We Protect Your Corporate Heartbeat®

America's Commercial Collection Agency
3 Reasons for Slow Payers
Accounts Receivable Turnover
Aging Accounts Receivable
Collecting Commercial Debt
Collection Consultants
Commercial Collection Company
Commercial Debt Recovery
Contingency Debt Collection
Credit Industry Groups
Debt Recovery
Early Warning Signs
Professional Debt Collection
Small Business Debt Collection
Third Party Debt Collection
Types of Commercial Debtors
US Collection Agencies
Accounts Receivable Training
AR Outsourcing
Bad Debt
Business Collection Agency
Commercial AR
Commercial Debt
Consumer Debt
Credit Collection
Credit Risk Management
Credit Seminars
Debt Collection
International Debt Collection
Nationwide Debt Collection
Online Collection Services
Small Business
Accounts Receivable Consulting
Advertising and Media
B2B Debt Collection
Business Debt
Commercial Credit
Consumer Debt Collection
Credit Card
Equipment Rental
Foreign Debt
Industrial Supplies
Landlord Tenant Collections
Law Firms
Oil and Gas
10 Day Final Demand
AAB Free Rate Quote
Accounrts Receivable as an Asset
Accounts Receivable Analysis
AR Assignment
Canada Collections
Collection Agency FAQs
Credit Resources
Debt Collection Services
Free Consultation
National Debt Collection
Overseas Negotiations
Private Collection Agency
Request a Quote
Risk Mitigation
What is a Collection Agency?

Are Accounts Receivable an Asset?

Are accounts receivable an asset? What formula can be easily used for valuating accounts receivable? These are common questions for AAB and the answers may surprise you. The real question is, do banks and lenders consider accounts receivable an asset?

The answer is yes, partially and no. The main factor in valuating accounts receivable is the age of the accounts. As accounts age the percentages drop substantially. Depending on the industry most lenders do not place any asset value on accounts that are over 6 months overdue.

How do lenders place a value on Accounts Receivable

Lenders will use different percentages when valuating accounts receivable according to the industry involved. Percentages will vary from lender to lender but are basically in the same range. Percentages are based on the standard recovery percentages on an average portfolio of accounts receivable.

Here are the average collection recovery statistics based on age for Accounts Receivable :

  • Due Date 94.9%

  • 30 Days Past Due 89.9%

  • 60 Days Past Due 81.3%

  • 90 Days Past Due 69.6%

  • 6 Months Past Due 52.1%

  • 9 Months Past Due 39.1%

  • One Year 22.8%

  • Two Years 9.3%

As you can see, the value of an accounts receivable deteriorates at a rapid rate. After 6 months the asset value of an accounts receivable drops almost in half. As a rule, lenders do not place any asset value on accounts that are over 6 months old. There are industry exceptions but in general this is the cutoff point when valuating accounts receivable as an asset.

Lenders will refine the percentages above based on the industry, and their experience in that industry, when valuating accounts receivable as an asset.

Using Accounts Receivable as security on a loan

Based on a similar formula above a lender will analyze and place a value on your accounts receivable as an asset.

Obviously the more up to date an accounts receivable portfolio is, the higher its value as an asset. Prior to having a lender evaluate your accounts receivables as an asset, be sure to clean up delinquent accounts.

If you need help with the cleanup, consider AAB. Give us a call or schedule a free consultation on accounts receivable as an asset.

Free Rate Quote
Account Adjustment Bureau, Inc. BBB Business Review
Member of International Association of Commercial Collectors
ACA InternationalInsured for your Protection
Serving you since 1973