Invoice Finance Terminology

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.