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Invoice Factoring Glossary by Alpha
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DBA: Doing Business As
Used to designate the name of a business as it is commonly known rather than its legal name, the name of the owner, etc.
DBT
An abbreviation for "days beyond terms," which indicates how many days past the due date an invoice is late.
Debtor
One who owes something and makes payments to a creditor.
Default
The omission or failure to perform or fulfill a legal duty, obligation, or promise (i.e. to pay a debt).
Delivery Evidence
A document that proves delivery and invoicing of a shipment.
Dilution
The amount of risk associated with collection of the accounts receivable. It can include returns, charge-backs, trade allowances, concentrations, slow pay, bad debt and other perceived risk.
Discount Factoring
Arrangement whereby a factor purchases an account(s) receivable from a business (your client) at a discount to the face value of that receivable. The factor earns a fee based on the number of days that the receivable remains unpaid, i.e., the longer the receivable remains unpaid, the larger the fee incurred.
Discount Fee
The amount earned by a factor on each invoice purchased. It is based on the period of time the invoice remains outstanding (unpaid) and is set forth and agreed upon by both parties in the Discount Schedule.
Discount Rate
The percentage of the face value of an invoice that a factor holds as its fee.
Due Diligence
Background check and research conducted by the factor to assess validity of a prospective factoring client and that client's customers. Due diligence may involve credit checks, appraisals, UCC searches, lien searches, or other communication with clients.
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