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The customer of a factor’s
client. The company owing the money due on the invoices.
Also known as the customer.
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The amount of money
a company owes for goods and services it has received.
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Invoices that have not
yet been paid by a company’s customers.
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A report showing how
long invoices from each customer have been outstanding.
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A financing technique
for working capital purposes, collateralized by
a security interest in a company’s accounts
receivable. Accounts receivable serve as collateral
and advances are made on a percentage of eligible
assets sold to the finance company.
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The percentage of the
face amount of an invoice that a funding source
advances to a client.
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A document filed with
a state by the founders of a corporation. After
approving the articles, the state issues a Certificate
of Incorporation; the two documents together become
the Charter of Incorporation.
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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, accounts
receivable and intellectual assets such as copyrights
or trademarks.
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The person or business
entity that is given, obtains, or buys the rights
to an asset.
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The transfer of the
rights, title, or interest of any debt instrument
(invoices) that is/are owned by another party.
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The person giving or
selling an asset, and subsequently, forfeiting rights
to that asset.
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Any debt that is delinquent
and has been written off as uncollectible.
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A financial statement
that shows the current financial condition of a
business by showing assets “balanced”
against liabilities and net worth.
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A state of insolvency
of an individual or organization. The inability
to pay debts.
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A document used to transfer
the title of certain goods from seller to buyer.
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The flow of cash through
a business. Cash flow involves the flow of cash
into a company in the form of revenues and out of
the company in the form of expenses.
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Professional whose primary
purpose is to unite income stream sellers with funding
sources. They may operate as referral sources or
as the primary liaison for cash flow transactions.
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The buying, selling
and brokering of privately held debt in the secondary
marketplace; the marketplace where businesses and
individuals get help managing their cash flow needs.
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The business which sells
its accounts receivable to the factor.
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Something of value (land,
home, car, etc.) that is pledged as security to
ensure the payment of a debt. Collateral is promised
to a lender until a debt is paid. If the borrower
defaults, the lender has the right, by law, to seize
the collateral.
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A privilege granted
for the purpose of extending time to make payment
on a debt.
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One who is owed payments
on a debt by a debtor.
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The client’s customer.
The company which pays the money due under the factored
invoice. Also known as the account debtor.
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One who owes something
and makes payments to a creditor.
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The omission or failure
to perform or fulfill a legal duty, obligation,
or promise (i.e. to pay debt)
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Background check and
research conducted by the factor to assess validity
of a prospective factoring client and that client’s
customers.
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The funding source for
the client. The company that purchases the accounts
receivable (invoices) from the client.
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The selling of a company’s
accounts receivable to a third party in order to
obtain financing.
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The fee the factor charges
for financing the client’s accounts receivable.
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A legal statement filed
when a sole proprietorship or other business entity
uses a name other than their own to operate a business.
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An individual investor
or an investment company that buys income streams.
A factor is a funding source that buys commercial
accounts receivable.
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A future payment or
series of payments, or a debt that one party owes
to another party.
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Person or business that
has the right to receive a payment or series of
payments and is interested in selling that income
stream for cash.
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The person, company
or government responsible for making payments on
an income stream.
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A contractual agreement
between a funding source and a seller, whereby the
seller assumes personal responsibility and liability
for the obligations of the income stream.
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A financial statement
that shows a historical record of a business’
income and expenses.
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Process by which the
factor verifies that the product or service provided
by the client was received and accepted by the customer
and that the customer intends to pay the factor
the money due under the invoice. This process takes
place before the factor sends out the advance to
the client.
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An amount a funding
source holds in its account to cover potential payment
defaults. This is part of the money retained by
the factor when the advance is sent to the client.
The reserve is sent to the client after the customer
has paid the factor the money due on the invoice.
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An interest in property,
other than real estate, which is given as security
for a debt or an obligation. A security interest
is created by execution of a Security Agreement
and a Financing Statement under the Uniform Commercial
Code.
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The person or company
that is holding commercial accounts receivable and
wants to sell them.
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The act of a creditor
acknowledging in writing that a debt due him or
her by a debtor shall be inferior to the debt due
another creditor by the same debtor.
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Standardized set of
guidelines protected by law that set down how business
transactions must be conducted.
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| Current assets minus
current liabilities. Working capital is a measure
of the liquid assets a company has available to
build its business. The number can be positive or
negative, depending on how much debt the company
is carrying. In general, companies that have a lot
of working capital will be more successful since
they can expand and improve their operations. Companies
with negative working capital may lack the funds
necessary for growth. |
