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Debt Recovery Definition I Growfin Ar Glossary

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Credits Definition Credits refer to the amount borrowed or deposited into your account. They can come in various forms, such as loans, lines of credit, or credit cards, and are essential for managing cash flow, investing in new opportunities, or covering expenses. Understanding Credits in Business Finance In business finance, when you engage with credits, Annual Percentage Rate (APR) Definition The Annual Percentage Rate (APR) represents the yearly interest expense for a business loan, personal loan, or credit product as the loan amount percentage.

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Bad Debt: Prolonged outstanding payments increase the risk of bad debts, where the company may have to write off unpaid invoices, impacting net income negatively. Financial Record: They necessitate allowance for doubtful accounts, a reserve against potential non-payment, affecting the company’s profit and loss statement. Calculating this, we get: Debt to Equity Ratio ≈ 0.714 So, in this example, the debt to equity ratio for ABC Company is approximately 0.714. This means that for every dollar of equity, the company has about $0.714 in total debt. A ratio below 1 shows that equity is the primary source of financing, while a high DE ratio above 1

Accounts Receivable Report Definition An accounts receivable report (AR report) is a financial document that helps businesses track the money customers owe for the goods or services delivered. The report is crucial for managing a company’s cash flow, as it provides detailed information on an outstanding invoice and the duration of an unpaid invoice. EBITDA Definition EBITDA stands for Earnings Before Interest Taxes Depreciation and Amortization. It measures a company’s overall financial performance by calculating its earnings from its operations before subtracting interest expenses, taxes, and the costs associated with depreciation and amortization. Purpose of EBITDA EBITDA measures

Financial Brokerage Definition A financial brokerage is a firm that acts as an intermediary between buyers and sellers in financial markets, facilitating transactions in various financial instruments like stocks, bonds, currencies, commodities, and derivatives. Role of a Financial Broker A financial broker acts as an advisor to help buyers and sellers achieve their Collection Dispute Letter Definition In B2B finance, a collection dispute letter is a formal communication sent from one business to another, or to a debt collection agency representing a business, disputing a specific debt claim. This situation arises when a business (the debtor) receives a notice of outstanding payment from another company (the creditor) or a Liquidity Risk Definition Liquidity risk refers to the possibility that an entity (either an individual or a company) is unable to meet its short-term financial obligations because of the inability to convert the asset into cash quickly enough or at a reasonable price. Liquidity risk is a crucial consideration for a financial institution, investor, and manager, as it influences decisions

Securitization Definition Securitization is a financial process that involves pooling various types of contractual debt such as mortgages, car loans, credit card debt obligations, or other types of receivables, and selling their related cash flows to third-party investors as securities, which may be described as bonds, pass-through securities, or collateralized debt obligation (CDOs). How Partial Payment Definition Partial payment refers to a payment that is not made in full but instead constitutes only a portion of the total amount due. This type of payment is often made in situations where the full amount cannot be paid at once. Partial payments can apply to various contexts such as loans, bills, or purchases, where the payer is either permitted or

Total Balance Definition A „Total Balance“ typically refers to the sum of all amounts in an individual’s or entity’s financial accounts, encompassing various types of accounts and financial instruments. This can include checking and savings accounts, investments, cash reserves, and any other forms of liquid or semi-liquid assets. Understanding Total Balance in Such actions can include handing the debt collection responsibility to an agency or pursuing legal measures. Legal Action for Payment Recovery: If the final notice does not result in payment, you can involve a collection agency to recover the owed Deficit Definition A deficit occurs when an entity, such as a federal government, business, or individual, spends more money than it receives over a given period. This term is most commonly associated with government budgets but can apply to any situation where expenditures exceed income. What are the Types of Deficit Understanding deficits is crucial for

  • Securitization Definition I Growfin AR Glossary
  • Profitability Ratios Definition I Growfin AR Glossary
  • Key Account Definition I Growfin AR Glossary

Maturity Date Definition The term „maturity date“ refers to a specified date when the principal amount of a financial instrument, such as a bond, loan, or fixed-income security, is due to be paid back to the investor. It is the final due date upon which the full amount of the investment, including any interest, must be returned to the holder of the instrument. Understanding Maturity Date in Promise to Pay Definition A „Promise to Pay“ refers to a declaration or agreement in which a person or entity (the promisor) commits to paying a specified sum of money to another person or entity (the promisee) under agreed conditions. This promise can be formalized in various ways, including a promissory note, a contract, or a verbal agreement, although written promises are

Hedging Definition Hedging is a financial strategy to reduce or limit the risk of price movements of assets, commodities, currencies, or securities. It involves taking an investment position to offset potential losses or gains that a companion investment may incur. Purpose of Hedging Hedging is a risk management strategy used by individuals, companies, and financial Day Sales Outstanding (DSO) Definition Day Sales Outstanding (DSO) represents the average number of days it takes a company to collect payment after a sale. It’s a crucial metric used in accounts receivable management, providing insight into the effectiveness of a company’s credit and collection policies. Essentially, DSO measures the liquidity or cash flow of a company’s

Bill of Exchange Definition A bill of exchange is a written, unconditional order by one party (the drawer) to another (the drawee) to pay a certain sum of money to a third party (the payee) or the bearer of the document. It is a negotiable instrument, which means it is legally transferable from one party to another. Bill of exchange is used primarily in international trade Liabilities Definition Liabilities refer to the financial obligations or debts that a person or organization owes to others. In accounting and finance, liabilities are a key component of the balance sheet, which represents the financial position of a business at a specific point in time. Understanding Liabilities in Accounting Liabilities in accounting represent a critical aspect of a SLA in Finance Definition SLA or Service Level Agreement is a binding document that outlines the service expectations between a business organization and a client. It covers the metrics, the responsibilities of each party, and the remedies or penalties, if any, should agreed-upon service levels not be achieved.

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They help navigate the legal process of recovering outstanding debts while ensuring compliance with relevant laws and regulations. Third-Party Collection Agency: Some businesses may outsource the collection of past due payments to a specialized collection agency.

Days Payable Outstanding (DPO) Definition Days Payable Outstanding (DPO) is a financial metric measuring the average time (in days) a company takes to pay its bills and invoices to its suppliers, vendors, and other creditors. It is an important indicator for cash flow management. Understanding Days Payable Outstanding in B2B Finance Days Payable Bad Debt Reserve Definition A bad debt reserve is an accounting tool that companies use to predict the money they won’t receive from customers. This reserve (allowance for doubtful accounts) shows the total debts that a company believes uncollectible. A bad debt provision is recorded on the balance sheet as a deduction from outstanding receivables. A Variance Analysis Definition Variance analysis is a financial analysis technique used to understand the differences between actual financial performance and budgeted or forecasted performance. This technique is particularly useful in budgeting and managerial accounting, as it helps managers understand why there might be discrepancies between what was expected

Credit Balance Definition A credit balance refers to the amount of money or credit that is present in a financial account, which indicates that the account holder has funds available to them or has paid more than they owe. A credit balance indicates a positive value for the account holder in the context of financial resources or standing. What is Credit Balance in Accounting? In Direct Debit Definition Direct Debit is a payment method that allows businesses to collect funds directly from their customers’ bank accounts. It’s set up based on the customer’s authorization, giving the business permission to withdraw specified amounts at agreed-upon intervals. Businesses widely use this method for recurring payments, such as subscription Invoice to Cash Definition The “Invoice to cash” refers to the end-to-end process within a business’s accounts receivable operations that starts with invoicing a customer for goods or services delivered and ends with collecting the payment and recognizing it in the company’s accounts. Understanding the Invoice to Cash Process The Invoice to Cash process is crucial

Amortization Definition Amortization is a financial term used to describe the process of spreading out a loan payment over a set period. When a loan is amortized, each payment is partly allocated to the principal amount borrowed and partly to the interest on the loan. Reduction in Bad Debt: Regular dunning can significantly reduce the likelihood of accounts becoming bad debts. By actively pursuing every overdue payment, companies can recover funds before they become uncollectible. Time and Resource Efficiency: Automated dunning processes save time and resources that would otherwise be spent on

Bad Debt Definition Bad debt occurs when you lend money, and the borrower fails to repay you. An uncollectible debt often happens in business transactions where you provide goods or services on credit. When the customer doesn’t pay the invoice, the amount becomes a loss for your company because you’ve expended resources without receiving the expected financial return.

Payment Agreement Definition A payment agreement is a legally binding contract between two parties, which outlines specific payment terms for goods or services. Understanding Payment Agreement A payment agreement provides a clear framework to prevent disputes and ensures both parties understand their obligations and rights regarding the payment transaction. This

Profitability Ratios Definition Profitability ratios are a category within financial ratios specifically focused on assessing a business’s ability to generate income relative to its revenue, assets, operating costs, or equity. Understanding Profitability Ratios in Business Finance In business finance, you use profitability ratios to measure how well your company makes money

Financial Bubble Definition A financial bubble is a market phenomenon characterized by the rapid escalation of asset prices to levels significantly above their fundamental value. Bubbles are often driven by a mix of speculative trading, excessive optimism, herd behavior, and the easy availability of credit. Features of the Financial Bubble Financial bubbles Key Account Definition A „key account“ is a term commonly used in business, particularly in sales and account management, to refer to a customer or client that is of strategic importance to the company. These accounts are typically the source of a significant portion of the company’s revenue and are crucial for its financial success. What is a Key Account in Accounts

It is categorized into cash flows from operating activities (day-to-day business operations), investing activities (purchases and sales of long-term assets), and financing activities (transactions and decisions affecting the equity and debt of the business). Force Pay Debit Memo Definition A force pay debit memo (or debit note) is a banking instrument that prioritizes a specific check or debit transaction, ensuring its payment ahead of other pending transactions. This tool is mainly employed when there is a risk of insufficient funds in the account to cover any transaction. By issuing a force pay debit memo,

Credit Policy Definition A credit policy is a set of guidelines you follow when deciding whether to extend credit to your customers and how to manage the credit arrangements. It’s a roadmap for determining who can buy your products or services now and pay you later. This policy helps determine who qualifies for credit, how much credit you can safely offer, and the