Need clarification on receivables factoring terms? Let this business funding glossary help.

Holdback: Amount withheld from the company factoring its accounts receivable until payment has been received. It is usually expressed as a percentage of the total invoice amount. (Also known as the reserve.)

Hypothecation: Borrowing funds from a lender, investing those funds in a debt instrument, and granting the lender a security interest in the debt instrument as the collateral for the loan.

Institutional Lenders: Savings and loan associations, local and regional banks, mortgage companies, finance companies and commercial lenders.

Intangible Personal Property: Something that has value but is not a tangible asset; for example, a trademark, copyright, patent or trade secret.

Invoice: A legal debt instrument indicating the amount due from a customer to pay for delivered goods or services.

Leverage: The ratio of debt to total assets.

Loan-to-Value-Ratio: A measure of how heavily mortgaged a property is and how likely the owner is to default on his or her debts.

Marginal Credit Customers: Consumers who may have had some slow pay problems, but generally pay their bills.

Market Value: The price at which a ready, willing and informed person would buy something; the price a property would command in the current market.

Mortgage: A written instrument that creates a lien by pledging real property as security for a debt.

Need more information about receivables factoring and how it can be the ideal business funding for your company? Just call MP Star Financial today at 1-800-833-3765, ext. 150 or email us your questions aboutchoosing business funding through receivables factoring.