Eligible Receivables
Eligible receivables are the accounts receivable a lender will actually lend against, after ineligible items are removed. They are the qualifying pool, invoices that meet the facility's criteria for age, debtor, concentration, and quality, to which the advance rate is applied to determine availability.
What Makes a Receivable Eligible
A lender does not advance against every invoice on the ledger. It advances against the ones that meet the facility's eligibility criteria. Eligible receivables are what remain after the ineligible items are stripped out, and they are the base to which the advance rate is applied to calculate availability.
Common Eligibility Criteria
Criteria are set in the credit or factoring agreement and typically require that an invoice is within its aging window (often 90 days), owed by an approved, creditworthy debtor, free of disputes and offsets, not from an affiliate or related party, denominated in an accepted currency, and within the debtor concentration limit. Amounts past those tests are excluded.
Eligible vs Ineligible
The two are mirror images: gross receivables minus ineligibles equals eligible receivables. The same invoice can move between the two over time, an eligible invoice becomes ineligible when it ages past the window, when a dispute arises, or when cross-aging pulls a debtor's whole balance out.
Why It Matters
Eligible receivables are the foundation of the borrowing base: availability is the eligible pool times the advance rate, less reserves. Because eligibility shifts as invoices age and cash moves, an overstated eligible pool overstates availability. Zolvo keeps eligibility, aging, and dilution current through portfolio monitoring, see how it applies to asset-based lending.
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