AR Glossary

 
 
 
 
 
 
 
 

 A 

 

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

 

 B 

 

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

 

 

 C 

 

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

 D 

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

 

 E 

Export Debt: 

Money owed to a client from an overseas customer

 F 

 

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

 G 

 

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.

 I 

 

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

 

 L 

 

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

 

 M 

 

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

 N 

 

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

 P 

 

Purchase Order Financing: 

Funding that finances the supplier costs associated with a purchase order

 R 

 

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

 

 S 

 

Schedule of Accounts: 

Form used by clients to submit their invoices to Capital Foundry

 T 

 

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

 U 

 

Uniform Commercial Code (UCC): 

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

 


 V 

 

Verification: 

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

 W 

 

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