Many importers and exporters require a specialist form of finance which offers them the ability to finance raw goods for processing before they then sell on the finished goods.

Often confused with Guarantees, a warranty defines the proper performance of one party to the agreement and confirms their intention to be bound by it.

If the agreement is terminated and the factor is unable to recover advances made to a client, this is referred to as a shortfall.

A sum held back from availability, in respect of contingencies. — This can include Concentration limit retentions, or debtor balances, which exceed approved funding limits.

Many companies, after having delivered goods or an agreed service, do not ask for cash on delivery but instead issue an invoice.

It is custom and practice, for a factor to take references, from the outgoing factor, where there is an inter-factor handover.

The amount (set as a percentage) that the factor will advance its clients, against outstanding invoices

The name for invoices raised, before delivery of the goods or service, to which it relates. — Some companies may raise pro-forma invoices, where they require payment in advance. —Pre-invoicing is the term common in factoring or discounting, which is a serious breach of warranties defined in the agreement.

An advance, over and above, the prescribed level in the agreement. Often where overpayments are requested, there is a specific charge relating to this, which is typically negotiated when such a request is made.

Security supplementary, to the obligation of a limited company, to repay sums advanced to it, whereby the party providing the guarantee, agrees to repay the factor, in the event the factor cannot recover its advances from invoices assigned.