AR GLOSSARY

A-C

D-F

G-I

D-F

G-I

J-L

M-O

P-R

S-U

V-X

A-C

Account Current:
A monthly accounting statement of the client's daily transactions

Accounts Receivable:

Money owed by customers of our clients, usually by issuing an invoice that is due to be paid within a certain period of time

Accounts Receivable Aging:
A periodic report that organizes a company’s accounts receivable by outstanding invoices

Accounts Receivable Financing:

The process of a company turning its accounts receivable into cash

Accounts Receivable Verification:
The process Capital Foundry uses to determine the eligibility of receivables

Accrual Accounting:

Used to record a business’ income and expenses, transactions are recorded when they happen,

without monies being paid or received

Advance:

This is the amount of money that Capital Foundry advances to clients when lending or purchasing against an invoice

Advance Rate:

The percentage of the invoice that will be advanced

Approved Account:
Invoices to a customer for which Capital Foundry has evaluated and assigned a credit risk rating

Articles of Incorporation:

Also known as the Certificate of Incorporation, this document acts as a charter to establish a new corporation. The document is filed with the government during the formation of a C corporation or S corporation, and includes information such as the company’s name and street address.

Asset Based Loan (ABL):

A term loan that is secured by the client’s assets as collateral

Audit commonly known as a Field Examination:

A review done by Capital Foundry to ensure the conditions of the facility are being met

Automated Clearing House (ACH):

ACH is a network allowing businesses to electronically transmit payments from their customers through a single or recurring transaction.

Average Due Date:
The date on which the month's sales are payable by the customer to our client

Bad Debt:

Debt that has an unlikely chance of being collected

Balance Sheet:

A financial document showing a company’s assets, liabilities and shareholders’ equity at a specific date

Borrowing Base:

The value of a client’s assets used by lenders as criteria for providing availability under a loan agreement

Cash Basis Accounting:

An accounting method used to record business income and expenses. Income is recorded when payment is received, and expenses are recorded when paid.

Change of Terms:
Modifying the terms of sale on the original invoice

Chargeback:
Uncollected invoices debited to the client's current account

Client:
An organization entered into a contract with Capital Foundry

Collateral:
Property owned by the client controlled by Capital Foundry to ensure that a borrower will repay the loan

Collections:

Payments received for financed invoices that were factored or loaned against that are remitted through the lock box system

Collection Days:
Days added to the due date of the invoice to allow for mail time and check clearing days

Concentration:

A percentage representing the maximum level which Capital Foundry will permit for a single customer within a client’s portfolio in order to mitigate risk

Confession of Judgment (COJ):

A written authorization within the loan agreement by the client giving Capital Foundry a judgment against the client in the case of a default without the necessity of any legal adjudication

Contra Account:

An account in which the client and it’s customer owe each other money

Credit Memo:
A credit to a customer's account to correct erroneous charges

Credit Protection:

A facility that covers the client against losses due to the nonpayment of an invoice

Confidential Factoring:

A facility where the customer is not notified that the client is partnered with Capital Foundry

Current Account:

Amount of funds paid including any charges at any given time

Current Liabilities:

Debts due within one year

Customer:
Organization to whom the client sells its goods

Deduction:
Funds deducted by the customer when paying a client's invoice

Discount Fee:
The fee charged by Capital Foundry to provide the line of credit

Dispute Notice:

Capital Foundry notification alerting the client that a customer has refused to pay an invoice. Disputes are resolved between the client and its customer.

Due Diligence:

The research process done by Capital Foundry in preparation for a new client

Export Debt:

Money owed to a client from an overseas customer

Factoring:

A form of business funding where a company finances their accounts receivable by selling their invoices to an intermediary called a factoring company

Funding Period:

Time period from when invoices are sent to customers to when payment is received

Government Contract Financing:

The availability of working capital prior to a Government payment to a contractor before the acceptance of goods or services by the Government.

Indemnification:
To provide security for reimbursement in case of a loss

Ineligibles:
Invoices Capital Foundry will not lend against

Inventory:
Goods or property on hand

Invoice:
A document listing merchandise shipped, the ship to name and address, the bill to name and address, the cost and terms of sale

Invoice Factoring:

Process of purchasing a client’s accounts receivable

Lien:

A security interest taken by the Lender or Factor against the client to secure debt

Lockbox:

A bank treasury management system designed to receive payments by mail or wire

Mechanics Lien:

A security interest in the legal title of a property by subcontractors and suppliers who have provided labor/products to improve the property

Notice of Assignment:

A memo sent to customers informing them that the invoice is pledged as collateral and the address to send payment

Non-recourse factoring:

An arrangement in which the Factor takes the credit risk

Purchase Order Financing:

Funding that finances the supplier costs associated with a purchase order

Rebate:

Funds wired to the client’s account once invoices are paid in full

Recourse Factoring:

Arrangement in which the client is responsible for invoices that remain unpaid

Schedule of Accounts:

Form used by clients to submit their invoices to Capital Foundry

Terms of Sale:
Time given to a customer to pay an invoice

Uniform Commercial Code (UCC):

Act that harmonizes the law of sales and commercial transactions in the 50 states.

Verification:

Process in which Capital Foundry verifies the validity of an invoice with the customer

Without Recourse:
Capital Foundry assumes responsibility for credit approval based on the client’s customers’ abilities for pay the invoice on maturity.

CAPITAL FOUNDRY

AR Glossary