The following Banking & Finance practice note provides comprehensive and up to date legal information covering:
In commercial lending transactions receivables are typically offered as security:
as part of a package of security over the whole of a company's assets (see Practice Note: Key features of debentures), and
in transactions where a steady stream of receivables forms a major part of the borrower's assets and the lender wants to control that income stream (for example, where the borrower is a company which provides goods and services to third parties)
This Practice Note explains the key issues which arise when taking security over receivables.
For information on taking security over other types of intangible assets see Practice Notes:
Taking security over contractual rights
Taking security over insurance policies, and
Taking security over intellectual property rights
In broad terms, a receivable is the right to receive the payment of money which is enforceable by legal action. Receivables are a type of intangible assets known as a 'chose in action'. A chose in action is something which is recoverable by legal action rather than something which can be physically possessed. Types of receivables include:
right to receive a payment under a loan agreement, and
rights to payments under contracts
In a commercial context, the term receivables is often used to refer to book debts, although strictly speaking book debts is a narrower term because it refers to 'debts accruing
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