Eligible receivables
Eligible receivables are the accounts receivable that qualify as collateral under a credit agreement after every eligibility test has been applied. Lenders advance funds against eligible receivables only. Invoices that fail a test, such as being too old or too concentrated in one customer, are excluded and reduce borrowing availability.
Why eligibility matters more than your AR balance
Your general ledger might show $50 million of receivables. That is not what you can borrow against. The credit agreement defines a set of tests, and only invoices that pass all of them count. In practice the gap between gross AR and eligible AR is often 15 to 30 percent, and every dollar in that gap is liquidity you cannot draw.
This is why treasury teams obsess over eligibility. A change in customer mix, a slow collections month, or a single large obligor growing past its concentration limit can shrink availability even when total receivables grow.
The most common eligibility tests
- Aging: invoices past due beyond a threshold, commonly 90 days from invoice date or 60 days from due date, drop out.
- Cross-aging: if a large share of one customer's invoices are past due, often 25 or 50 percent, all of that customer's invoices become ineligible.
- Concentration: exposure to a single obligor above a set percentage of the pool is excluded as excess concentration.
- Obligor quality: government, affiliate, and intercompany receivables are frequently excluded or capped.
- Jurisdiction and currency: foreign receivables may be excluded or limited unless the agreement carves them in.
- Disputes and offsets: disputed invoices, contra accounts, and balances subject to setoff usually fail eligibility.
Exact thresholds vary by facility. The tests themselves come straight from the credit agreement, so two borrowers with identical receivables can have very different eligible balances.
Example: from gross AR to eligible receivables
| Line | Amount |
|---|---|
| Gross accounts receivable | $50,000,000 |
| Less: invoices over 90 days past due | ($3,200,000) |
| Less: cross-aged customers | ($1,800,000) |
| Less: excess concentration (one obligor over 10%) | ($2,500,000) |
| Less: intercompany and affiliate balances | ($900,000) |
| Less: disputed invoices and contras | ($600,000) |
| Eligible receivables | $41,000,000 |
At a 85 percent advance rate, this borrower's gross borrowing base is $34.85 million before reserves. The $9 million of ineligibles cost roughly $7.65 million of availability. Knowing exactly which invoices caused that, and why, is the difference between managing the number and being surprised by it.
Data you need to test eligibility
- Invoice level detail: invoice number, obligor, invoice date, due date, original and open amount, currency.
- Obligor master data: legal entity names, parent groupings, country, and any affiliate flags.
- Credit memos and unapplied cash tied back to the invoices they affect.
- Dispute and offset flags from your ERP or collections system.
Most eligibility mistakes are data mistakes. A due date mapped wrong, or the same customer spelled three ways, will misstate aging and concentration before any rule even runs. Olycor tests every invoice against the facility's rules and keeps the link from each exclusion back to the source record, so you can show your lender exactly why the number is what it is.
Frequently asked questions
Are eligible receivables the same as current receivables?+
Who decides what counts as eligible?+
Can eligibility rules change during the life of a facility?+
Test eligibility from source data, not from a spreadsheet.
Olycor applies your facility's eligibility rules to every invoice and traces each exclusion back to its source record.
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Last updated 2026-07-08. This page explains general market practice. Your credit agreement governs how these concepts apply to your facility. Olycor does not provide legal, tax, accounting, or credit advice.