Glossary

Not sure of the jargon?
Our glossary provides a quick and easy
guide to all the terms used in the process.

Administration/Service Fees

Fees taken at the end of each month to cover work undertaken on the account.

Approved Debt

A debt which at the time in question is not overdue or disputed.

Availability

The amount that can be withdrawn from the Current Account subject to the restrictions imposed by the Funding Limit calculated by:
(1) taking the credit balance on the Sales Ledger Account Approved Debts and deducting the equivalent of your Liability and then:
(2) multiplying the result of the first calculation above by the Prepayment percentage,
(3) and from the result of the second calculation deducting the value of any existing debit balance on the Current Account; and
(4) from the result of that calculation deducting any reserves as we may wish to establish.

BACS

Bankers Automated Clearing System or transfers through the normal banking system taking 3 days and at no charge to our clients.

Base Rate

The Sterling Base Rate per annum of the Barclays Bank plc or any other bank as we may advise.

CHAPS

Clearing House Automated Payment System. Same day transfer of funds which will be charged at the standard rate at the time

CHOCS

Customer Handles Own Collections. A form of invoice discounting where the client sends copies of all invoices to the factor for processing onto the factor’s operating system thereby creating a mirror sales ledger. The client still has responsibility for collecting the debt but the customer/debtor still pays the factor direct.

Client Account

A balance on your account at any given time that is calculated by taking the value of the net Debts Outstanding on the Sales Ledger and deducting all payments made to you up to that point and also deducting all Fees, Discount Charges and VAT due to us. The remaining credit balance then represents the amount that we could pay you if all Debtors included on the Sales Ledger had paid their Debts to us by the date of the statement but before reserving the unentered amount of your Liability to us.

Concentration Limit

The proportion of the total Sales Ledger/Outstanding Debtors at any one time represented by one debtor.

Credit Limit

The maximum value, decided by us, of the Debts due by a Customer, which we are prepared to designate as Approved Debts. The limit is calculated by reference to the Debtor’s credit rating as well as practical experience of the Debtors’ payment history. Debts in excess of a Credit Limit will be regarded as Unapproved Debts.

Current Account

An account operated by us whose balance at any time reflects the closing balance on the Sales Ledger less the closing balance on the Client Account.

Debtor

A person who incurs or may incur any indebtedness under a Sale Contract.

Discount Charge

A charge for interest on funds used based on a percentage above Barclays Bank plc Base Rate. It is calculated daily and charged at the end of each month.

Factoring

You pass your sales ledger to the Factor to collect the debt thereby taking over the role of the credit controller. The debtor pays the Factor direct

Funding Limit

The amount set out in the Schedule as the maximum debit balance on the Current Account.

Invoice Discounting

A form of Factoring where you retain the control of your sales ledger and chase the debt but the debtor still pays the Factor direct.

Limits

Any of:
1) Prepayment Percentage;
2) Credit Limits;
3) Funding Limit;
4) Concentration Limit.

Prepayment Percentage

A percentage of the Purchase Price of Debts purchased and approved.

Recourse Period

The period at the expiry of which a Debt becomes Unapproved Debt. Our standard policy is 90 days from the end of month of date of invoice.

Sales Ledger Account

The total and current value of your Sales Ledger maintained in our sytems for both funding and credit control purposes. Transactions include Invoicing notified to together with any credit notes raised and cash received from debtors. Other debit or credit adjustments may arise for discounts allowed, adjustment for debit notes etc.

Service Fee

Our charge to you for our services based on a percentage of turnover or a fixed monthly figure agreed between us at the outset of the agreement.

Unapproved Debt

Any of the following Debts:
1) Debt which is disputed by the Debtor
2) Debt which remains unpaid beyond the end of the Recourse Period;
3) Debt in excess of a Debtor’s Credit Limit;
4) Debt which when totalled with all other Debts owing by the same Debtor is in excess of the Concentration Limit;
5) Debt in respect of which legal proceedings have been threatened against the Debtor;
6) Debt where the Debtor is Insolvent;
7) Debt which comprises discount wrongly claimed or deducted by the Debtor;
8) Debt which the Debtor is (or claims to be) unable to pay for any reason;
9) Debt where the invoice is dated after the date the Debt is offered to us;
10) Debt purchased but which has to be verified by us to establish its amount or collectability or while we establish the creditworthiness of the debtor;

Verification

As part of our normal procedures we verify at random and on a regular basis invoices and outstanding ledgers with Debtors.