Bills Receivable Risk

Create factored bills receivable remittances to remit bills receivable as collateral in return for cash advances or loans from your bank.

For bills receivable factored with recourse, you bear the financial risk of customer default. When you create a bill receivable factored with recourse, Receivables records a short term debt for the default risk. The bills receivable remittance receipt method assigns the number of risk elimination days to the bill. The risk elimination days are the number of days after the bill receivable maturity date that you can clear short term debt on your factored bills receivable.

Receivables applies receipts created at the time of remittance to bills receivable and eliminates the risk on each bill. The apply date is the bill receivable maturity date plus the number of risk elimination days.

You can use the Close Matured Bills Receivable process to apply receipts and eliminate risk on bills receivable factored with recourse. The process performs these tasks:

• Unapplies the receipt from short term debt.

• Applies the receipt to the factored bill receivable after the maturity date plus any risk elimination days. The apply date is the bill receivable maturity date plus the number of risk elimination days.

• Eliminates the risk on the factored bill receivable.

You can also use the Eliminate Risk action to manually eliminate risk on a bill receivable. You can do this, for example, if payment is received from the customer during the risk elimination period.

If a customer is at risk of not paying the bill receivable after risk has been eliminated, you can use the Reestablish Risk action to reestablish risk on the bill. When you reestablish risk on a Closed bill receivable that was factored with recourse, Receivables unapplies the receipt that was created when the bill was factored and applies the receipt to short term debt. The status of the bill is updated to Matured Pending Risk Elimination.