This straightforward introduction to the terminology used in accounts receivable factoring will help you navigate the factoring process like a pro. Terms cover the factoring process, types of invoice factoring, and the role your business plays in the factoring relationship.

1. Accounts Receivable
Factoring Terminology
By Factor Finders

2. Account Creditor
The business that provides
products/services to customers. (Also
known as YOU)

3. Account Debtor
The purchaser of the Account Creditor’s
products/services. The account debtor
pays off the invoice during factoring.
(Also known as your customers)

4. Accounts Payable
The amount customers need to pay for
receiving products/services from the
seller.

5. Accounts Receivable
The amount not yet collected for
providing services or goods to a
customer.

6. Advance Rate
The initial amount of cash your company
receives through invoice factoring.

7. Aging Report
A report that shows how long accounts
receivable have remained outstanding.

8. Cash Flow
The flow of money in and out of your
business.

9. Due Diligence
A review of your company’s & your
customer’s financial background. This
determines your eligibility for factoring.

10. Factoring Broker
Brokers match the Account Creditor to
the right factoring company for their
particular business and industry.

11. Non-Recourse Factoring
A more expensive invoice factoring
option that alleviates the Account
Creditor of any liability for paying the
invoice upon the Account Debtor’s
failure to pay off their debt.

12. Recourse Factoring
A less expensive factoring option in
which the Account Creditor is liable for
paying the invoice should the debtor fail
to pay the factor company.

13. Reserve
The amount of cash from the invoice
retained by the factoring company. The
reserve is released once the customer
submits payment.

14. Spot Factoring
An invoice factoring option that allows
the Account Creditor to factor a single
invoice without any long-term
commitments.

15. Working Capital
Funds available to cover daily business
and operating costs.

16. Contact Factor Finders
Call us at 1-855-FACTOR-1 and visit
us online at
http://www.factorfinders.com/accounts
-receivable-factoring