Factoring Benefits and Terminology

BENEFITS:

No Set up fee - Set up is "Free".  No hidden fees!

No Application Fee - "There are NO processing fees. ZERO out-of-pocket!

No Term Contracts - There is no pre-set term.  Factor when you want, for as long as you want.

No Minimum Volume - You set the Minimum Volume.

Non-Recourse - We take full responsibility against your debtors.

Fast Easy Approval - We help you get your Cash, Fast!

Same Day Rebates - Rebates (Reserve) are paid to you the same day we receive payment from your customer.

Competitive Fees - UC Factors will work with you to get you the deal you want!

FACTORING TERMINOLOGY:

Account Debtor
The customer of a factor’s client. The company owing the money due on the invoices. Also known as the customer.

Accounts Payable
The amount of money a company owes for goods and services it has received.

Accounts Receivable
A commercial debt due for repayment usually in 30 - 90 days. In the factoring industry the accounts receivable is what a company sells to a factor.

Accounts Receivable Aging Report
A report showing how long invoices from each customer have been outstanding.

Accounts Receivable Financing
A financing technique for working capital purposes, collateralized by a security interest in a company’s accounts receivable. Accounts receivable serve as collateral and advances are made on a percentage of eligible assets sold to the finance company.

Advance Rate
The percentage of the face amount of an invoice that a funding source advances to a client.  The amount of money provided immediately to the company factoring its Accounts Receivable, expressed as a percentage of the total invoice amount. Advance Rates usually range from 75% to 95%.

Articles of Incorporation
A document filed with a state by the founders of a corporation. After approving the articles, the state issues a Certificate of Incorporation; the two documents together become the Charter of Incorporation.

Asset
Anything having commercial or exchange value that is owned by a business, institution, or individual. A business’ assets might include its real estate, equipment, inventory, accounts receivable and intellectual assets such as copyrights or trademarks.

Bad Debt
Any debt that is delinquent and has been written off as uncollectible.

Bankruptcy
A state of insolvency of an individual or organization. The inability to pay debts.

Bill of Sale
A document used to transfer the title of certain goods from seller to buyer.

Broker
An individual who pairs clients in need of cash with appropriate financial entities including factors.

Cash Flow
The flow of cash through a business. Cash flow involves the flow of cash into a company in the form of revenues and out of the company in the form of expenses.

Client
 The business that sells its accounts receivable to the factor.

Collateral
Something of value (land, home, car, etc.) that is pledged as security to ensure the payment of a debt. Collateral is promised to a lender until a debt is paid. If the borrower defaults, the lender has the right, by law, to seize the collateral.

Concentration
The amount of one client's accounts receivable due from a single customer.

Credit
A privilege granted for the purpose of extending time to make payment on a debt.

Creditor
One who is owed payments on a debt by a debtor.

Customer
The client’s customer. The company which pays the money due under the factored invoice. Also known as the account debtor.

Debtor
One who owes something and makes payments to a creditor.

Default
The omission or failure to perform or fulfill a legal duty, obligation, or promise (i.e. to pay debt)

Factor
The funding source for the client. The company that purchases the accounts receivable (invoices) from the client.

Factoring
The selling of a company’s accounts receivable to a third party in order to obtain financing.

Fee
The fee the factor charges for financing the client’s accounts receivable.

Fictitious Business Name Statement or dba
A legal statement filed when a sole proprietorship or other business entity uses a name other than their own to operate a business.

Invoice
A legal debt instrument which indicates the amount due from a customer to pay for delivered goods or services

Personal Guaranty
A contractual agreement between a funding source and a seller, whereby the seller assumes personal responsibility and liability for the obligations of the income stream.

Reserve
The amount of money that is not immediately provided to the company factoring its Accounts Receivable, expressed as a percentage of the total invoice amount (Advance Rate + Reserve = 100% or Total Invoice Amount). This money is transferred to the client once payment is received by the factor

Security Interest
An interest in property, other than real estate, which is given as security for a debt or an obligation. A security interest is created by execution of a Security Agreement and a Financing Statement under the Uniform Commercial Code.

Seller
The person or company that is holding commercial accounts receivable and wants to sell them.

Subordination
The act of a creditor acknowledging in writing that a debt due him or her by a debtor shall be inferior to the debt due another creditor by the same debtor.

Uniform Commercial Code
Standardized set of guidelines protected by law that set down how business transactions must be conducted.

Verification
A step during the due diligence process in which a factor confirms the validity of an invoice with the customer

Working Capital
Current assets minus current liabilities. Working capital is a measure of the liquid assets a company has available to build its business. The number can be positive or negative, depending on how much debt the company is carrying. In general, companies that have a lot of working capital will be more successful since they can expand and improve their operations. Companies with negative working capital may lack the funds necessary for growth.