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Factoring
Advance of finance against unpaid, outstanding sales invoices by a factor (factoring company). Some degree of credit management is also built into the facility. Facilities can be structured so that the credit risk remains with the business or is passed on to the factor.
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Factoring charges
A service charge levied by the factor expressed as a percentage of your gross invoice value.
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Factoring company
A business that provides an advance against unpaid sales invoices.
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Fair market value
Price at which an asset is sold and bought in the open market.
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firstcheck
Lloyds TSB Commercial Finance online credit opinion service. It combines data collected by Lloyds TSB Commercial Finance regarding customer payment periods, with historical data to provide an instant opinion.
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Initial percentage
see Advance rate
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Initial pre-payment (IPP or IP)
see Advance Rate
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Invoice Discounting
Financing by raising funds against unpaid outstanding sales invoices. No intervention into current credit management systems and not visible to the customer/debtor.
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Invoice Factoring
Invoice factoring is the process of purchasing commercial accounts receivable (invoices) from a business at a discount.
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Lease
Contract in which we purchase the asset selected by you and convey the use of that asset to you for a specific period of time at a predetermined rate.
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Lease rate
The periodic payment to us for the use of the asset. The lease rate is primarily determined by the total cost of the asset, the duration of the lease and the interest rate level.
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Lessee
The lessee is the user of the asset being leased, i.e. you.
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Lessor
The lessor is the party who finances the purchase of the asset and has legal or tax title to the equipment, grants the lessee the right to use the equipment for the lease term, and is entitled to the periodic payments, i.e. the leasing company, us.
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Master lease
A contractual arrangement which allows you to lease other assets under the same basic terms and conditions without negotiating a new contract.
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MBI
Management buy in. New management team buys into the business acquiring either the shares or the business assets.
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MBO
Management buy out. Where the existing management team are looking to buy the shares or assets from a parent company, or non-group company.
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Merger
The combining of two or more entities into one.
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Net working capital
Net working capital is defined as a company's total current assets minus its total current liabilities.
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Non-recourse facility
Advance of finance against unpaid outstanding invoices in which the credit risk is passed over to the finance company. A non-recourse facility comes with credit insurance meaning you don't have to pay back advances in the event of bad debts. Non-recourse agreements tend to be more restrictive when looking at funding decisions, and more expensive than recourse facilities (see also 'Recourse')
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Purchase option
A provision by which you have the right to purchase the asset at the end of a lease term, either at a predetermined amount or its fair market value.