Charge over receivables (fordringspant)
Also known as receivables charge, charge over book debts
A charge over receivables is security in the company's outstanding invoices — the ones customers have not yet paid.
- Covers
- The company's outstanding invoices
- Registered
- To bind third parties
- Related to
- The floating charge
In practice
For many companies the sales ledger is the largest asset they have, and it can be given as security without being sold. That is what a charge over receivables does: the claims stay with the company, but the chargeholder has first call on them.
It resembles the floating charge and is often used alongside it, but it is narrower — here only the receivables are covered. As with the floating charge, it has to be registered to take effect against other creditors.
For a creditor weighing up his own position, the point is the same as with a floating charge: if the customer’s sales ledger is charged, it is not a reserve you can reach yourself.
Where it commonly goes wrong
- Confusing it with selling the receivables. Under a charge the claims stay with the company; on a sale they do not.
- Assuming new invoices fall outside. The charge is drafted to cover what comes in later as well.