Invoice Finance Terminology

A Glossary of Factoring and Invoice Discounting Terms

Invoice Finance - A Simple Glossary of Factoring and Invoice Discounting Terms

These definitions may prove useful in understanding any invoice finance contract you may be considering.

Accounts Receivables
Your sales ledger i.e. debtor sales invoices.
Aged Debtor Analysis
A schedule of outstanding trade debts with reference to their due dates.
Assignment
The legal process by which our sales invoices are transferred to your factoring or Invoice Discounting Company giving them the right to receive payment.
Confidential Invoice Discounting
A facility where your customers remain unaware that debtor invoices have been sold to a third party invoice discounter.
Credit Period
The period of credit in days a trade buyer has to settle a purchase debt, e.g. 30 days.
Debt
The invoiced amount a debtor owes to a creditor.
Discount Charge
The interest charged by the factor on outstanding liabilities of the client.
Facility Limit
Some invoice financiers may impose a credit limit or maximum about that may be factored.
Minimum Term
Many lenders will require a minimum contract period.
Non Recourse
The facility is 100% protected against bad debts.
Overpayments
A facility where the invoice financier agrees to fund in excess of the normal early payment percentage.
Recourse
The fee levied against factored turnover by the invoice finance lender.
Sales Invoice
An invoice raised by a seller for the provision of goods or services.
Sales Ledger
The accounting structure holding all sales invoice details.
Service Charge
The cost of the invoice facility charge.

Why not find out how much working capital a factoring facility could provide and how much it might cost with this Invoice Factoring Calculator.

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