Jargon Buster
Certain financial terms often mean different things to different organizations depending on their own particular accounting policies.
Our A-Z will help you understand the terms used every day by those working in the financial services industry.
| Assignment | The legal means by which we have the right to collect cash directly from your debtors to repay amounts that we have advanced to you. |
| Aged Debt Report | This is a report that shows you all the outstanding balances for each debtor and displays how old each balance is (normally by month). |
| Approved / Disapproved Debt | Approved: An invoice or invoices which have been accepted by us as being eligible for funding. Disapproved: An invoice or invoices which have not been accepted by us as being eligible for funding. |
| Bank base rate | The base rate of Lloyds TSB Bank plc which may vary, normally in line with Bank of England base rate |
| BACS | Bankers Automated Clearing System. Funds may be transferred from our account to your own bank account electronically via this system. It takes 3 working days for the money to hit your account. |
| CHAPS | Clearing House Automated Payment System (telegraphic transfer). Funds may be transferred from our account to your own bank account via this system on the same day. |
| Credit Insurance | This provides a level of bad debt protection against protracted payment or non payment by your customers. We can insure specific customer on your sales ledger. |
| Credit Limit | This is the funding limit that we are prepared to extend to any of your customers. |
| Current Account | The account which shows how much you have drawn from your availability. |
| Debtor | A customer that you have sold to on credit and that owes you money |
| Disbursements | Charges for anything over and above the standard factoring and discount charges. Note that these are exceptional charges and are listed in your Client Manual. |
| Discount Charge | The charge for any funds advanced against your invoices. It is calculated on a daily basis and charged at the end of the month. |
| Factoring charge / Service Fee | This is our administration charge (also called the service fee). It is the charge that we make against the invoices that you assign to us. |
| Prepayment Percentage | The amount advanced against the value of your invoices (including VAT) |
| Recourse Period | We will normally agree to fund invoices for up to a maximum of 90 days |
| Re-factoring Charge | This is a small charge for our additional workload for any invoices that exceed the recourse period |
| Sales Ledger | Your sales ledger contains the accounts of the customers you have sold to on credit (your debtors). It records information such as invoices issued, credit notes issued and payments received. We often use it as a term for the total value of your outstanding invoices. |