Updated 2026-05-19

Ineligible receivable

An invoice that does not qualify for purchase under the contract terms.

Why it matters

Ineligible invoices reduce the advance base without reducing the obligation to repay. A large pool of ineligible receivables can significantly reduce actual available funding, even when total reported receivables look strong. Common ineligibility triggers include: invoices from unapproved debtors, invoices that are too old, invoices subject to dispute or offset, government receivables in programs that exclude them, cross-aged invoices, and invoices with anti-assignment clauses. Sellers should review the eligibility criteria before starting a factoring relationship to understand what portion of their receivables will qualify.

How it appears in contracts

The Eligible Receivables definition in a factoring agreement lists the criteria an invoice must meet to qualify for funding. Common exclusions: invoices older than 90 days from invoice date, invoices from related parties or affiliates, invoices subject to retainage or pay-when-paid conditions, and invoices where the account debtor credit limit would be exceeded. When a funded invoice later becomes ineligible, such as when a previously undisclosed dispute surfaces, the agreement typically requires the seller to repurchase the ineligible amount from the factor.

Related terms

• Advance rate
• Reserve
• Recourse
• Chargeback