Cross-Aging (Cross-Age Rule)
Cross-aging is an eligibility rule that makes all of a debtor's invoices ineligible once a defined share of that debtor's balance is past due. If more than, say, 50 percent of what a debtor owes is delinquent, the lender treats the entire balance, even current invoices, as ineligible, because a debtor struggling to pay old invoices is a risk on the new ones too.
How it works
Normally an invoice becomes ineligible only when it individually ages out. Cross-aging looks at a debtor's whole balance, and if the past-due portion crosses the threshold it disqualifies all of that debtor's receivables at once, including the current ones.
The typical threshold
Commonly around 50 percent past due (beyond, say, 90 days), at which point the entire balance for that debtor becomes ineligible. Some facilities use a different percentage or trigger.
Impact on the borrowing base
Cross-aging can sharply cut availability by pulling a block of otherwise-current invoices out of the eligible pool the moment a debtor's aging deteriorates, which is why it must be monitored continuously. Zolvo tracks aging and eligibility in real time through portfolio monitoring, see asset-based lending.