Dilution

The portion of an invoice that will not be collected because of credits, disputes, returns, or offsets.

Why it matters

High dilution reduces the effective yield on invoices and can trigger reserve holds, ineligibility, or chargebacks over time.

Related terms

Related article: What is invoice factoring?

Related reading

Sources

  • International Factoring Association - International Factoring Association. Accessed 2026-05-19. Industry association source for factoring terminology and industry context.
  • Secured Finance Network - Secured Finance Network. Accessed 2026-05-19. Industry education source for secured finance and asset-based lending context.
Financial disclaimer. This page is educational only and is not financial, legal, tax, accounting, or credit advice. Factoring terms vary by provider and contract. Read the full disclaimer.