Accounts Receivable – A comprehensive list of monies owed to a company for services rendered.
Advance Rate – Percentage of the face value of an invoice that a factoring company will send to a client up-front.
Client – A business that is factoring their invoices
Client Credit – The dollar amount of invoices a factoring company is willing to buy from a client, across all customers.
Customer – Customer of the client. The business whose invoices our client wishes to have factored.
Customer Credit – The dollar amount of invoices a factoring company is willing to purchase from a particular customer.
Discount – The difference between the face amount of the invoice and the amount the factor purchases it for. Also referred to as the factoring rate.
Face Amount – The total value of an invoice at the time it is factored.
Factoring – Also known as accounts receivable finance, factoring is the purchase of a business’s accounts receivable by a third party, known as a factor.
Invoice – A list of goods and services provided coupled with the sums due for these.
NOA – Acronym for Notice of Assignment. A document sent to a client’s customers that makes them aware of the client’s factoring relationship and provides them with an updated remittance address for payment.
Rebate – Any remaining monies left over from a factored invoice once payment has been received and the advance and discount has been deducted.
Recourse – A factoring term wherein all unpaid invoices that reach a certain aging (known as the recourse period) must be paid for or exchanged by the client.
Reserve Account – Amount of funds set aside from client invoices reserved to cover unpaid an invoice in case of invoices reaching their recourse period.
Schedule – Short for “schedule of accounts”, this is a list of invoices that a client wishes to have factored.
UCC – Acronym for Uniform Commercial Code. The Uniform Commercial Code is a set of uniform laws that governs how businesses transact across state lines. In regards to factoring, it refers to a filing that a factoring company makes on your business that creates a lien against your accounts receivables.