude cross-aged AR to avoid advancing against receivables that may ultimately prove uncollectible.
Common aging cutoffs in Eligible Receivable definitions
The credit agreement's Eligible Receivable definition specifies the aging cutoff. The OCC Comptroller's Handbook on Asset-Based Lending notes that "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." Advance rates for eligible accounts receivable are typically "70 percent to 85 percent of eligible accounts receivable."
Source: OCC Comptroller's Handbook: Asset-Based Lending
Related topics
- Before binding an ABL revolver, which AR lines are ineligible?
- AR aging buckets in Eligible Receivable definition
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Frequently asked questions
Does cross-aged AR count toward the borrowing base at term sheet?
Cross-aged AR (significantly overdue invoices) is typically excluded from the Eligible Receivable definition or subject to concentration limits. Each credit agreement specifies aging cutoffs based on payment terms. Overdue invoices signal collection risk, and lenders carve them back to limit exposure to uncollectible receivables.