Invoice Factoring Glossary by Alpha
The amount owed by a business or an individual, excluding ownership equity. There are two types of liabilities: Current and Long-term. Current are debts which must be paid within one year (such as accounts receivable, dividends, notes payable, bank loans payable, taxes payable, wages and long-term debt due within one year). Long term liabilities, also called funded debt, are debts that are not due until after a year's time.
A claim upon a piece of property for the payment or satisfaction of a debt or obligation.
A search through public records on file in both the County Clerk's and Secretary of State's offices for any claims (pledges) against the property of a business (such as their accounts receivable) or an individual. An example would be if a taxing authority has a lien against the accounts receivable of a business due to taxes owed.
Limited Liability Company (LLC)
A legal entity or business organization which can own property, incur debts, sue, and be sued. Laws dealing with LLC's vary from state-to-state but in general LLC's provide limited liability to its members, allow centralized management, and can be taxed as a partnership.
Line of Credit
An amount of money, which a business or individual can borrow against at times it needs cash.
Cash, accounts receivable, or other assets that can be readily converted into cash.
The ability to convert assets into cash (or cash equivalent) without significant loss. If a business has good liquidity they will be able to meet their maturing obligations promptly, earn trade discounts, benefit from a good credit rating, etc.