Advance rate
The percentage of an approved invoice paid upfront by a factor before the customer pays.
Invoice factoring glossary
Reserve
The invoice amount held back until customer payment and fee deductions are completed.
Recourse
A structure where the business may have to repurchase or replace invoices after defined non-payment events.
Non-recourse
A structure where the factor assumes certain defined credit risks, subject to contract exclusions.
Notice of assignment
A notice directing the account debtor to pay assigned receivables according to new instructions.
UCC-1
A financing statement filed to give public notice of a secured party interest in listed collateral.
Debtor
The party that owes an obligation. In factoring discussions, the term may refer to the seller or another obligated party depending on context.
Account debtor
The customer or other party obligated to pay an invoice or account.
Dilution
Reductions to collectible invoice value caused by credits, disputes, returns, allowances, or offsets.
Chargeback
A contractual event requiring the seller to repurchase, replace, or cover an invoice or related balance.
Aging report
A report showing unpaid invoices grouped by days outstanding.
Notification factoring
A structure where customers are notified that receivables are assigned and payment directions changed.
Non-notification factoring
A structure where the customer may not receive ordinary assignment notice, subject to contract and legal limits.
Spot factoring
Factoring of selected invoices rather than an entire ongoing receivable stream.
Contract factoring
An ongoing factoring relationship governed by a broader purchase or factoring agreement.
Fuel advance
An advance intended to help cover fuel costs, common in some transportation factoring programs.
Reserve release
Payment of remaining reserve after customer collection and deductions.
Minimum volume
A required invoice volume or fee level during a contract period.
Termination fee
A fee charged for ending an agreement early or without required notice.
Personal guarantee
An owner or individual promise to be responsible for specified business obligations.
Purchase agreement
The contract describing sale or assignment of receivables and related obligations.
Factoring agreement
The main agreement between a business and a factor governing purchased invoices, fees, reserves, and remedies.
Invoice verification
A factor process for confirming invoice validity, delivery, and customer acceptance.
Credit limit
The maximum approved exposure for a customer, account debtor, or seller.
Concentration limit
A limit on exposure to one customer or group of related customers.
Bad debt
A receivable considered unlikely to be collected.
Dispute
A customer objection to an invoice, delivery, price, quality, or other payment condition.
Setoff
A reduction claimed by a customer because of another amount allegedly owed by the seller.
Lockbox
A controlled payment account or address used to collect receivable payments.
Remittance
A payment sent by a customer or payer.
Assignment of receivables
Transfer of rights in invoices or accounts to another party.
Accounts receivable
Amounts owed to a business by customers for goods or services already provided.
Invoice
A request for payment describing goods or services, amount due, customer, and payment terms.
Approved invoice
An invoice accepted by the factor as eligible for funding.
Eligible receivable
A receivable meeting contract requirements for purchase or advance.
Ineligible receivable
A receivable excluded from funding under contract criteria.
Debtor credit check
Review of the account debtor payment risk before approving invoices.
Verification call
A call or other contact used to confirm invoice details with a customer.
Schedule of accounts
A listing of invoices submitted for purchase or funding.
Discount fee
A factoring charge often tied to invoice amount and time outstanding.
Flat fee
A stated charge that does not vary by daily accrual, subject to contract terms.
Tiered fee
A fee that changes as an invoice remains unpaid for longer periods.
Daily rate
A fee rate applied per day, usually based on invoice or advance amount.
Funding limit
Maximum amount a factor will fund for a seller or customer set.
Reserve account
Ledger or account tracking held-back amounts and deductions.
Repurchase
A seller obligation to buy back an invoice after a contract trigger.
Replacement invoice
Another eligible invoice used to substitute for a charged-back item.
Cross-default
A default under one agreement that can trigger default under another.
Cross-collateralization
Collateral securing more than one obligation.
Lien release
Termination or release of a filed security interest after obligations are satisfied.
Subordination
An agreement changing priority among creditors or secured parties.
Intercreditor agreement
A contract among creditors defining lien priority and remedies.
Collection rights
Rights to collect payment from account debtors.
Customer concentration
Dependence on a small number of customers for receivable value.
Recourse period
The time after which an unpaid invoice may become subject to recourse.
Maturity date
The date an invoice or obligation is due.
Short pay
Payment below the invoiced amount.
Rebate
A return of reserve or other amount after deductions, depending on contract terms.
Notification letter
Written notice to a customer about assignment and payment instructions.
Factoring company
A company that purchases or finances business receivables under a factoring arrangement.
Account purchase
A transaction in which a factor purchases an account or invoice.
Verification
Confirmation of invoice, shipment, service completion, or payment obligation details.
Customer portal
An online system used to submit invoices, view reserves, or track payments.
Debtor notification
Communication sent to an account debtor about payment instructions or assignment status.
Account control
Control over a deposit account or lockbox used to receive customer payments.
Borrowing base
A collateral formula used in credit facilities to determine available borrowing.
Overadvance
Funding above the normal eligible amount or formula.
Availability
The amount currently available to be advanced after limits, reserves, and ineligible receivables.
Verification exception
A problem found during invoice verification that may delay or prevent funding.
Debtor ineligibility
A customer status that prevents invoices from being approved for funding.
Cross aging
A rule that can make otherwise current invoices ineligible when older invoices from the same customer exceed a threshold.
Dilution reserve
A reserve for expected credits, returns, allowances, or other reductions to invoice value.
Default rate
A higher fee or interest rate that may apply after a contract default.
Early termination fee
A charge for ending a factoring agreement before the stated term expires.
Automatic renewal
Contract language that extends the term unless notice is given before a deadline.
Notice period
The required advance notice before terminating or changing a contract.
Assignment release
Written release or termination of assignment after obligations are satisfied.
Collection account
An account designated for customer payments on assigned receivables.
Lockbox instructions
Customer payment directions for a lockbox or controlled payment account.
Credit memo
A document reducing the amount owed on an invoice.
Contra account
A customer that is also a vendor or counterparty, creating possible offset risk.
Pay-when-paid
Contract language tying payment timing to receipt of funds from another party.
Retainage
A portion of contract payment held until work is complete or accepted.
Field ticket
A job-site record used to document services, labor, equipment, or materials provided.
Rate confirmation
A freight document confirming agreed shipment rate and load details.
Bill of lading
A transportation document that identifies goods, shipment terms, and receipt of cargo.
Proof of delivery
Evidence that goods or services were delivered or completed.
Timecard approval
Client approval of worker hours, often required before staffing invoices are collectible.
Payer denial
A payer refusal or reduction of a claim, common in healthcare receivables.
Recoupment
A payer or customer recovery of amounts previously paid or credited.
True sale
A legal characterization of a receivables transfer in which the assignment is treated as a completed sale rather than a secured loan.
Cross-aged receivable
An invoice made ineligible for funding because the same account debtor has another invoice outstanding past a defined age threshold.
Dilution rate
The percentage of gross invoice value not collected due to credits, disputes, returns, short pays, or offsets over a measured period.
Factoring facility
The maximum credit or purchase capacity available to a seller under a factoring program at any given time.
Event of default
A contract-defined event that gives the factor default remedies under the factoring agreement.
Cure period
A limited period in which a party may fix a default before some remedies become available.
Warranty of validity
A seller promise that submitted invoices are valid, enforceable, undisputed, and owed by the account debtor.
No-offset clause
A contract provision stating that the account debtor should not reduce payment by unrelated credits, claims, or offsets.
Payment redirect
A change in payment instructions directing the account debtor to pay the factor, lockbox, or collection account.
Debtor ledger
A record of invoices, credits, payments, and open balances for a specific account debtor.
Audit rights
Contract rights allowing a factor to inspect records, invoices, accounts, customer files, or related documents.
Governing law
The state or jurisdiction law chosen to interpret and enforce the factoring agreement.
Forum selection
A contract clause choosing where disputes must be filed or heard.
Jury waiver
A contract clause in which parties waive the right to have certain disputes decided by a jury.
Attorney fees
Legal fees that may be shifted to a party under the factoring agreement after enforcement, default, or collection activity.
Service credit
A credit given to a customer for missed service levels, quality issues, or contract adjustments.
Milestone billing
Billing tied to completion or acceptance of defined project milestones rather than a simple delivery date.
Statement of work
A project document describing services, deliverables, timing, acceptance criteria, and payment terms.
Post order
A security-services instruction document describing duties, location, schedule, and procedures for a guard post.
Service-level credit
A credit or price reduction triggered when service performance falls below a contract standard.
Payment portal
An online system used by a customer to receive invoices, approve them, and issue payments.
Subcontractor dispute
A dispute involving a subcontractor's work, payment, documentation, or performance on a customer invoice.