CAPITAL FOUNDRY
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.