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APRAPR (annual percentage rate) is the total yearly cost of borrowing — i…AccrualAn accrual records an expense incurred or income earned before any cas…Accruals: What They Are and Why They Matter for Your Company AccountsAn accrual is an accounting entry that records a cost or income in the…Aged creditorsAged creditors is the mirror of aged debtors — the report showing what…Aged debtorsAged debtors is the report that groups the money customers owe you by …AmortisationAmortisation is the process of repaying a loan in regular instalments …Annuity (loan repayment)An annuity repayment is a loan repaid in equal, regular instalments, e…ArrearsArrears are payments that are overdue — money your business owes that …Arrears in Business Lending: Meaning and ManagementArrears arise when scheduled loan payments are not made by their due d…Asset financeAsset finance lets a business acquire equipment, vehicles or machinery…Asset-based lending (ABL)Asset-based lending is revolving finance secured against a pool of bus…
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Bad Debt: Write-Offs, Provisions and the Impact on Company AccountsBad debt is money owed to a business that is unlikely ever to be recov…Bad debtBad debt is money owed to your business that you no longer expect to c…Balance sheetA balance sheet is a snapshot of what your business owns and owes at a…Balloon paymentA balloon payment is a large lump sum due at the end of a finance agre…Bank reconciliationBank reconciliation is the routine of matching your accounting records…Base rateBase rate is the headline interest rate set by the Bank of England, wh…Bridging loanA bridging loan is short-term finance used to cover a gap until a larg…Bullet Repayment — Business Finance GlossaryA bullet repayment is the full return of principal in a single lump su…Burn rateBurn rate is the speed at which a company spends through its cash rese…
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Capex vs opexCapex is money spent acquiring or improving long-term assets; opex is …CapitalCapital is the money, funding and valuable assets a business holds and…Capital Expenditure (CapEx): What It Means and How It Flows Through Your AccountsCapital expenditure is money spent on acquiring or improving long-term…Cash conversion cycleThe cash conversion cycle measures the days between a company paying f…Cash flowCash flow is the movement of money into and out of your business over …CollateralCollateral is an asset a borrower pledges to a lender as security for …Contribution marginContribution margin is what's left from a sale once you take off the v…CovenantA covenant is a promise or condition written into a loan agreement tha…Covenant (Loan)A loan covenant is a contractual obligation embedded in a facility agr…Credit facilityA credit facility is an arrangement that lets a business borrow up to …Credit limitA credit limit is the maximum amount a company can borrow on a revolvi…Creditor days (DPO)Creditor days, or days payable outstanding (DPO), is the average numbe…CreditworthinessCreditworthiness is a measure of how likely a business is to repay mon…Cross-Default — Business Finance GlossaryA cross-default clause provides that a default under any other materia…Current Ratio: Formula, What It Shows, and Healthy Benchmarks for UK CompaniesThe current ratio divides current assets by current liabilities to sho…Current ratioCurrent ratio measures whether a company's short-term assets are enoug…
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DebentureA debenture is a legal document that secures a loan against a company'…Debt Restructuring: Business Options in the UKDebt restructuring is the process of renegotiating the terms of existi…Debt service coverage ratioThe debt service coverage ratio (DSCR) measures whether a business gen…Debt-to-equity ratioDebt-to-equity ratio compares how much a company has borrowed with how…Debtor Days: Formula, What It Measures, and How to Improve Collection SpeedDebtor days — also called days sales outstanding — measures the averag…Debtor days (DSO)Debtor days, or days sales outstanding (DSO), is the average number of…DefaultDefault is when a borrower fails to meet the terms of a loan — most of…Default in Business Lending: Triggers and ConsequencesDefault occurs when a borrower breaches a material term of a loan agre…Depreciation: Methods, Accounting Treatment, and the Difference from Capital AllowancesDepreciation is the systematic allocation of a fixed asset's cost over…DrawdownDrawdown is the act of taking money from a loan or credit facility tha…Drawdown — Business Finance GlossaryA drawdown is the formal act of requesting and receiving funds under a…Due Diligence in Business Lending and AcquisitionsDue diligence is the structured process of verifying financial, legal,…Due diligenceDue diligence is the structured investigation a lender, investor or bu…
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FacilityA facility is a formal arrangement under which a lender makes a define…Facility Fee — Business Finance GlossaryA facility fee is a periodic charge levied on the total committed amou…Factor RateA factor rate is a simple multiplier applied to a business advance to …Factor rateA factor rate is a fixed multiple — typically between 1.1 and 1.5 — ap…FactoringFactoring is a form of invoice finance in which a business sells its u…Financial Covenants in UK Business Loan AgreementsFinancial covenants are contractual ratios or thresholds in a loan agr…Fixed Charge: Asset Security in UK Business LendingA fixed charge is a security interest attached to a specific identifie…Fixed Costs: Definition, Examples, and Why the Fixed/Variable Split MattersFixed costs are business expenses that remain constant in total regard…Fixed chargeA fixed charge is security a lender takes over a specific, identifiabl…Fixed vs variable costsFixed costs stay broadly the same whatever you produce; variable costs…Floating Charge: Security Interest in UK Business LendingA floating charge is a form of security over a class of assets that fl…Floating chargeA floating charge is security a lender takes over a changing pool of b…
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GearingGearing is the ratio of a business's debt to its equity, showing how m…Grace periodA grace period is a window at the start of a facility, or after a paym…Gross marginGross margin is revenue minus the direct cost of sales, expressed as a…GuaranteeA guarantee is a legally binding promise by a third party to repay a d…GuarantorA guarantor is a person or company that agrees to repay a debt if the …Guarantor and Personal Guarantees in UK Business LendingA guarantor is a person or entity that agrees to be liable for another…
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Indemnity in Business Finance: Meaning and Key DifferencesAn indemnity is a primary, standalone obligation to hold another party…InsolvencyInsolvency is the state in which a company cannot pay its debts as the…Insolvency: Types and Process for UK BusinessesInsolvency is the state in which a company cannot pay its debts as the…InstalmentAn instalment is one of the regular scheduled payments that repay a lo…Intercreditor Agreement — Business Finance GlossaryAn intercreditor agreement is the contract between two or more credito…Interest coverInterest cover is the ratio of a company's operating profit to its int…Invoice discountingInvoice discounting lets a business borrow against unpaid invoices to …
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LeverageLeverage is the use of borrowed money to fund a business, amplifying r…LienA lien is a legal right to retain possession of another party's proper…LiquidityLiquidity is how readily a business can convert assets into cash to me…Liquidity: What It Means for a Business and How Directors Manage ItLiquidity is a measure of how readily a business can convert assets in…Loan-to-value (LTV)Loan-to-value (LTV) expresses how much you are borrowing as a percenta…
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Management accountsManagement accounts are internal financial reports, prepared monthly o…MarginMargin is the fixed percentage a lender adds on top of a reference rat…Material Adverse Change (MAC) — Business Finance GlossaryA material adverse change clause allows a lender to refuse drawdown or…MaturityMaturity is the date on which a loan or facility reaches the end of it…Merchant cash advanceA merchant cash advance is a lump sum of finance repaid automatically …Mezzanine Finance — Business Finance GlossaryMezzanine finance is a hybrid layer of capital that ranks below senior…
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Net MarginNet margin is the percentage of revenue that remains as profit after a…Net Present Value (NPV): What It Means for Business FinanceNet present value (NPV) is a method of evaluating an investment by dis…Net marginNet margin is the profit left at the very bottom of the accounts — aft…Net working capitalNet working capital is your current assets minus your current liabilit…Non-Utilisation Fee (Commitment Fee) — Business Finance GlossaryA non-utilisation fee — also called a commitment fee — is charged on t…
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Origination feeAn origination fee is an upfront charge a lender applies for arranging…OverdraftAn overdraft is a flexible borrowing facility on a business current ac…Overdraft (Business)A business overdraft is a revolving credit limit attached to a current…Overtrading: What It Is, Warning Signs, and How Growing Businesses Can Avoid ItOvertrading happens when a business takes on more revenue than its ava…
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Personal guaranteeA personal guarantee is a director's legally binding promise to repay …Personal guarantee insurance (PGI)Personal guarantee insurance (PGI) is cover a director buys to repay p…PrincipalPrincipal is the original sum of money borrowed on a loan, before any …PrincipalIn business lending, principal is the original capital sum advanced by…
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ReceivablesReceivables (or accounts receivable) are the amounts your customers ow…RefinancingRefinancing is replacing one or more existing debts with a new facilit…Repayment holidayA repayment holiday is an agreed, temporary pause in loan repayments —…Retained Earnings: What They Are and How They Build Over TimeRetained earnings are the cumulative net profits a limited company has…Return on Investment (ROI): A Plain Guide for UK DirectorsReturn on investment (ROI) is a ratio expressing the net gain from an …Revolving creditRevolving credit is a flexible facility with a set limit that you can …RunwayRunway is how long your cash will last at the current rate of spending…
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Secured loanA secured loan is borrowing backed by a specific asset — property, equ…SecurityIn lending, security is an asset or legal claim a lender can enforce t…Security Trustee — Business Finance GlossaryA security trustee holds security interests on behalf of a group of le…Senior Debt — Business Finance GlossarySenior debt is the most senior layer in a company's borrowing structur…Solvency: What It Means Under UK Company LawSolvency is a company's ability to meet its financial obligations as t…Subordinated Debt — Business Finance GlossarySubordinated debt ranks below senior obligations for repayment and enf…
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Term SheetA term sheet is a non-binding summary document that sets out the headl…Term loanA term loan is a fixed lump sum borrowed upfront and repaid over a set…Trade creditTrade credit is the time a supplier gives you to pay after delivering …TurnoverTurnover is your business's total sales income over a period, before a…Turnover: What It Means, How It Differs from Profit, and Why Both MatterTurnover — also called revenue or sales — is the total income generate…
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Weighted Average Cost of Capital (WACC) ExplainedWeighted average cost of capital (WACC) is the blended rate a company …Working capitalWorking capital is the money a business has available to fund its day-…Working capital cycleThe working capital cycle is the loop your cash travels through the bu…Write-offA write-off is the removal of a debt or asset from a company's account…
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Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.