Foreign Receivables

Last Updated: Jun 7, 2019

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In the past, lenders didn't typically lend on foreign receivables because the credit information system in most foreign countries is not as well established as it is in the United States and, as a result, is not as reliable. Also, geographical distances can create the potential for payment problems, particularly for a third party trying to collect. Most importantly, the governing laws of the country in which the account debtor is located may prevent or inhibit collection efforts, and may even deny our legal interest in the receivable (since the UCC is a United States law). For these reasons, we typically considered receivables from account debtors headquartered outside the U.S. as ineligible. However, more recently, lenders have become more comfortable lending on foreign A/R depending on the country. In addition, lenders may include foreign A/R as eligible if the lender is assigned credit insurance for the foreign account debtors.