UCC accounts receivable definition - filing nightmare with blanket lien language
Been wrestling with this for weeks and getting nowhere fast. Our bank's UCC-1 uses "all accounts receivable now owned or hereafter acquired" as the collateral description, but I'm seeing some filings that break it down much more specifically. Like "accounts, chattel paper, instruments, documents, general intangibles" etc. My question is about the UCC accounts receivable definition - are we being too broad or too narrow? Had a loan officer tell me our current language might not cover invoice factoring arrangements properly, and now I'm second-guessing everything. The debtor has multiple revenue streams including service contracts, product sales, and licensing deals. Should accounts receivable cover all of this under UCC Article 9, or do we need separate categories? Really don't want to find out we missed something critical when it comes time to enforce. Anyone dealt with similar collateral description issues?
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Nia Watson
The UCC accounts receivable definition is pretty straightforward - it's basically any right to payment for goods sold or services performed. Your "all accounts receivable" language should cover invoice factoring, but you might want to add "proceeds" explicitly to catch the cash flow from those transactions. What state are you filing in?
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Micah Trail
•Filing in multiple states actually - Delaware, Texas, and California. The debtor has operations in all three. Should I be worried about state-specific interpretations of accounts receivable?
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Nia Watson
•UCC Article 9 is pretty uniform across states for basic definitions. Delaware and Texas are usually straightforward, California can be pickier about continuation filings but the collateral descriptions should be fine.
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Alberto Souchard
I've seen banks get burned by being too general with accounts receivable descriptions. One case involved a debtor who had both traditional A/R and streaming royalty payments - court ruled the blanket language didn't clearly cover the royalties because they weren't from "goods sold or services performed" in the traditional sense. You mentioned licensing deals - that could be similar.
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Micah Trail
•Oh man, this is exactly what I was worried about. The licensing deals are a big part of their revenue. So should I separate out "general intangibles" to cover licensing payments?
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Alberto Souchard
•Yes, definitely add general intangibles to be safe. Also consider "payment intangibles" if the licensing involves ongoing payment streams rather than lump sum purchases.
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Katherine Shultz
•Had this exact headache last month. Ended up using Certana.ai's document verification tool to cross-check our UCC-1 language against the loan agreement and security agreement. It flagged that our accounts receivable definition was too narrow for the debtor's business model. Really saved us from a potential gap in coverage.
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Marcus Marsh
Here's what I learned the hard way - UCC accounts receivable definition varies depending on the nature of your debtor's business. Service companies vs. manufacturers vs. technology companies all generate different types of receivables. For tech companies especially, you want "accounts, general intangibles, payment intangibles, chattel paper, instruments, and documents" to cover all bases.
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Hailey O'Leary
•This is great advice. I always struggle with the line between accounts and general intangibles. Is there a bright-line test?
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Marcus Marsh
•Not really a bright line, but accounts are usually for goods/services already provided, while general intangibles are more about intellectual property or ongoing contractual rights. Licensing fees often fall into general intangibles.
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Cedric Chung
Am I the only one who thinks the UCC definitions are deliberately confusing? I mean, why have separate categories for accounts, payment intangibles, and general intangibles when they all end up being "rights to payment" anyway??
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Talia Klein
•LOL no you're not alone. The categories matter for priority rules and enforcement though. Different types of collateral have different perfection requirements.
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Cedric Chung
•Fair point. Still annoying when you're trying to draft a comprehensive security interest and have to guess which bucket everything falls into.
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Maxwell St. Laurent
Quick question - does "accounts receivable" automatically include the right to collect on those accounts? Or do you need separate language for collection rights and enforcement remedies?
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PaulineW
•Collection rights are usually included in the security agreement rather than the UCC filing itself. The UCC-1 just needs to identify the collateral type broadly.
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Nia Watson
•Right, the UCC filing is just notice to third parties. Your actual rights come from the security agreement language.
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Annabel Kimball
For what it's worth, I've started using much more detailed collateral descriptions after getting burned on a factoring arrangement. Now I use "accounts, accounts receivable, chattel paper, instruments, documents, general intangibles, payment intangibles, supporting obligations, and proceeds of all of the foregoing." Covers pretty much everything.
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Micah Trail
•That's comprehensive but won't some filing offices reject it for being too broad? I thought they wanted specific descriptions.
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Annabel Kimball
•Most states accept this language as long as it's not just "all assets" or "all personal property." The key is using the specific UCC Article 9 defined terms.
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Chris Elmeda
•I second the Certana.ai recommendation from earlier. When I was dealing with a similar collateral description issue, I uploaded both our UCC-1 draft and the security agreement to their verification tool. It immediately spotted that we were missing "supporting obligations" which could have been a problem for our standby letter of credit arrangements.
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Jean Claude
One thing to watch out for with accounts receivable - make sure your continuation filing uses the exact same collateral description as the original UCC-1. I've seen filings get rejected because someone "improved" the description during continuation and it no longer matched exactly.
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Charity Cohan
•Wait, you can't improve the collateral description during continuation? That seems backwards.
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Jean Claude
•You can amend with a UCC-3 amendment form, but the continuation itself should match the original filing exactly. Changing the description during continuation can cause rejection in some states.
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Josef Tearle
Just to add to the confusion - trade receivables vs. accounts receivable. Anyone know if there's a meaningful distinction for UCC purposes? Our debtor has both traditional invoice-based receivables and contract milestone payments.
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Nia Watson
•For UCC purposes, both would typically fall under "accounts" as long as they're rights to payment for goods sold or services performed. The milestone payments might need careful review depending on the contract structure.
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Shelby Bauman
•Milestone payments can be tricky. If they're contingent on performance milestones, they might not qualify as "accounts" until the milestone is actually achieved. Could be general intangibles until then.
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Quinn Herbert
Update: ended up going with "all accounts, chattel paper, instruments, documents, general intangibles, payment intangibles, supporting obligations, and proceeds thereof" based on everyone's advice. Filed yesterday and got accepted in all three states. Thanks for the help sorting out the UCC accounts receivable definition mess!
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Salim Nasir
•Great outcome! That's pretty much the gold standard language for comprehensive coverage.
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Hazel Garcia
•Glad it worked out. The broad approach is usually safer than trying to get too clever with narrow descriptions.
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Katherine Shultz
•Perfect example of why the document verification tools are so helpful. Would have taken you weeks to research all those collateral categories manually.
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Abby Marshall
This thread is incredibly helpful - I'm dealing with a similar issue right now with a debtor who has SaaS subscription revenue, professional services contracts, and equipment leasing income. The UCC accounts receivable definition gets murky when you're dealing with recurring subscription payments that might be considered executory contracts rather than traditional A/R. Has anyone run into issues where subscription revenue didn't qualify as "accounts" because the services haven't been fully performed yet? I'm wondering if I need to specifically include "contract rights" or if the general intangibles category would cover ongoing subscription obligations.
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Eloise Kendrick
•Great question about SaaS revenue! You're right to be cautious - subscription payments for services not yet performed typically don't qualify as "accounts" under UCC Article 9 since accounts are for goods sold or services already rendered. For ongoing subscription obligations, I'd definitely include "general intangibles" to cover the contractual rights to future payments. You might also want "payment intangibles" for any subscription streams that are purely payment rights rather than tied to specific service delivery milestones. The equipment leasing income should fall under accounts if it's for equipment already delivered, but general intangibles if it covers future lease obligations.
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