Account - collection of claims or invoices against a particular customer for goods or services delivered.
Accounts Receivable - money that is owed to a company for goods and services it has provided to customers on credit. Accounts receivable are also considered an asset.
Advance the percentage of an invoice's face value a factor pays upon its purchase.
Cash flow - measurement of cash a company has gained or lost during an accounting period and adjusted for any previous accounting for accruals and other non-cash transactions.
Collateral - an asset that is promised or given to a creditor (a factor or a financial institution) to guarantee the discharge of an obligation by the debtor. The creditor may seize the asset and sell it to pay off the loan upon default.
Discount Fee - amount earned by a factor on each invoice purchased based on the period of time the invoice remains unpaid. Discount fees are set forth and agreed upon by both parties in the Discount Schedule.
Discount Rate - percentage of the face value of an invoice that a factor holds as its fee.
Face Amount also known as face value, it is the amount that has to be paid to the factor by client's customer, without consideration as to how much was advanced to the client.
Factoring - the process of purchasing debts owed, or accounts receivable, in exchange for immediate payment at a discount.
Invoice - a legal debt instrument that indicates the amount a customer owes for delivered goods or services. Invoices can be traded or sold.
Invoice Discounting - instant cash upon issuing invoices that does not require sales ledger and collection services.
Liability - a financial obligation, debt, claim or potential loss. Usually, short-term liabilities are debt on terms of less than five years, and long-term liabilities are debt for longer than five years.
Non-Notification - an aspect of confidential factoring in which the customers are not notified of the client's arrangement with the factor.
Non-Recourse - type of factoring where the A R factoring, company assumes complete responsibility for collection of debt, and will be held accountable for debt not collected due to the financial inability of the customer.
Note - a written promise to pay a named amount to a particular company or business by a certain date.
Notification - process by which the factoring business lets an account debtor know an invoice has been purchased from the client and the debtor is to pay the factor directly.