Invoice Factoring Glossary by Alpha
A Credit Customers
Consumers with excellent credit, who can obtain a loan from traditional lenders.
A collection of claims or invoices against a particular customer for goods or services delivered.
The customer of a factor's client. The compny owing the money due on the invoices. Also known as the customer.
The amount owed by a business to its suppliers or vendors.
Trade credits; an amount owed by an account debtor by the act of granting short term unsecured credit in lieu of cash for goods or services. A collection of a company's outstanding invoices (invoices which have not yet been paid by the company's customers). Considered a liquid asset on the balance sheet and generally expected to be paid in less than ninety days.
Accounts Receivable Aging Schedule
A classification process, as reported on a schedule by time intervals (30 day increments & current), 30 days, 60 days, 90 days, 90+ days, used to analyze the amount of money owed to a business by its customers. It is used by credit grantors (such as banks and factors) to determine the probability of collection, as it shows patterns of payment and delinquency.
Accounts Receivable Financing
A secured short-term loan that involves either the assignment or factoring of receivables.
Accounts Receivable Turnover
A measure used to determine a company's average collection period for receivables; computed by dividing net credit sales by average accounts receivable.
A system of accounting in which revenues and expenses are recorded as they are earned and incurred, not necessarily when cash is received or paid.
Form sent to the client's customer account debtors to confirm that the invoice the client is selling does exist and that they will remit payment directly to factor.
The percentage of an invoice's face value which a factor pays upon its purchase.
Anything having commercial or exchange value that is owned by a business, institution or individual. A business' assets might include its real estate, equipment inventory, intellectual assets such as copyrights or trademarks, and accounts receivable.
Asset Based Lending
A business loan where the borrower pledges as collateral for the loan any assets, such as invoices, purchase orders or equipment, used in the conduct of his or her business. Funds are used for business related expenses. All asset-based loans are secured.
The ability to assign (or sell) accounts receivable to another individual or business.
The person or business entity who is given, obtains, or buys the right to an asset.
The transfer of the rights, title or interest of any asset or debt instrument that is properly owned by another party.
The person giving or selling an asset, and subsequently, forfeiting rights to that asset.
An individual who is authorized to execute a binding document on behalf of a corporation, partnership or other legal entity.