Ineligible Receivables

Ineligible receivables are the mirror image of eligible receivables—invoices that cannot be pledged as collateral in an ABL borrowing base because they present elevated collection risk, legal complications, or concentration problems. Understanding ineligible categories helps businesses forecast their true ABL credit availability.

Common ineligibility triggers: 1. **Over-90-days aging** — the most frequent exclusion; invoices past 90 days from invoice date (or 60 from due date) are presumed impaired. 2. **Cross-aging** — if ≥50% of the total balance from one customer is past due, all invoices from that customer are ineligible. 3. **Concentration excess** — the portion of a customer's invoices exceeding 20–25% of total eligible A/R is excluded. 4. **Government debtors** — federal and state government receivables may be excluded (or require a special DACA/assignment of claims filing under the Assignment of Claims Act, 31 U.S.C. §3727) (https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title31-section3727). 5. **Retainage** — in construction, retainage held by general contractors is excluded until released. 6. **Bill-and-hold, progress billings, contra accounts, pre-billed invoices** — all typically ineligible. 7. **Foreign receivables** without trade credit insurance.

Borrowers should review their ineligible list before each borrowing-base certificate—reducing ineligible balances through faster collection or dispute resolution directly increases available credit. The FDIC's bank examination guidance for ABL portfolios instructs examiners to verify that ineligible categories are clearly defined in loan agreements and consistently applied (https://www.fdic.gov/regulations/examinations/supervisory/insights/siwin04/abltranscript.html).