Common AR Ineligible Categories:
Below is a comprehensive list of the most common accounts receivable ineligible categories, along with a list of other, perhaps less common AR ineligible categories.
Please note the categories displayed below represents draft, summary content and may be subject to change.
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Concentrations (Tainted)
Definition: In asset-based lending, Concentrations refer to a significant portion of receivables owed by a single customer or a small group of customers. These are ineligible as collateral beyond specified thresholds due to increased risk of non-collection.
Cross Aged
Definition: In asset-based lending, Cross Aged refers to receivables that are partially overdue across a customer’s account. These receivables are considered ineligible because overdue portions can affect the collectability of the entire balance.
Past Due (Over Eligible Days)
Definition: In asset-based lending, Over Eligible Days refers to receivables that exceed the lender-defined aging period. These are considered ineligible as collateral because they have a higher risk of being uncollectible.
Credits Over Eligible Days (Aged Credits)
Definition: In asset-based lending, Credits Over Eligible Days refer to receivables that are past the lender’s defined eligibility period for payment. These are considered ineligible as collateral due to increased risk of non-collection.
Government Accounts
Definition: In asset-based lending, Government Accounts refer to receivables owed by government entities. These are ineligible as collateral due to longer payment cycles and legal constraints on collections.
Affiliates (Intercompany)
Definition: In asset-based lending, Affiliates refer to related companies or entities under common ownership or control. Receivables from affiliates are considered ineligible as collateral due to potential conflicts of interest and collectability risks.
Finance Charges
Definition: In asset-based lending, Finance Charges refer to interest or late payment fees added to customer balances. These are ineligible as collateral because they are not guaranteed collections and do not represent core receivables.
Advance Billings (Pre-Billings)
Definition: In asset-based lending, Advance Billings refer to invoices issued before goods or services have been manufactured or delivered. These receivables are considered ineligible as collateral because they represent unearned revenue and lack a corresponding delivery of goods or services.
Bill & Hold
Definition: In asset-based lending, Bill & Hold refers to invoices issued for goods that are billed to the customer but remain in the possession of the seller. These receivables are considered ineligible as collateral due to the lack of actual delivery.
Contra Relationships (Offsets)
Definition: In asset-based lending, Contra Relationships refer to situations where the borrower and customer owe amounts to each other. These receivables are ineligible as collateral because they may be offset by the customer’s claims.
Customer Deposits
Definition: In asset-based lending, Customer Deposits refer to funds received in advance for goods or services not yet delivered. These deposits are ineligible as collateral because they do not represent earned revenue.
Employee Receivables
Definition: In asset-based lending, Employee Receivables refer to amounts owed by employees to the borrower, typically for loans or advances. These are ineligible as collateral because they are not commercial receivables.
NBAR (Non-Borrowing Accounts Receivable)
Definition: In asset-based lending, NBAR (Non-Borrowing Accounts Receivable) refers to receivables that are excluded from the borrowing base due to ineligibility criteria such as customer risk, contractual restrictions, or collection uncertainty.
Other AR Ineligible Categories:
[This section currently under development]
Below is a comprehensive list of other types of ineligible accounts receivable categories.
Please note the content is in draft form right now and may be subject to updates.
Advertising Allowance
Definition: In asset-based lending, Advertising Allowance refers to discounts or rebates provided to customers to support marketing efforts. These amounts are considered ineligible as collateral because they are financial concessions, not collectible receivables.
Aging Over G/L
Definition: In asset-based lending, Aging Over G/L refers to discrepancies between accounts receivable aging reports and the general ledger. Such discrepancies are ineligible as collateral because they indicate potential errors or unverified balances.
Bankrupt Recently
Definition: In asset-based lending, Bankrupt Recently refers to receivables owed by customers who have filed for bankruptcy. These receivables are considered ineligible due to the high risk of non-collection.
Big-Box Store Discounts
Definition: In asset-based lending, Big-Box Store Discounts refer to deductions taken by large retailers for promotional allowances, chargebacks, or volume rebates. These amounts are ineligible as collateral because they reduce the actual collectible receivables.
Bonded Jobs
Definition: In asset-based lending, Bonded Jobs refer to receivables tied to construction or service contracts guaranteed by performance bonds. These receivables are ineligible as collateral because bondholders often have superior claims.
Cash and COD
Definition: In asset-based lending, Cash and COD (Cash on Delivery) refer to transactions where payment is required upon delivery of goods. These are ineligible as collateral because they do not represent credit extended to customers.
Charge-Backs
Definition: In asset-based lending, Charge-Backs refer to deductions taken by customers for returned goods, discrepancies, or promotional allowances. These amounts are ineligible as collateral because they reduce the actual collectible balance.
Co-Op Accruals
Definition: In asset-based lending, Co-Op Accruals refer to marketing or promotional funds accrued by customers based on purchases. These are ineligible as collateral because they are contingent credits and not collectible receivables.
Consignments Billed
Definition: In asset-based lending, Consignments Billed refers to invoices issued for goods shipped on consignment. These receivables are ineligible as collateral because ownership of the goods has not been transferred to the consignee.
Contractual Billings
Definition: In asset-based lending, Contractual Billings refer to invoices issued under long-term contracts for services or goods. These are considered ineligible as collateral because they are tied to future performance obligations.
Core Credits
Definition: In asset-based lending, Core Credits refer to receivables tied to refundable deposits or returns of used goods, such as vehicle parts. These are ineligible as collateral because they are conditional and not guaranteed.
Credit Card Sales
Definition: In asset-based lending, Credit Card Sales refer to receivables due from credit card companies for customer purchases. These are ineligible as collateral because they are subject to processing delays and potential chargebacks.
Credit Insurance Deductibles
Definition: In asset-based lending, Credit Insurance Deductibles refer to portions of insured receivables that are not covered under a credit insurance policy. These are ineligible as collateral because they represent uncovered risk.
Credit Limit Exceeded
Definition: In asset-based lending, Credit Limit Exceeded refers to receivables owed by customers who have surpassed their approved credit limits. These are ineligible as collateral due to increased default risk.
Credits and Rebills
Definition: In asset-based lending, Credits and Rebills refer to receivables created from credit adjustments followed by reissuance of invoices. These are ineligible as collateral due to discrepancies and double counting risks.
Credits Under Eligible Days
Definition: In asset-based lending, Credits Under Eligible Days refer to receivables that have not yet reached the lender-defined aging period for inclusion as collateral. These are considered ineligible because they have not matured for collection.
Debit Memos
Definition: In asset-based lending, Debit Memos refer to adjustments issued by the customer to reduce the amounts owed. These are ineligible as collateral because they directly reduce collectible balances.
Deferred Revenue
Definition: In asset-based lending, Deferred Revenue refers to payments received for goods or services not yet provided. These amounts are ineligible as collateral because they represent future obligations, not completed sales.
Deposit Billings
Definition: In asset-based lending, Deposit Billings refer to invoices issued for advance payments on goods or services not yet delivered. These are ineligible as collateral because they are tied to unfulfilled obligations.
Dilution Reserve
Definition: In asset-based lending, Dilution Reserve refers to adjustments made for expected reductions in receivables due to returns, allowances, or other adjustments. These reserves are ineligible as collateral because they reduce net collectible amounts.
Discounts Due
Definition: In asset-based lending, Discounts Due refer to anticipated reductions in receivable amounts as part of customer payment terms. These are ineligible as collateral because they directly reduce collectible balances.
Disputes
Definition: In asset-based lending, Disputes refer to receivables subject to disagreements over terms, pricing, or delivery. These are ineligible as collateral because the collectability is uncertain.
Due Date Distant Future
Definition: In asset-based lending, Due Date Distant Future refers to receivables with payment terms far beyond standard periods. These are ineligible as collateral because they increase collection risks.
Due Date Terms
Definition: In asset-based lending, Due Date Terms refer to payment terms that deviate significantly from standard arrangements. Receivables under such terms are considered ineligible because they may complicate collectability.
Duplicate Invoices
Definition: In asset-based lending, Duplicate Invoices refer to identical invoices issued for the same transaction. These are ineligible as collateral because they create the risk of double counting.
Extended Terms
Definition: In asset-based lending, Extended Terms refer to receivables with payment terms longer than industry norms. These are ineligible as collateral due to higher risks of non-collection and cash flow delays.
F.O.B. Destination
Definition: In asset-based lending, F.O.B. Destination refers to receivables where the ownership of goods transfers to the customer upon delivery at the destination. These are ineligible as collateral until delivery is confirmed.
Healthcare Cost Reporting Obligations
Definition: In asset-based lending, Healthcare Cost Reporting Obligations refer to receivables tied to cost reporting in healthcare services, often involving government reimbursements. These are ineligible as collateral because of delayed payments and compliance risks.
Healthcare Discharge Not Final Bill
Definition: In asset-based lending, Healthcare Discharge Not Final Bill refers to receivables from healthcare services where the final bill has not yet been issued. These are ineligible as collateral because the amounts are not finalized and collectible.
Healthcare Medicaid in Excess of Expected Days
Definition: In asset-based lending, Healthcare Medicaid in Excess of Expected Days refers to Medicaid receivables overdue beyond typical payment periods. These are ineligible as collateral due to increased collection risks.
Healthcare: Self Paid
Definition: In asset-based lending, Healthcare: Self Paid refers to receivables owed directly by patients without insurance coverage. These are ineligible as collateral due to higher default risks and extended collection periods.
Individuals (Consumer AR)
Definition: In asset-based lending, Individuals (Consumer AR) refers to receivables owed by individual customers rather than businesses. These are considered ineligible as collateral due to higher default risks and collection challenges.
International
Definition: In asset-based lending, International receivables refer to amounts owed by foreign customers. These are considered ineligible as collateral due to currency exchange risks, jurisdictional issues, and collection complexities.
License Fee Reserves
Definition: In asset-based lending, License Fee Reserves refer to amounts set aside for licensing costs associated with specific receivables. These are ineligible as collateral because they do not represent collectible amounts.
Markdown Allowance Receivable
Definition: In asset-based lending, Markdown Allowance Receivable refers to credits issued to customers for price reductions or promotional discounts. These are considered ineligible as collateral because they reduce the actual collectible balance.
Non-Trade Receivables
Definition: In asset-based lending, Non-Trade Receivables refer to amounts owed to the borrower that are unrelated to core business operations, such as employee advances or tax refunds. These are ineligible as collateral because they are not tied to revenue-generating activities.
NSF Customers
Definition: In asset-based lending, NSF Customers refer to customers who have a history of non-sufficient funds (NSF) payments. Receivables from such customers are ineligible as collateral due to the increased risk of default.
Pack & Hold
Definition: In asset-based lending, Pack & Hold refers to invoices issued for goods packed but not yet shipped to the customer. These receivables are ineligible as collateral because ownership of the goods has not been transferred.
Partially Paid Invoices
Definition: In asset-based lending, Partially Paid Invoices refer to receivables where customers have made partial payments. These are ineligible as collateral because they do not represent the full balance due.
Payable in Another Currency
Definition: In asset-based lending, Payable in Another Currency refers to receivables denominated in foreign currencies. These are ineligible as collateral due to exchange rate risks and jurisdictional challenges.
Pre-Billed
Definition: In asset-based lending, Pre-Billed refers to invoices issued for goods or services not yet delivered. These receivables are ineligible as collateral because they represent unearned revenue.
Price Guarantee Billing
Definition: In asset-based lending, Price Guarantee Billing refers to invoices issued with guaranteed price adjustments. These are ineligible as collateral because they are subject to future price modifications.
Progress Billings
Definition: In asset-based lending, Progress Billings refer to invoices issued incrementally as work is completed on a project. These are ineligible as collateral because they are tied to incomplete obligations.
Rebates Due
Definition: In asset-based lending, Rebates Due refer to amounts expected from suppliers or customers as part of incentive programs. These are ineligible as collateral because they are contingent on future actions or conditions.
Retainage Billings
Definition: In asset-based lending, Retainage Billings refer to amounts withheld by customers until a project is completed to satisfaction. These are ineligible as collateral due to their contingent nature and delayed payment.
Returns
Definition: In asset-based lending, Returns refer to receivables tied to goods returned by customers. These are ineligible as collateral because they may require reprocessing or cannot be resold at full value.
Salesperson / Samples Receivable
Definition: In asset-based lending, Salesperson / Samples Receivable refers to amounts owed for promotional goods or samples held by sales representatives. These are ineligible as collateral because they are not tied to revenue-generating activities.
Samples Billed
Definition: In asset-based lending, Samples Billed refers to invoices issued for sample products. These receivables are ineligible as collateral because they are not intended for revenue generation.
Service Billings
Definition: In asset-based lending, Service Billings refer to receivables from services rendered. These are often ineligible as collateral because they lack tangible assets to secure the lender’s interest.
Setup Fees
Definition: In asset-based lending, Setup Fees refer to one-time charges for establishing accounts or providing initial services. These are ineligible as collateral because they are not tied to ongoing revenue streams.
Shift Reserve
Definition: In asset-based lending, Shift Reserve refers to adjustments made to account for potential receivable write-offs due to collection risks. These are ineligible as collateral because they do not represent actual receivables.
Short Pay Amounts
Definition: In asset-based lending, Short Pay Amounts refer to partial payments made by customers, leaving balances unpaid. These are ineligible as collateral because they reflect disputed or delayed payments.
Specialized Pallets
Definition: In asset-based lending, Specialized Pallets refer to receivables tied to custom or unique pallets used for shipping goods. These are ineligible as collateral because they lack broad resale value and are often customer-specific.
Storage Charges Billed
Definition: In asset-based lending, Storage Charges Billed refers to receivables from fees charged to customers for storing goods. These are ineligible as collateral because they are not tied to the sale of goods or services.
Tooling Bills
Definition: In asset-based lending, Tooling Bills refer to receivables tied to custom tools or molds used in production. These are ineligible as collateral due to their specialized nature and limited resale potential.
Tooling Charges Billed
Definition: In asset-based lending, Tooling Charges Billed refers to invoices for custom tools or equipment made for specific customers. These are ineligible as collateral because they are tied to specialized, non-liquid assets.
Trade-In Allowance Owed
Definition: In asset-based lending, Trade-In Allowance Owed refers to receivables tied to credits for traded-in goods. These are ineligible as collateral because they are contingent on the valuation and resale of traded items.
TripPack Payable
Definition: In asset-based lending, TripPack Payable refers to receivables tied to expenses or advances for logistics and shipping documentation. These are ineligible as collateral because they do not represent collectible revenue.
Unapplied Cash
Definition: In asset-based lending, Unapplied Cash refers to payments received from customers but not yet allocated to specific invoices. These are ineligible as collateral because they are not tied to identifiable receivables.
Unapplied Credits in Aging
Definition: In asset-based lending, Unapplied Credits in Aging refers to credit balances on customer accounts that are not linked to specific invoices. These are ineligible as collateral because they do not represent collectible amounts.
Unissued Credits / Credit Memos
Definition: In asset-based lending, Unissued Credits / Credit Memos refer to anticipated but unprocessed adjustments to customer accounts. These are ineligible as collateral because they are not finalized receivables.
Vendor (3rd Party) Direct Pay
Definition: In asset-based lending, Vendor (3rd Party) Direct Pay refers to receivables collected directly by third-party vendors on behalf of the borrower. These are ineligible as collateral because the lender does not have direct control over collection.
Warranty Billings
Definition: In asset-based lending, Warranty Billings refer to receivables tied to warranty claims. These are ineligible as collateral because they are contingent on service obligations and may not be collectible.