Glossary of Financial Terms

Factor – the agent and/or organization that purchases a business’s accounts receivables and assumes collection of associated invoices from applicable clients.

Factor Receivables – to factor receivables means to sell accounts receivables invoices to a factor or factoring company.

Factoring – (also accounts receivable factoring) the selling of a business’s accounts receivable to a third party at a discount, for the purpose of obtaining funding.

Fiduciary duty – a requirement that a person in a position of trust, such as a banker, real-estate agent, or title agent, must act in good faith and honesty on behalf of a client.

Financial management – the process of managing the financial resources, including accounting and financial reporting, budgeting, collecting accounts receivable, risk management, and insurance for a business.

Full Recourse Factoring–in this type of factoring, the factor is protected against customer non-payment. If the customer does not ultimately pay the invoice, the client is responsible for paying back the funds that were advanced.