Updated 2026-05-19

Cross aging

A rule that can make otherwise current invoices ineligible when older invoices from the same customer exceed a threshold.

Why it matters

Cross-aging can reduce available funding significantly if a customer has one or more overdue invoices. The mechanism works like this: if a customer has an invoice more than 90 days old, all invoices from that customer—including current ones—become ineligible for funding. This protects the factor by treating a slow payer as a systemic risk rather than an invoice-by-invoice risk. The practical effect is that a single aged invoice from a dominant customer can lock out that customer from the funding pool entirely until the old invoice is resolved.

How it appears in contracts

Cross-aging provisions appear in the Eligible Receivables definition of the factoring agreement. Common thresholds: if more than a specified percentage, often 20 to 25 percent, of the total invoice balance from a single account debtor is more than 90 days old, all invoices from that debtor become ineligible. The cross-aging test is typically calculated at the time of submission. Sellers should monitor customer payment aging closely to identify when a customer is approaching the cross-aging threshold, since ineligibility can happen without prior notice and may affect funding on invoices already submitted.

Related terms

• Advance rate
• Reserve
• Recourse
• Chargeback