Glossary

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There are currently 326 names in this directory
1099
One of several IRS forms that reports non-employee payments to a payee; this may include independent contractor services, pension and interest distributions, etc. These amounts must be reported on a tax return.

Accounting Period
A period of time for which financial statements are prepared. Typical accounting periods include month, quarter and year.

Accounts Payable
Amounts owed by a business to its suppliers, vendors or creditors for goods and services received at any given time.

Accounts Receivable
Amounts owed to a business for goods or services rendered that it expects to receive.

Accrual Basis of Accounting
The opposite of cash basis of accounting; an accrual basis of accounting reports income when it is earned, rather than when it is actually received, and matches any related expenses to that same reporting timeframe.

Acid test ratio
An indicator of a company's short-term liquidity that measures a company's ability to meet its short term obligations. Also called quick ratio and quick assets ratio. Information obtained from a company's balance sheet is used to calculate the ratio. Subtract inventories from current assets and divide the number by current liabilities.

Activity-based management (ABM)
A system wide, integrated approach that focuses management's attention on activities by refining and expressing an organization's resources on the activities it supports - not on what it spends.

Advance Rate
A percentage of the value of specific collateral for which a lender is willing to grant a loan.

Advanced Shipping Notice (ASN)
Notification of pending deliveries usually sent in an electronic format. It may also contain information about a shipment of goods, order information, product description, type of packaging, markings and carrier information.

Aging
The length of time a receivable has been outstanding after issuance of an invoice. An aging report sorts accounts into categories based on how long they have been outstanding, e.g., 1 to 30 days, 31 to 60 days, etc.

American Banking Association (ABA)
Founded in 1875, the American Bankers Association represents banks of all sizes and charters and is the voice for the nation's $13 trillion banking industry and its 2 million employees. For more information see About the ABA.

American Bankruptcy Institute
An organization dedicated to research and education on matters related to insolvency.

American Institute of Certified Public Accountants (AICPA)
The American Institute of Certified Public Accountants is a national association for the accounting industry where part of its mission is to provide accounting professionals with uniform certification and licensing standards, establishing professional standards, and enforcing current requirements. See www.aicpa.org for further information.

American National Standards Institute (ANSI)
American National Standards Institute. A non-profit organization which coordinates the development and use of voluntary standards for products, services, processes, systems and personnel in the United States. ANSI developed the standards for EDI.

American SAP Users Group (ASUG)
A non-profit association of business and technology professionals who are SAP users. For more information see the Americas SAP Users Group

Amortization
The process of gradually reducing any amount in regular installments over a period of time, such as write-down of bond premium, the cost of intangible assets or periodic payment of mortgage or other debt.

Arms Export Control Act (AECA) Debarred List
A list published by the State Department. It contains the names of individuals and entities convicted of violating or conspiring to violate the Arms Export Control Act (AECA). They are barred from directly or indirectly exporting defense articles, including technical data and defense services. Click here to access the AECA Debarred List

Asset
An economic resource belonging to a company or entity, an item owned by the company or entity; an asset has future economic benefit and is the result of past financial transaction.

Asset-Based Lending (ABL)
A loan that is secured by an organization's assets: inventory, accounts receivable, equipment, etc.

Association of Certified Fraud Examiners (ACFE)
A professional organization that provides anti-fraud training and education; more than 37,000 members worldwide. The ACFE certifies and governs Certified Fraud Examiners, which investigate business fraud around the world.

Auditors Report
A report that provides an opinion and analysis of a company's financial state; usually prepared by an outside or external auditor.

Authentication
A process of confirming a computer, system or program user's identity by validating it against a user database; usually requires a unique user name and password.

Authorization
The granting of access rights to a computer system's data based on a user's identity. Authorization generally follows immediately after authentication; together they comprise a two-part process.

Automated Clearing House (ACH)
An electronic method used to process transfers between banks via the Federal Reserve system and other AHC operators, such as automated payroll deposits and debit card purchases. ACH is more efficient and cost-effective than paper checks and transactions are usually processed and settled within one or two days.

B2B
A term used in reference to 'business-to-business'; generally used when referring to a business which sells its products or services to another business.

B2C
A term used in reference to 'business-to-consumer'; generally used when referring a business which sells its products or services to a consumer.

Back Office Conversion
The ability of retailers or billers to convert a physical check collected at a point-of-sale or manned bill payment location into a single-entry ACH debit.

Bad Debt
An account receivable, loan or note that is deemed uncollectible by the company and is written off. This usually occurs when a customer is unwilling to pay for services rendered to them.

Balance Sheet
Description of a company's resources, including assets (items owned); liabilities (obligations owed); and owner's equity. Total assets must equal total liabilities added to owner's equity.

Bank Administration Institute (BAI)
An organization geared towards improving the functionality of financial service companies through the offering of solutions, education and training.

Bank Administration Institute (BAI) Standards
The quality standards to which most cash management service providers and banks are held. Each year, the survey done by the BAI researching the quality of processing by financial institutions, is often used to formulate the quality standards for the upcoming year.

Bank Guarantee
A commitment by a bank to be answerable for payment to a specified beneficiary (seller) in the event of the failure of the bank's client (the buyer) to pay.

Bank Routing Number
A nine-digit number printed across the bottom of a check that identifies the financial institution it is drawn upon.

Bankruptcy
A legal declaration of the inability of an individual or an organization to pay their creditors. An organization will request for the reorganization of its debts (under chapter 11) or a liquidation of its assets (under chapter 7). Bankruptcy can be initiated by the debtor or by the creditors, in an effort to recoup a portion of what is owed to them. Debts of an insolvent person or organization are liquidated after being satisfied to the greatest extent possible by debtor's assets.

Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA)
BAPCPA is a disclosure of rules regarding bankruptcy and debt counseling that apply to debtors, creditors, lawyers, debt relief agencies and petition preparers. This act helped to amend the 1968 Truth in Lending act.

Batch Processing
An operation where related transactions are grouped together and submitted for processing at least once a day; usually used by merchants who do not have a real time verification system.

Benchmarking
The process of improving performance by continuously identifying, understanding, and adapting best practices and processes found inside and outside your organization.

Best Practice
A business technique that has been proven most effective in producing desired results, including regulatory compliance.

BIC (Bank Identifier Code)
Codes assigned to identify banks in the Single Euro Payment Area (SEPA).

Bill Consolidator
In EIPP, a Bill Service Provider that consolidates bills from other Bill Service Providers or Billers and delivers them for presentment to the Customer Service Provider

Bill Detail
Information provided to a customer from a biller that includes specific billing information. Also called invoice detail.""

Bill of Lading (B/L)
A contractual document stating the terms between the shipper of goods and the transportation company. A bill of lading also serves as a receipt for goods.

Bill of Sale
A written, legal document that transfers title to personal property.

Bill Summary
An invoice summary sent to the customer explaining what is owed. Information on the summary may include: Amount owed, due date, biller name and account number, etc.

Bill/Invoice
A request for payment for products or services rendered, typically comprising an itemized list of charges, including prices, quantity, tax if applicable, and shipping charges.

Biller
A company or organization that issues a bill or invoice requesting payment for a product or service rendered to a customer or client.

Billing Quality Index (BQI)
A benchmark used to gauge the accuracy of invoices processed.

Blanket Purchase Order
Long-term agreement between a company and its supplier; often contains predetermined delivery dates.

Blockchain
A "distributed ledger" technology that is decentralized to a great number of computer nodes; transactions, financial or otherwise, must be validated by all the nodes to be authorized, making blockchain extremely secure. A group of transactions is created as a "block," which is then written to all the nodes and is unchangeable, thus forming the "blockchain" over time. Potential applications of the technology include cryptocurrencies that do not require banks (e.g. Bitcoin), and more efficient business transactions.

Board of Directors
A group of individuals elected by a public corporation's or non-profit's shareholders; it is their responsibility to govern and set policy for the organization.

Bottleneck
A resource that constrains the flow of production, inventory movement or data in a system.

BSP (Biller Service Provider)
An agent that provides an electronic payment service for the biller.

Call Campaign
A series of calls made by collectors to contact a debtor by telephone.

Call Center
An area within an organization that handles inbound and outbound customer service calls, technical support and many other customer-related responsibilities.

Capital Expenditure
A company's expense for long-term fixed assets like property or equipment. The expense is amortized or depreciated over the life of the asset, or "capitalized."

Capital Stock
The aggregate of a company's common and preferred stock authorized for issue by the corporate charter. It is reported on the balance sheet as "stockholder equity."

Cash Application
The process of applying payments, credit memos, and adjustments to customers' accounts.

Cash Basis Accounting
A method of accounting where expenses and revenue are recorded when cash is actually received or spent, as opposed to an accrual accounting basis.

Cash Discount
An early payment discount offered by a vendor to incentivize the customer to pay within a certain time frame; e.g., "2% 10, net 30" means that the customer may take a 2 percent discount if the invoice is paid within 10 days, but the entire balance must be paid within 30 days.

Cash Flow
The amount of cash that is coming into a company compared to how much is leaving the company. A healthy financial condition entails a higher inflow of cash than outflow.It's an analytical tool used to determine a company's short-term viability, including ability to pay bills. (Also known as statement of cash flows or funds flow statement.)

Cash In Advance (CIA)
Companies often ask new customers or customers with little, no or poor credit histories to pay in advance.

Cash On Delivery (COD)
The shipper requests the carrier of the goods to collect the payment for the delivery from the consignee.

Cash Receipts
Money received by a business from its customers, such as payments on accounts receivable.

CEBP
The Council for Electronic Billing and Payment (CEBP) promotes the adoption and usage of electronic consumer, business and government billing and payment programs and services across any delivery channel.

Chapter 11
When an organization files bankruptcy and requests to reorganize its debts. See bankruptcy and Chapter 7.>

Chapter 7
When an organization files bankruptcy and requests to liquidate its assets. See bankruptcy and Chapter 11.>

Chargeback
Term that refers to deductions AR thinks are invalid and are charged back to the customer.

Chart of Accounts
A listing of accounts in a financial system generally using alpha numeric characters to designate the transactions that comprise the Balance Sheet and Income Statement. The chart of accounts is used as the basis for preparing financial reports from an accounting system.

Chattel paper
A record or records that evidence both a monetary obligation and a security interest in specific goods.

Check Clearing for the 21st Century Act of 2004
Legislation that created a new negotiable instrument called a substitute check or image replacement document (IRD), which has the full legal force of the original check of which it is a copy. Also referred to as Check 21.

Check Kiting
A form of check fraud in which bank "float" is manipulated to fund bogus checks. This process can be perpetuated between bank accounts indefinitely, creating an interest-free loan: a bogus check is deposited into account A, and a check is written against that to deposit nonexistent funds into account B, which is then used to deposit nonexistent funds back into account A. However, many banks now place a hold on funds from check deposits until they clear, and float time is much less that it was previously, making this a less viable scam.

Collateral
An asset or property used as assurance that a debt will be repaid. The asset will be given to the creditor in the event of a default.

Collection
The act of pursuing debtors who are delinquent on payments due.

Collection Charges
Fees added to accounts receivable for outside collection efforts, including administration costs, penalties and interest.

Collection Intensity Matrix
A strategy where accounts receivables are segmented by balance size and collectors tailor approaches to manage each segment. For example, collectors would spend more time and effort on accounts with balances greater than $10,000 that control 67 percent of the portfolio than accounts with balances that range from $5,000 to $9,999 that contribute 28 percent to the AR portfolio.

Commercial Law League of America (CLLA)
An organization of attorneys and other experts in credit and finance actively engaged in the field of commercial law, bankruptcy and insolvency.

Compliance
Conformity with legislation governing a particular practice or process; e.g., tax laws, unclaimed property laws, or such governing legislation as the Sarbanes-Oxley Act of 2002, which mandates transparency and ethics for public companies.

Confirmed irrevocable letter of credit (L/C)
A letter of credit that may not be amended or cancelled without the consent of the issuing bank, the confirming bank, if any, and the beneficiary. The bank guarantees the payment if the beneficiary complies with credit terms and conditions.

Consignment
A transaction, in which a business delivers goods to a merchant for the purpose of sale and the transaction does not create a security interest that secures an obligation.

Consolidator
An interface between multiple buyers and sellers that simplifies invoice presentment allowing trading partners to interact through one party.

Contra-Accounts
A general ledger account that offsets the balance in a related account; e.g., an accumulated depreciation account that offsets the fixed asset account. Combined, they report the net value of the assets remaining. Another example of such a pair is allowance for doubtful accounts and accounts receivable.

Contributed Capital
Contributed Capital is the value of funds or other consideration contributed to a company in return for an ownership interest. For instance, contributed capital increases when a person invests money in a company and receives a stock certificate recognizing their right to share in the profits and losses of a company and increases or decreases in the equity value of the company. Owners of a company are often referred to as stockholders. Contributed capital is located in the stockholders equity section of the balance sheet.

Corporate or Parent Company Guarantee
When the customer's parent company guarantees payment in the event the customer defaults.

Corporate Trade Payments (CTX)
An ACH format that allows B2B electronic payments that include remittance information, up to 9,999 addenda that contain trade payment details.

Corporation
A legal business entity that has its own rights, including issuance of freely transferable stock, perpetual life and limitation of owner's liability.

COSO
Committee of Sponsoring Organizations of the Treadway Commission, a joint initiative created to combat corporate fraud.

Cost of Goods Sold
The aggregate cost of materials, components, labor, distribution costs and overhead to produce goods sold by a company. COGS is reported on an income statement and is deducted from revenue to arrive at net income. Sometimes called "cost of sales."

Cost of Sales
See "Cost of Goods Sold."

Course of conduct
Refers to a proven and accepted history or performance and actions that transpired between two parties, which allegedly created a verbal contract.

Credit bid
When a secured lender uses the value of their assets in lieu of cash to bid for their collateral in a bankruptcy sale.

Credit Bureau
An agency that collects information from collection agencies and creditors and reports that to a consumer reporting organization, which in turns supplies quantifiable information to banks, lenders and financing companies about borrowing and payment behaviors.

Credit Group
A gathering of credit managers within an industry who meet periodically to share information about customers' credit status and credit worthiness.

Credit Memo
A credit memo is a document issued by a company to a customer to offset all or part of an invoice, to correct accounts receivable and make good to the customer for such issues as damaged or return goods, lack of delivery, incorrect prices or freight charges, or other such problems. The company usually applies the credit memo against the customer’s outstanding balance, or issues a check to the customer.

Credit Score
A numerical expression calculated to determine the creditworthiness of a company or person. Credit departments use credit scores to ascertain how much credit to extend a new customer.

Creditor
An individual or organization to whom money is owed.

Cross-Aging
In accounts receivable, deeming an entire account to be delinquent when a certain percentage of receivables become overdue, typically 10 percent.

Cryptocurrency
A strictly digital currency in which cryptography is used to record and control transactions; e.g., bitcoin, ethereum.

Current Asset
An asset expected to provide an economic benefit to the company within 12 months from the date of the initial transaction that generated the asset.

Current Liability
An amount owed by a company as an obligation expected to be settled within 12 months from the date of the initial transaction that resulted in the liability.

Current Ratio
A ratio calculated by dividing a company's current assets by its current liabilities. The ratio indicates whether a company has the ability to pay off its short-term liabilities with its short-term assets. (Also known as liquidity ratio, cash asset ratio and cash ratio.).

Customer Master File
A central database that contains all pertinent information about customers, such as names (legal entity and DBA name); tax ID; billing address; delivery address; contract terms; credit limit; contact information; order.

Cwt
Abbreviation for per 100 pounds weight"."

Cycle Billing
An accounting method where invoices are prepared and divided into cycles and dispatched throughout the accounting period, rather than billing all customers on the same day each month, thus spreading work evenly over time.

Dashboard
A reporting tool that organizes and presents key information or metrics to provide the status or condition of a project, process or business.

Data Encryption
Converting important information into scrambled text to prevent unauthorized use and to protect confidentiality of the information. This process makes the data unreadable until it is decrypted.

Debit Transaction
An electronic payment transaction that results in a debit to a cardholder's account and a credit to the merchant account.

Debt Buyer
A purchaser of accounts receivable or portfolios. Unlike a factor, if collection attempts are unsuccessful, a debt buyer will either place receivables with an external collection agency or resell all or portions of the receivables to other debt buyers. Defined as a collection agency" under the Fair Debt Collection Practices Act. Also called "bad debt buyers.""

Debt Collection Improvement Act of 1996 (DCIA)
The U.S government's response to the increasing amount of delinquent non-tax debt owed to the U.S. The act centralized the collection of debts to the Treasury and the Financial Management Service (FMS). Also under the act, federal agencies are required to turn over all non-tax debt to FMS for collection. Collection of delinquent tax debt was added in 1999. For more on this act, click here.

Debt to Equity Ratio
Total debt divided by total equity. A high debt-to-equity ratio may indicate that a company might not be able to generate sufficient cash to satisfy its obligations.

Debtor
A party that owes a creditor and has the obligation to pay off the debt.

Denied Persons List
A list published by the Department of Commerce’s Bureau of Industry and Security. It contains the names, addresses and countries of individuals and companies whose export and re-export privileges were revoked by the U.S. government. Click here to access the Denied Persons List

Depreciation
An accounting method that involves reducing the value of a tangible asset over its useful life.

Direct Payment
A method of collection where a debtor authorizes a creditor to debit their account to collect payment.

Disputed Stop Payment
A stop payment initiated by the writer of a check due to a dispute over goods or services.

Dodd-Frank Act
The Dodd–Frank Wall Street Reform and Consumer Protection Act was signed into law in 2010 as a response to the financial crisis of 2008. It places regulation of the financial industry in the hands of the federal government.

DPO
Days Payable Outstanding. An activity ratio that indicates how long a company takes to pay its creditors on average, calculated as (accounts payable / (cost of sales / 365)) for a full year.

Drop shipping
When one company makes the sale and is in charge of the accounts receivable, but a separate wholesale or manufacturing company actually fulfills the order and ships it to the customer.

DSO
DSO is Days Sales Outstanding, a measurement of the average number of days that a company takes to collect revenue after a sale has been made. DSO = [(Total Receivables / Total Credit Sales for the Period) X (# Days in Period)]. For more information see Understanding Your DSO.

DSO, Countback
Countback DSO is a method of calculating DSO that seeks to provide a more precise figure than the standard DSO calculation, by accounting for month-to-month changes in sales and past due receivables, and using actual number of days in the month. The calculation gives more weight to the current month’s sales, since most of the AR balance should be from current rather than previous sales.

DSO, Sales Weighted
Sales Weighted DSO is a method of calculating DSO that takes into account credit sales and terms of sale. Sales Weighted DSO = [($ in Current Age Bucket / Credit Sales of Current Period) + ($ in 1-30 Day Age Bucket / Credit Sales one month prior) + ($ in 31-60 Day Age Bucket / Credit Sales two months prior) + (etc.)] x 30.

Due Diligence
Documented collection efforts made by creditors and lenders to collect on a delinquent account; also, in escheatment, statutorily required effort to contact the owner of unclaimed property.

Dunning Letter
A collection letter with defined language sent to a customer with an outstanding account, and part of a series of escalating collection letters.

Dunning Letter Service
A service that distributes dunning letters.

Duplicate Invoice
More than one invoice issued for the same transaction. Duplicate invoices can result in duplicate payments, and may be issued as a method of fraud, or may be due to inadequate internal controls, such as duplicate vendors within the vendor master file.

EBITDA
Earnings before interest, taxes, depreciation and amortization. This measurement provides insight into a company's operating profitability, although it is not regulated by GAAP.

EDI
Electronic data interchange—the transfer of electronic documents between computers without human intervention by using a standard format.

EFT
Electronic funds transfer, in which funds are transferred between bank accounts via electronic means such as wire or ACH (automated clearing house). Includes such things as payroll direct deposit, POS transactions, direct debits and ATM transactions.

EIN
Employer Identification Number, also known as Federal Employer Identification Number (FEIN). Similar to a social security number, it is a number assigned to employers and used for reporting taxes.

Electronic Banking
The use of computers and other technology to handle banking transactions and to access bank accounts. Financial institutions usually issue a PIN (Personal Identification Number) and/or ATM or debit cards for this purpose.

Electronic Bill Delivery
A system that sends customer bills via computer or telephone.

Electronic Bill Presentment and Payment (EBPP)
A system that sends bills and other information electronically to customers and provides a way for them to make the payment.

Electronic Check Clearing House Organization (ECCHO)
A non-profit organization that is a national clearinghouse for its member institutions. It provides the rules for check image exchange for member financial institutions that exchange and settle check payments. For more information visit the homepage: ECCHO

Electronic Data Interchange (EDI)
A system that makes possible the electronic exchange of documents such as purchase orders, invoices and other business transactions.

Electronic Funds Transfer (EFT)
A computerized system that electronically transfers funds from one account to another. EFT eliminates the need for paper checks.

Electronic Invoice Presentment and Payment (EIPP)
EIPP refers to the invoicing and payment process between businesses, or B2B applications, over the Internet and typically via a third-party EIPP vendor.

Electronic Payment
An alternative payment method to the paper check that is made electronically via computer, telephone or ATM.

Electronic Signatures in Global and National Commerce Act (ESIGN)
A federal law designed to facilitate the use of electronic records and signatures in interstate and foreign commerce.

Embezzlement
Financial fraud involving misappropriation of funds placed in one's care. Similar to larceny, except in the case of embezzlement, the criminal gains access to the funds rightfully before appropriating them wrongfully.

Encryption
Process of converting information, such as credit card numbers, into a form that can only be accessed by selected users who have a key or means to unlock and read the data.

Enterprise Resource Plan (ERP)
Software that integrates departments and functions across a company into one computer system. ERP runs off a single database, enabling various departments to share information and communicate with each other.

Entity List
A list published by the Department of Commerce’s Bureau of Industry and Security. It contains the names of foreign nationals, businesses and organizations subject to special licensing requirements or policies for the export, re-export or transfer of selected items. Click here to view Frequently Asked Questions About the Entity List

Equity
Assets minus liabilities. On a balance, sheet, shareholders' equity is the net amount invested by the owners of a firm, plus retained earnings.

ERM
Enterprise risk management, defined by COSO as "a process, effected by an entity's board of directors, management and other personnel, applied in strategy-setting and across the enterprise, designed to identify potential events that may affect the entity, and manage risk to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives."

Escheatment
Remittance of unclaimed property to the state in compliance with unclaimed property law. Abandoned or unclaimed property (of all kinds) is transferred to the state, which protects the property on behalf of the owner. AR departments may have to comply with state unclaimed property laws if they have un-cashed rebate checks or credits, as well as, unapplied cash. See Unclaimed Property in Accounts Receivable: Is Your Company at Risk?for more information

Escheatment priority rules
Rules that determine which state is entitled to abandoned property in the event of disputes. First priority is given to the state of the last known address of the owner - i.e. the customer to whom the credit belongs; if the customer's address is unknown, the state of incorporation of the holder of the credit takes precedence. (See Texas v. New Jersey.)

Ethics Resource Center
America's oldest nonprofit organization devoted to independent research and the advancement of high ethical standards.

Evergreen
An automatic renewal/extension clause in a contract that keeps it in force until either party formally cancels it.

Exchange Rate
The price of the currency of one nation in terms of that of another nation; the rate at which one currency is traded for another.

Expenses
Costs an organizations incurs as part of the effort to earn revenue.

Extranet
A private system that is part of an organization's internal computer network that is made available to outside users such as suppliers, vendors, partners or other businesses. The system allows the organization to share information through various levels of accessibility.

F.O.B.
Free on Board

F.O.B. Delivered/ Freight Collect
A term of sale in which the buyer takes ownership of the goods on delivery and pays the freight charges, and the seller files any claims.

F.O.B. Delivered/ Freight Collect and Allowed
A term of sale in which the buyer takes ownership of the goods on delivery and pays the freight charges but then deducts them from the seller's invoice, and the seller files any claims.

F.O.B. Delivered/ Freight Prepaid
A term of sale in which the buyer takes ownership of the goods on delivery, and the seller pays the freight charges and files any claims.

F.O.B. Origin/ Freight Collect
A term of sale in which the buyer takes ownership of the goods at the shipping point, pays the freight charges, and files any claims.

F.O.B. Origin/ Freight Prepaid
A term of sale in which the buyer takes ownership of the goods at the shipping point and seller pays the freight charges and files any claims.

F.O.B. Origin/ Freight Prepaid and Add
A term of sale in which the buyer takes ownership of the goods at the shipping point and files any claims, and the seller pays the freight charges but is then reimbursed by the buyer.

Factor
A company that purchases accounts receivable from a client, then collects payment for the invoices.

Factoring
A financial transaction whereby a business sells its accounts receivable at a discount. The purchasing organization assumes the responsibility of collecting the invoices

Factoring Rate
Percentage of invoice amount a factor charges for advancing on an invoice.

Fair and Accurate Credit Transactions Act (FACTA)
A federal law enacted in December 2003 to reduce identity theft and help victim recovery by providing ways for consumers to obtain their credit report and credit score. For more information on this act, click here

Fair Credit Billing Act of 1974 (FCBA)
An act that helped amend the 1968 Truth in Lending Act and applies to open end" credit accounts

Fair Credit Reporting Act (FCRA)
A federal consumer protection law that ensures that credit reporting agencies act fairly and establishes procedures on how to correct mistakes that appear on credit reports. To read the full act, click here.

Fair Debt Collection Practices Act (FDCPA)
A federal consumer protection law that ensures that collection agencies do not use abusive or deceptive debt collection practices. To read the full act, click here.

FASB
Financial Accounting Standards Board. A private, non-profit organization whose primary purpose is to develop Generally Accepted Accounting Principles (GAAP) in the United States. The standards established by FASB are intended to educate issuers, auditors and users of financial information as well as the general public.

Federal Financial Institutions Examination Council (FFIEC)
An interagency body established in March 1979 to prescribe uniform principles, standards, and report forms to promote uniformity in the supervision of financial institutions.

Federal Reserve
The central banking system in the United States. Twelve banks belong to the Federal Reserve and serve twelve districts. The functions of the Federal Reserve include enforcing good banking practices, ensuring compliance with federal regulations, providing loans and money to banks and determining interest rates.

FIFO
"First-in, first-out." A method of inventory costing in which the oldest inventory items are considered to be sold first. Generally used when selling perishable items, but may also figure into tax liability. See "LIFO."

Fixed Asset
An asset, usually tangible, that is not intended to be consumed or sold for at least a year, and is needed to conduct business, e.g., land, buildings, machinery and equipment, vehicles, etc.

Fixed Costs
Sometimes known as overhead costs, these costs are part of the operating expense of a business and not dependent on the amount of goods or services produced.

Float
A period of time in which the same funds appear on the books of two different financial institutions due to inefficiencies in the clearing system, e.g., "check float." Also refers to the time between issuance of a check and the time that the check clears the bank account on which it is drawn.

Flowchart
A diagram that illustrates the flow of data, processes and operations within an organization or business management system.

Force Majeure
A clause that appears in many supplier contracts that excuses non-performance for forces beyond the suppliers' control, like acts of God, wars, riots, etc.

Foreclosure
A legal forced sale of a property due to failure of a mortgager to comply with the terms and conditions of the mortgage. The property is sold to pay off the debt of the defaulting borrower.

Foreign Corrupt Practices Act of 1977 (FPCA)
A federal law with key provisions that address anti-bribery and accounting transparency.

Forgery
The act of deliberately altering or creating a fraudulent document or financial instrument, such as a check, to falsely authorize or change it.

Fraud
Any dishonest and illegal activity perpetrated in the course of business to give an advantage to an individual or company.

Full-Service Collections
A third party collection service that uses several collection tactics throughout the collection cycle. Tactics include written debtor contacts and calls from professional collectors.

Fungible Goods
Goods, like nails, where each unit is the equivalent of any other like unit.

General Ledger (GL)
A list of numbered accounts with an organization used to prepare financial statements. The GL contains a credit and corresponding debit for every transaction, called a "double entry accounting system."

Generally Accepted Accounting Principles (GAAP)
Accounting guidelines accepted by accounting professionals and businesses on a set of practices that provide guidance for preparing and reporting financial information. There are also two other sources that provide the basis for establishing accounting standards: 1) APB Opinions are accounting guidelines issued by the AICPA Accounting Principles Board and 2) ETIF abstracts are issued by FASB Emerging Task Force for guidance on new accounting issues. GAAP helps to create conformity when reporting financial results across all businesses and industries in the United States. Financial Reporting methodologies in accordance with GAAP provides comparable data and common principles when a company prepares and reports financial information.

Goods and Services Tax (GST)
A value-added tax (VAT) imposed in some countries for goods and services. The items taxed and the amounts vary by type and nation.

Gross Profit
Total revenue minus cost of goods sold.

Hash Total
A number calculated or arbitrarily assigned to verify records or documents; for example, the check numbers of a batch may be added together to produce a value that may be used later to ensure that all were deposited. It is not a significant number in and of itself, but rather a verification method.

Health Insurance Portability & Accountability Act (HIPAA)
A federal act that protects American workers by improving portability and continuity of health insurance coverage. To see the full act, click here.

Hell or high water clause
A clause in a contract, usually a lease, that says the lessee must make payments during the contract's life come hell or high water

Heuristic Credit Score
Determining a customer's credit worthiness using intuition, educated guesses, common sense, industry trends, etc.

IBAN
International Bank Account Number; used for international payments, primarily in Europe.

IFX (Interactive Financial Exchange)
A standard set for the exchange of financial data and instructions.

Image Cash Letter (ICL)
An electronic file that is the standard for formatting and transmitting remotely deposited checks. ICL's contain check images and MICR data. Also known as an X file.

Income Statement
A list of a company's revenues and expenses, gains and losses, for a particular period of time, such as a quarter or year. A company's profitability is calculated by deducting expenses and losses from gains and revenue. Also called a Statement of Earnings, Statement of Operations or Profit and Loss Statement (P/L).

Incoterms
Standard definitions and rules for common commercial terms clarifying buyer and seller tasks, costs and risks in international trade; created and maintained by the International Chamber of Commerce (ICC).

Indemnification
A clause contained with a legal contract in which one party agrees to assume liability and compensate the other for issues related to the contract. For example, if a manufacturing company supplied faulty products to its customer and the customer were sued, the manufacturer might contractually indemnify its customer by assuming costs issuing from the lawsuit.

Insolvency
A situation in which an organization can no longer meet its financial obligations.

Institute of Internal Auditors (IIA)
The internal audit profession's recognized authority, acknowledged leader, chief advocate, and principal educator.

Intangible Asset
A non-physical asset, including intellectual property, trademarks and patents, brand recognition, etc.

Interest
A fee paid for the privilege of borrowing money, usually a percentage of the loaned amount (principal).

International Association of Commercial Administrators (IACA)
A professional association for government administrators of business organization and secured transaction record systems at the state, provincial, territorial, and national level.

International Standby Practices 1998 (ISP98)
Rules that incorporate generally accepted practices, customs and uses of standby letters of credit maintained and published by the International Chamber of Commerce.

Interval measure
A calculation used to estimate the number of days a company could operate with its cash on hand. Like the current ratio and quick ratio, it shows how quickly a company could cover its obligations.

Inventory
Finished goods, work-in-progress and raw materials that comprise a sizeable portion of a business's assets.

Investment-to-value Ratio
A measurement of a creditor's position and the likelihood that a foreclosure would occur.

Invoice
A formal request for payment; a written record of a transaction submitted to customer or client when requesting payment for services or goods delivered; includes taxes where applicable; also called bill, and sometimes statement, though the term statement" has a different meaning that does not include a formal request for payment."

IRD: Image Replacement Document
Also referred to as substitute checks, IRDs are paper copies of checks that have been scanned to produce digital images (truncated) to facilitate electronic transmission between banks. An IRD is produced when a party involved in the transaction requires physical documentation. The image of the paper check in an IRD is smaller than the original check and contains some different information (See Check 21)

ITIN
Individual Taxpayer Identification Number; ITINs are issued to individuals who do not have or are not eligible to obtain U.S. social security numbers.

Journal
A record of all financial transactions of an organization, listed in chronological order. Also called "book of original entry."

Kaizen
Japanese for continuous improvement. A business methodology that developed in Japan after World War II. Every employee is encouraged to regularly offer improvement suggestions. Ideas are shared, discussed and frequently implemented.

Key Performance Indicators (KPI)
A short list of important financial or operational metrics that provide a measurement for results.

Lapping Scheme
A form of payment fraud facilitated by inadequate separation of duties. An employee steals a payment, then diverts a second payment to cover up the theft of the first, then a third to cover the misapplication of the second, and so on, often continuing until the perpetrator is caught.

Letter of Credit (LOC)
A document issued by a bank or other financial institution on behalf of one of its clients, called the applicant." The letter is effectively a guarantee of payment to another party

Letter of Credit, Standby
A document that assures payment will occur for a transaction, such as the timely construction of a building. Standby letters of credit are not limited to the sale of goods, but are used to guarantee performance or repayment of a financial obligation.

Leverage
The ability to control property of greater value than the amount of capital invested, in an effort to increase return on equity.

Liability
A financial obligation owed to other parties, such as suppliers. Examples of liability include accounts payable, wages and taxes.

Lien
A legal claim by one person on the real or personal property of another as security for a debt; a lien blocks the sale of the property until the lien is paid.

LIFO
"Last-in, first-out." A method of inventory valuation where the last goods purchased are assumed to be the first sold or used. The choice of whether to use this method or FIFO is a decision generally made to control tax liability, since the cost of the inventory may vary over time, and thus may be higher or lower relative to the selling price and will affect taxable income.

Limited Liability Company
A form of business structure designed to combine the best of corporate and partnership attributes into one entity; members have limited liability and are taxed like a partnership, avoiding double taxation. Rules vary by state.

Limited Partnership
Business structure consisting of at least one general partner and one limited partner; limited partners have limited liability and are not involved in management. It serves as a tax shelter, but does not constitute a separate legal entity from the owners, as does a corporation.

Liquidation
When a company becomes insolvent and its assets are divided among creditors and shareholders, per Chapter 7 of the U.S. Bankruptcy Code.

Liquidity
The ability of assets to meet liabilities. Also refers to an organization's ability to quickly access cash.

Liquidity Ratio
The relationship of cash and marketable assets to outstanding debt. A high ratio indicates a company unlikely to default on its obligations.

Loan-to-value Ratio
The ratio of the money borrowed on a property to the property's fair market value.

Lockbox
A third party collection service, often a bank, to which clients have customers send payment. This provides the client with faster deposits and better control of cash.

M-commerce
A business transaction conducted by using a mobile electronic device, such as a cell phone.

Matched Payment
When the amount paid matches" or equals the amount owed. Also called a "full payment.""

MICR (Magnetic Ink Character Recognition)
A character recognition technology adopted by the banking industry to facilitate check processing, includes magnetic ink or toner and unique fonts on the bottom of checks. The encoding contains the account number, the routing number, the serial number and the amount of the check.

MICR Number Method
A procedure that authorizes a check using the bank routing number, the account number and the check number located at the bottom of the check.

MICR Reader
An instrument used to read the encoded information in the magnetic ink on the check.

NACHA
A not-for-profit association that represents more than 11,000 financial institutions through memberships, a network of regional payments associations and 585 organizations through its industry councils and establishes standards and procedures that enable the exchange of ACH payments on a national basis.

National Association of Unclaimed Property Administrators (NAUPA)
A non-profit organization whose members administer state unclaimed property and compliance laws.

National Automated Clearing House Association (NACHA)
A non-profit organization that creates rules for moving electronic payments through the ACH (Automated Clearing House) network.

Net (income, loss, profit, sales, worth)
The amount that remains after related items have been deducted. E.g., net income is revenue minus the costs of doing business.

Nexus
Term used to define the minimum presence or level of activity at which an entity may fall under a taxing jurisdiction's laws.

Non-exempt
Under the Fair Labor Standards Act (FLSA), employees who are not exempt from earning overtime pay.

Non-recourse Factoring
A factoring agreement where the factor assumes all the debt risks and all rights to pursue a customer for payment. The client is not responsible for refunding the advance if the debt is not paid.

NSF (Non-Sufficient Funds)
Indicates that a demand for payment (a check) cannot be honored because there are not enough funds to cover the check.

OCR (Optical Character Recognition)
Software that electronically converts scanned images into text.

OFAC
The Treasury Department's Office of Foreign Assets Control. OFAC publishes the Specially Designated Nationals and Blocked Persons List (SDN). U.S. businesses are prohibited from doing business with individuals and countries contained on the list.

OFX (Open Financial Exchange)
A data format used by financial institutions to exchange financial information over the Internet.

Operating Expense
Costs associated with operation of a business, e.g., cost of goods sold (COGS), selling, general and administrative expense (SG&A).

Order to Cash (OTC or O2C)
The cycle or steps in a process that starts with credit extension and receipt of the sales order and ends when payment (cash) is received.

Originator
Any individual, corporation or financial institution that initiates an ACH transfer.

Outsourcing
The process of hiring a third-party firm to handle internal company functions. Outsourcing often leads to cost-savings and better efficiency.

Overdraft
A debit or check written for an amount that exceeds the amount of funds available in the bank account. Financial institutions often will charge a fee for each overdraft made to the account.

Paper Hanging
A form of check fraud involving intentionally writing checks on a closed account. The fraudster makes no physical changes to the checks, but the account information is no longer valid. Perpetrators only have access to a small number of remaining checks, meaning paperhanging is usually a short-term fraud, but often involves large-dollar purchases.

Parent Company Guarantee
When a customer's parent company guarantees repayment of the customer's loan.

Payee
The individual or organization to whom a check is made payable. Also known as the receiver of payments.

Payment
A method to effect the transfer of value; the transfer of funds between bank depositories or to or from a debt instrument.

Payment Card Industry Data Security Standards (PCI DSS)
Standards developed by the Payment Card Industry Security Standards Council to assist organizations that process credit card payments with preventing fraud.

Payor or Payer
The individual or organization that makes a payment.

PCI DSS
Payment Card Industry Data Security Standard. Created in 2004 by major card brands Visa, MasterCard, American Express and Discover, the PCI DSS is a set of widely accepted standards for card transactions of all types.

Personal Guarantee
When a borrower or third party guarantees a loan with personal assets. The lender may take control of the guarantors' assets if the borrower defaults.

Personal Property Security Act (PPSA)
Canadian statutes that regulate the creation and registration of security interests.

Portfolio
A list of financial assets, investments and securities owned by an individual or an entity.

Power Dialer
A high-speed telephone system that rapidly dials numbers in succession.

Pre-Arranged Payment and Deposit
A type of ACH transaction (ACH Standard Entry Class code PPD) that a transfer of funds by way of direct access to a consumer's checking or savings account, e.g., direct payroll deposit (credit), or consumer bill payment (debit).

Predictive Dialer
A new, high-speed telephone system that automatically dials batches of telephone numbers simultaneously until one number is answered and also monitors the length of each call to determine an average call length.

Preference Payment
A payment made during the preference period

Preferred Stock
A type of ownership share in a company that has a higher claim on company assets than common stock. Preferred stock generally yields dividends to shareholders.

Price-to-Earnings Ratio
A method of determining the value of a company to investors; it is arrived at by the formula: (market value per share / earnings per share).

Proforma invoice
An invoice typically sent prior to shipment and represents an estimate. It is not the actual bill. Companies do not pay from these invoices. A commercial invoice should follow with the final price.

Proft and Loss Statement
Often called simply "P&L." A financial statement reporting activity for a certain specified period: quarter or year, for example. Also called "income statement" or "statement of earnings."

Promissory Note
A legal document between a lender and a borrower where the borrower promises to repay the loan by a given date. The promissory note also contains information about the terms and conditions of the loan.

Purchase Card (P-Card)
Multi-purpose bank card aimed at streamlining the traditional purchase order and payment processes for lower-dollar transactions, typically not exceeding $5,000, but often much smaller.

Purchase Money Security Interest (PMSI)
A lien trade creditors can use to obtain first priority on goods or equipment they sell in the event their debtor defaults.

Purchase Order (PO)
Information a prospective buyer sends to a vendor to request goods or services; the PO typically includes the item, quantity, price, discounts, delivery address, billing address, delivery date and terms of payment.

Quick Ratio
A measurement of a business's liquidity. It compares the company's cash and cash equivalents, such as marketable securities and accounts receivables with current liabilities. Also called an acid test.

Quote
Process of extending a formal offer to a prospective buyer for a product or service.

Record Retention Schedule
Also "record retention period." The prescribed length of time to keep certain historical business records, often specified by type; the reason for keeping it; and its final disposition, whether to archive or dispose of it.

Recourse Factoring
A factoring agreement where the factor has the right to reclaim their advance to the client if the customer does not pay the debt.

Remittance Information
The information needed by the biller to accurately post customer bill payments.

Remittance Method
The method used to deliver remittance information.

Remotely Created Check (RCC)
Check drawn on a bank account that is created by a person other than the account holder and does not bear the physical signature of the person on whose account the check is drawn. An RCC may contain a statement of customer authorization, the account holder's printed or typed name on the check, or the statement No signature required" or "Signature on file." Also called a "telecheck"

Replevin
The method used to deliver remittance information.

Retained Earnings
Profits earned by a company that are not distributed as dividends to the shareholders.

Return on Investment (ROI)
A financial ratio used to value or ascertain a company's return or gain on an investment.

Revenue
Gross income from business operations from which no costs have been subtracted. Also called the "top line."

Routing Transit Number (RTN)
A nine-digit number that designates a specific financial institution used to process transactions. The number appears on the bottom of financial instruments, like checks, and indicates the bank on which the check is drawn.

SaaS
Software-as-a-Service or “software on demand.” Software that users subscribe to and access via the internet whenever they need it opposed to software that must be installed, updated and maintained on a company’s internal computers.

Sarbanes-Oxley Act of 2002
A United States law passed in response to a series of corporate scandals including Enron, WorldCom, and Tyco International. Provisions require the CEO and CFO of all publicly traded companies attest that they have strict internal controls within the company's policies and procedures. SOX is intended to deter and punish accounting fraud and corruption.

SDN
The Specially Designated Nationals and Blocked Persons list prepared by the Treasury Department’s Office of Foreign Assets Control. U.S. businesses are prohibited from doing business with the individuals, organizations, and countries on the SDN. The list includes terrorists, drug and weapon dealers and other prohibited individuals and organizations. Click here for OFA’s SDN List

Secured Transactions (lien)(SLAs)
A security interest granted over an item of property, such as a home, business, or equipment to secure the payment of a debt.

Securities and Exchange Commission (SEC)
An agency of the U.S. federal government created to prevent fraud in securities transactions and mutual fund trading.

Service Level Agreements (SLAs)
A contract that defines levels of service in measurable terms.

Settlement
The resolution of a legal matter without having to dispute the case in court.

Shared Services
The standardization, re-engineering, and consolidation of a non-core function within a company. It generally involves the centralization of administrative functions.

Short pays
When a customer pays less than the total amount due on an invoice; the deduction is usually taken for a real or perceived error, such as damaged goods.

Single Euro Payment Area (SEPA)
A geographical area where electronic payments within or between 32 European member states are accepted in euros; each member country adopts similar business, legal and technical requirements.

Six Sigma
A statistical, methodical technique for eliminating defects in manufacturing. To achieve Six Sigma, a process may produce no more than 3.4 defects per million "opportunities."

Skimming
1) Stealing money from cash receipts for personal use and not reporting them in a deposit. 2) Stealing the information from payment cards and using it for fraudulent purchases.

Skip Tracing
The process of finding the whereabouts of persons, often hard-to-locate debtors, known as skips.""

SME
Subject matter expert.

Sole Proprietorship
A business that is owned and operated by one individual. The sole owner assumes all financial and legal liability for the business.

Split Payment
A payment that is applied to the wrong account. Also refers to a payment that is divided or split" among several invoices."

SPUD
Short-paid un-reconciled deduction; received payment that is less than the amount invoiced.

Statement/Notice
A periodic report that states all transactions on a single account. A statement can also be an itemized list of charges showing due dates and amounts owed.

Straight Through Processing
A method of electronic payment processing where funds are transferred and settled without the need for manually re-keying the data.

Streamlined Sales Tax (SST)
A cooperative agreement among U.S. states intended to simplify and standardize sales tax collection and administration between states. A main goal is to promote parity between brick-and-mortar merchants and remote / internet sellers from a sales tax standpoint.

Subordination
Acknowledgement that a debt owed is inferior to another debt owed by the same debtor.

Supply and Demand
A model in economics that states that when the supply of a commodity is high but the demand low, the price drops; when supply is low but demand is high, the price rises. Over time in a competitive market, a price equilibrium will be reached; for example, if prices become too high, demand will drop, which will force prices down.

SWIFT
"Society for Wordlwide Financial Telecommunication." SWIFT uses a telecommunication protocol to transmit requests for funds transfers across the globe, e.g., wire transfers. (It does not actually transfer the funds itself.) It is a Belgium-based cooperative of financial institutions.

Tangible Personal Property
Property, excluding real property, that can be seen and touched and has an intrinsic value.

Texas v. New Jersey
The landmark case in which the U.S. Supreme Court's rulings established escheatment priority rules that determine which state is entitled to abandoned property in the event of disputes. First priority is given to the state of the last known address of the owner - i.e. the customer to whom the credit belongs; if the customer's address is unknown, the state of incorporation of the holder of the credit takes precedence.

Time Value of Money
The principle that money received in the present is worth more than money invested in the future.

Transaction
Activity between two parties. A transaction can be financial or commercial.

Travel and Entertainment Expenses (T&E)
Expenses employees incur for business travel and entertainment that may be tax deductible.

Trial Balance
An accounting worksheet in which all general ledger transactions are listed in debit and credit columns for a certain period, and verified to see that they match.

Truncation
The process of removing a paper check from its processing flow.

UB-92
The standard billing format for submitting hospital claims, developed by the AHA's National Uniform Billing Committee.

Unbilled Receivables
Receivables for which services or products have been delivered and revenue recognized but no invoice has been issued; unbilled receivables are a metric to watch, since timely billing is critical to cash flow.

Unclaimed Property
Tangible or intangible property that is considered lost or abandoned by the rightful owner after that owner cannot be located for a specific period of time. Intangible unclaimed property typically includes money, checks, drafts, deposits, interest, dividends and income, credit balances, customer overpayment, gift certificates, security deposits, refunds, credit memos, unpaid wages, unused airline tickets, and unidentified remittances. Such property must be reported and escheated (remitted) to the states after a dormancy period and a due diligence effort to locate the owner. See Escheatment.

Unclaimed Property Professionals Organization (UPPO)
An organization created to ease the burden of reporting unclaimed property and simplifying compliance issues. It works closely with the National Association of Unclaimed Property Administrators.

Uncollected Funds
Checks that have been deposited into an account but have not yet been paid by the bank(s) on which the checks were drawn.

Uniform Commercial Code (UCC)
A set of statutes and laws adopted by most states to govern commercial transactions uniformly. Click on The Uniform Commercial Code for more information.

Uniform Customs and Practice for Documentary Credits (UCP)
A set of rules regarding the issuance and use of letters of credit developed, maintained and published by the International Chamber of Commerce. The most recent version, UPC 600, took effect on July 1, 2007.

Uniform Law Commission
The Uniform Law Commission is also known as the National Conference of Commissioners on Uniform State Laws. The commission was established in 1892 and provides states with non-partisan, well-conceived and well-drafted legislation that brings clarity and stability to critical areas of state statutory law.

Unmatched Payments
Payments made that differ from the amounts that are due.

Unseasoned
A debt that has had very few, if any, payments made on it.

Unverified List
A list published by the Department of Commerce’s Bureau of Industry and Security. It contains the names of foreign individuals whose participation in transactions may have failed to follow U.S. export control regulations. The Bureau has not been able to conduct pre-license checks or post-shipment verifications of the transactions. Click here for the Unverified List

Value Added Tax (VAT)
VAT is a consumption tax levied on goods and services at each step of the production/distribution cycle. An indirect tax, VAT is paid by manufacturers, distributors and retailers when they receive goods in their inventories. Businesses are able to recover VAT payments through tax deductions, with the cost of the tax ultimately paid by the end-consumer. More than 100 countries worldwide have VAT systems in place, including Canada, New Zealand, Japan, Australia and the European Union. VAT rates can vary from 3.6 percent to 25 percent of a good's total value.

Vendor-bridging
When a company has been cut off from one supplier and turns to a new vendor to purchase products and/or services.

Wholesale Lockbox
A third party collection service that collects business-to-business payments from a lockbox dedicated to receiving payments from these businesses. This is typically a high-dollar, low volume payment lockbox.

Wire Transfer
Method of payment in the form of an electronic transfer of funds (EFT) between the payer (the company) and recipient (the vendor). A wire transfer costs approximately $10 -$30 per transaction. A Wire transfer is faster than ACH but more expensive.

Work Flow
Refers to the technology which uses electronic systems to manage and monitor business processes, allowing the flow of work between individuals to be defined and tracked; moving information in document form according to defined processes; tracking the process of creating, reviewing and distributing documents for action.

Working Capital
The available short-term liquidity (excluding loans like line of credit) a business has for day-to-day operations; calculated by subtracting current liabilities from current assets.

Z-Scores
A family of statistical models used to calculate the probability a company will file for bankruptcy. The original Z-Score model only sampled publically-traded manufacturing companies. Z' (Z Prime) included manufacturing and privately-held organizations. Z?'s (Z Double Prime) samples were compiled from manufacturing and non-manufacturing firms, such as retailers and wholesalers, and companies located outside the U.S.

Zombie Debt
Bad debt that is so old the borrower may have forgotten he or she owed it. It may have been given up on by the company to which it was owed. Zombie debt can haunt a debtor if a debt collector buys the debt for a low price from the company in attempt to recover the owed funds.