Glossary

A metric that expresses the length of time, in days, that it takes for a company to convert resource inputs into cash flows.

A deduction allowed by the seller of goods or by the provider of services in order to motivate the customer to pay within a specified time.

A control arrangement wherein all of the borrower’s cash receipts are sent by customers to cash collateral account. It is another basic element of an asset-based facility which refers to a critical step in the overall cash management system of a company and concerns how the funds in the collection accounts are handled.

A Cash receipts journal is a specialized accounting journal and it is referred to as the main entry book used in an accounting system to keep track of the sales of items when cash is received, by crediting sales and debiting cash and transactions related to receipts.

The total amount of money that an insurance company is contractually obligated to pay if the policyholder voluntarily cancels the policy before its maturity or an insured event occurs. 

Payment method in which an order is not processed until full payment is received in advance. Also called cash with order.

A type of transaction in which the recipient makes payment for a good at the time of delivery. If the purchaser does not make payment when the good is delivered, then the good is returned to the seller. 

In cash-flow lending, a financial institution grants a loan that is backed by the recipient's personal or business cash flows. By definition, this means that a company borrowers money based on historical and expected free cash flows. Credit ratings are far more important in this form of lending, in addition to historical cash flows.