Glossary of Terms

glossary of factoring terms
  • Account Receivables (AR)
    Payment owed to a business by customers in exchange for goods or services already delivered or provided. Account Receivables are clearly delineated in an invoice.
  • Accounts Receivable Aging
    The amount of time it takes to collect on a receivable. May be used to determine rate of factoring accounts receivables and a debtor’s good standing.
  • Bankruptcy
    A business that is unable to repay its debts owned, also referred to as insolvency.
  • Cash flow
    Money coming into your business (from sales, investments, etc.) and money going out of your business (for expenses). Frequently used to measure a business’s health or solvency.
  • Factoring Company
    A third-party financial services company that purchases current invoices from clients to give them cash right away. When invoices are due, the debtor pays the amount owed to the factoring company. Also referred to as the “funding source.”

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