Factoring Glossary
Insolvency
The situation where the debtor is unable to pay its debt on due date.
Evidence of Insolvency
It is the official certificate given by the Execution Office stating that the debtor does not have adequate assets to pay the receivable which is tracked in legal aspects.
Insolvency Document
The official document submitted by the Debt Enforcement Office stating that the debtor is not the owner of adequate property to pay the receivable which is legally tracked.
Receivable
Price of the goods or services sold or rendered by the supplier company.
Factoring with Notice
The factoring method where the supplier company notifies its customers that it has assigned its receivables arising out of its sales on account to a factoring company. Under these circumstances, the debtor company pays the invoice amounts to the factoring company.
Factoring without Notice
The factoring method where the supplier company does not notify its customers that it has assigned its receivables arising out of its sales on account to a factoring company. Under these circumstances, the supplier company makes its collections individually.
Payment Under Guarantee (PUG)
Payment of the receivable taken over by the factoring company to the supplier company in the event of buyer’s insolvency and bankruptcy.
Irrevocable Factoring
The factoring method whereby the factoring company undertakes the non-payment risk of the receivable. The supplier benefits from the factoring guarantee function.
Bankruptcy
A court order stating that the debtor is unable to pay its debts.
Dispute
All possible objections to and commercial and physical defects in the goods and services sold.
Revocable Factoring
The factoring method where the factoring company offers financing and/or collection services without guarantee.
Limit Approval Notice
The notice given to the customer by the factoring company with the purpose of executing the factoring guarantee provisions of the factoring agreement, which includes information about the debtor and the guarantee limit and term of the guaranteed receivable.
Average Maturity
The average collection period of the invoices assigned to the factoring company.
Down payment
The rate of financing which can be provided to the customer by the factor for the receivables which are taken over.
Assignment
Transfer of Receivables.
Maturity
The period granted to the debtor individual or corporation for the payment of debts. Payment due date of a debt or note is also called maturity.