Glossary

A detailed accounts receivable (A/R) aging is a report that lists unpaid customer invoices (by individual invoice) and unused credit memos by date ranges. The aging report is the primary tool used by collections personnel to determine which invoices are overdue for payment.

In the commercial finance world, dilution or A/R dilution refers to non-cash reductions to the A/R balance. Dilutive items, such as discounts, credit memos, and write-offs, dilute the value of accounts receivable, as they represent billed amounts that are not ultimately collected.

A reserve established by the Creditor from time to time to reduce availability under the Borrowing Base to reflect a reduction in the advance rates applicable to Eligible Accounts Receivables.

Direct Ship or Direct Shipment is a method of delivering goods from the supplier or the product owner to the customer directly. In most cases, the customer orders the goods from the product owner. This delivery scheme reduces transportation and storage costs, but requires additional planning and administration.

The Discount Rate is the interest rate charged to commercial banks and other depository institutions for loans received from the Federal Reserve's discount window. 

A Dividend Recapitalization, also referred to as a dividend recap, occurs when a company incurs new debt in order to pay a special dividend to shareholders.

A Documentary Letter of Credit is a written obligation of a bank, issued at a client's request, to pay a certain sum after the fulfillment of the conditions stipulated in the letter of credit. The banks involved examine only the documents, not goods or services.

Double-Sided Posting refers to when the incoming cash is applied to both the loan side and collateral side. This is also known as "Gross & Net" posting. In a traditional ABL revolving line of credit, the incoming cash would reduce the receivable and revolver balance simultaneously.