Does cross-aged AR count toward the borrowing base at term sheet?
At term sheet, cross-aged AR generally does not count toward the borrowing base. Unisys's Bank of America credit agreement (SEC EX-10.3) excludes “Cross Aged Accounts”: “Billed Accounts that are the obligations of an Account Debtor if fifty percent (50%) or more of the Dollar amount of all Billed Accounts owing by that Account Debtor are ineligible.” OCC describes this mechanic.
Last updated: September 13, 2026
Buyer answer: cross-aged AR is carved from the borrowing base
At term sheet, cross-aged AR generally does not count toward the borrowing base. Lenders exclude it through the Eligible Receivable definition and OCC-described cross-aging: when any (or some percentage) of a customer's receivables become ineligible, the whole customer balance can be designated ineligible collateral. LenderAnalyzer states that cross-aged ineligibles knock out the rest of a customer balance when a set share is already past due, with 20 percent as a common trigger—an example, not universal law. The credit agreement governs the past-due share and day-count windows.
What OCC lists on cross-aging
The OCC Comptroller's Handbook on Asset-Based Lending states 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—referred to as cross-aging. The OCC glossary defines cross-aging as making all receivables from a single account party ineligible if a specified delinquent proportion trips, sometimes called the "10 percent rule" because 10 percent is a common delinquency threshold. Separately, OCC states that an account is normally ineligible when past due by three times the terms (e.g., 90 days for 30-day terms).
Example thresholds (agreement-set)
LenderAnalyzer defines cross-aging as the rule that makes an entire customer balance ineligible once a set share is past due, commonly 20 percent. Glacier Lake Partners states that typically only current and 30-day AR qualify and gives a cross-aged accounts example: if a customer has more than 50% of their balance over 90 days, the entire balance becomes ineligible—attribute as that page's example. LegalClarity lists a 10% entire-balance wipe, with some agreements at 25% to 33%. Don Clarke lists most commonly 25 percent, but in some agreements 50 percent, wiping current invoices too. eCapital describes the cross-aged accounts / 10% rule. ABF Journal states that under the loan agreement, a significant past-due balance (for example, 20%) can make the entire customer balance cross age ineligible.
Sample clause
A Justia-hosted Hallwood Group sample credit agreement says: Eighty percent (80%) of "cross aged" receivables, such that if twenty percent (20%) or more of any account debtor's receivables are aged more than sixty (60) days from the due date, all receivables from that account debtor shall be deemed ineligible.
| Claim | Listed | URL |
|---|---|---|
| OCC ABL: past due by three times the terms | Normally, 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. | OCC Comptroller's Handbook: Asset-Based Lending |
| OCC ABL: cross-aging mechanic | 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. | OCC Comptroller's Handbook: Asset-Based Lending |
| OCC glossary: cross-aging / common 10 percent rule | Cross-aging: The practice of making all of the accounts receivable from a single account party (the obligated party for an account receivable) ineligible to be included in the borrowing base if a specified proportion of the total accounts receivable from that party is delinquent. Sometimes referred to as the “10 percent rule” because 10 percent of an individual party’s accounts is a common delinquency threshold. | OCC Comptroller's Handbook: Asset-Based Lending |
| LenderAnalyzer: cross-aged ineligibles (common 20 percent trigger) | Cross-aged ineligibles knock out the rest of a customer balance when a set share of that customer is already past due, 20 percent being the common trigger. | LenderAnalyzer — Borrowing Base Software |
| LenderAnalyzer: cross-aging definition (commonly 20 percent) | Cross-aging is the rule that makes an entire customer balance ineligible once a set share of that customer is already past due, commonly 20 percent. | LenderAnalyzer — Borrowing Base Software |
| LenderAnalyzer: past-due window sibling to cross-aging | Past dues come first: invoices unpaid beyond a reasonable window, commonly defined as three times the standard customer terms or 60 days past the due date, so a Net 30 invoice goes ineligible around 90 days from invoice date. | LenderAnalyzer — Borrowing Base Software |
| Glacier: cross-aged accounts example (50% over 90 days) | cross-aged accounts (if a customer has more than 50% of their balance over 90 days, the entire balance becomes ineligible) | Glacier Lake Partners — Credit Facility Management |
| Glacier: aged AR excluded from eligibility | Typically only current and 30-day AR qualify; aged AR is excluded. | Glacier Lake Partners — Credit Facility Management |
| Justia sample clause: 20% cross aged / 60 days from due date | Eighty percent (80%) of "cross aged" receivables, such that if twenty percent (20%) or more of any account debtor's receivables are aged more than sixty (60) days from the due date, all receivables from that account debtor shall be deemed ineligible | Justia — Hallwood Group sample credit agreement |
| Don Clarke: cross-aging wipe (commonly 25%; some 50%) | most commonly 25 percent, but in some agreements 50 percent — the entire remaining balance from that customer is wiped out of the eligible pool, including invoices that are current. | Don Clarke — Cross-Aging Borrowing Base |
| Don Clarke: remove aged invoices (90 from invoice / 60 past due) | Remove aged invoices — typically any invoice over 90 days from invoice date, or over 60 days past stated due date, depending on the credit agreement. | Don Clarke — Cross-Aging Borrowing Base |
| Don Clarke: cross-aged receivables range (20 to 50 percent) | If a meaningful portion of a single customer's balance is past due -- typically 20 to 50 percent depending on the agreement -- the entire balance from that customer becomes ineligible, including invoices that are not themselves past due. | Don Clarke — Eligible vs Ineligible Receivables |
| Don Clarke: past-due convention (90 from invoice / 60 past due) | Industry convention is that any invoice unpaid 90 days from invoice date or 60 days past its stated due date is considered past due and ineligible. | Don Clarke — Eligible vs Ineligible Receivables |
| LegalClarity: cross-aging threshold (10%; some 25% to 33%) | That means if 10% or more of a customer’s total outstanding balance is past due, the lender classifies the entire balance from that customer as ineligible. Some agreements set the threshold higher, at 25% to 33%, particularly for lower-risk portfolios or industries where slower payment cycles are normal. | LegalClarity — How Cross-Aging Makes Invoices Ineligible |
| eCapital: cross-aged accounts / 10% rule | if 10% or more of a customer’s total outstanding receivables are overdue beyond a certain period (often 90 days), then all of that customer’s receivables might be considered high-risk or doubtful. | eCapital — Cross-Aged Accounts (10% rule) |
| ABF Journal: cross age ineligible (example 20%) | Based on the loan agreement between the lender and the borrower, if an account receivable has a significant past due balance (for example, 20%), the entire outstanding receivable balance from that customer is treated as at-risk and considered to be cross age ineligible. | ABF Journal — Standard AR Ineligibles |
Frequently asked questions
Does cross-aged AR count toward the borrowing base at term sheet?
No. At term sheet, cross-aged AR generally does not count toward the borrowing base. It is carved via the Eligible Receivable definition and cross-aging so a customer's whole balance can go ineligible when a credit-agreement past-due share trips. Thresholds are agreement-set.
What is cross-aging in an ABL Eligible Receivable definition?
The OCC Comptroller's Handbook on Asset-Based Lending states 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—referred to as cross-aging. The credit agreement sets the past-due share that trips the wipe.
What cross-aging thresholds do published sources list?
Published examples differ by agreement: OCC's glossary notes a common "10 percent rule"; LenderAnalyzer lists commonly 20 percent; LegalClarity lists 10% with some agreements at 25% to 33%; Glacier's page gives a 50% over-90-days example; Don Clarke lists commonly 25 percent, some 50 percent. None of these is a universal statute—credit agreement governs.
When does OCC treat an aged account as ineligible collateral?
The OCC ABL handbook says: "Normally, 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." Cross-aging is a separate customer-level wipe when a specified delinquent share trips.
Related
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