For companies with a line of credit with their bank that is based in part or whole of accounts receivable, it is common for bank to carve out customers when the amount of their receivables over the eligibility threshold (over greater than 90 days, for us it is greater than 120 days [separate request to create that aging]) is equal or greater than 25% of the entire receivable. This is called a taint calculation and the full receivable of that customer is ineligible for consideration of the a/r base on the line of credit, when taint is triggered.

by: Pamela W. | 6 months ago | Accounting Reports