The money or other assets that a company or individual uses to start or maintain a business.
An accounting transaction used to move Unapplied Cash (UC) from one account to another. A negative CA reduces the balance held while a positive CA increases the balance.
The amount of cash a company generates or uses in a specific period of time, typically a month or a year.
Cash Flow Margin
A ratio that measures cash from operating activities as a percentage of total sales revenue in a given period.
Chargeback Reserve (CBR)
An accounting transaction used to reverse a posted Chargeback (CB) transaction.
The company who sells their invoices to a factoring company.
A wide range of assets that may be used by a borrower to secure a loan or credit line. In invoice factoring, your contracts and invoices serve as this collateral.
The percentage of a client’s overall portfolio that each customer accounts for. Concentration is used as a risk measure and is reviewed on a case by case basis.
A trading arrangement in which a seller sends goods to a buyer who pays the seller only whent the goods are sold. The seller typically remains the owner of the goods until they are paid in full. If the goods remain unsold after a certain period, the seller can reclaim them. Also referred to as: Guaranteed Sale, Sale or Return, or Goods on Consignment. These arrangements are typically not financeable and can be risky.
In A/R financing, a contra account is when a factoring company’s client and their customer (Account Debtor) owe each other payments. Any situations of both buying and selling to a customer should be disclosed immediately.
Also called Trade Insurance, is an insurance policy for companies who wish to proect their A/R from loss due to risks such as customer bankruptcy.
The maximum amount of money a lender will issue to a business or individual customer (Account Debtor).
Credit Memo (CM)
An accounting transaction wherein funds are withdrwan from a client’s Earned Reserve Balance to apply to open invoices. Typically, CMs are issued by a seller (client) in order to decrease the gross amount of an invoice due payable by the customer. Commonly due to returned goods, allowances taken, or price disputes. CMs should be sent to the factoring company as soon as possible.
Credit Reversal (CR)
An accounting transaction used to reverse a posted Apply Reserve (AR), Credit Memo (CM), or Discount (DI) transaction.
An agreement between the buyer and seller that list the amount owed, when payment is due, and any discounts or fees related to early or late payment. Examples include Net 60 and 2/10 Net 30.