LENDER As a factoring company, Vertex Financial is a creditor.
CLIENT The debtor is a business that purchases solutions from Vertex Financial.
ADVANCE RATE The amount deposited into your account upfront. The amount is a percentage of the invoices; the remaining percentage not deposited is held in a reserve account until your customer pays off the invoice.
FACTORING AGREEMENT An agreement made between Vertex Financial and you that includes how much the advance rate is, service fees, and the length of the factoring service.
FACTORING FEE A fee that is assessed the account debtor (your company). The fee helps cover the collection risk assumed by the account creditor (Vertex Financial). This fee is based on different factors, including invoice size, the credit rating of the invoiced customer, and how long the invoice may remain unpaid.
INVOICE FACTORING The purchasing of a company’s invoices by a financial company (in this case Vertex Financial).
NON-RECOURSE FACTORING With this type of factoring, Vertex Financial assumes the risk for invoice nonpayment. You would receive a lower advance rate, but the benefit of this type of factoring is that you are relieved of any responsibility for the invoice after we purchase it.
REBATE The rebate is the unpaid amount left on the invoice, minus fees, after Vertex Financial pays you the advance rate. We deposit this amount into your account once the invoice is paid.
RECOURSE FACTORING With recourse factoring, you assume responsibility for any unpaid invoices after the recourse period.
RESERVE The reserve equals the difference between the advance rate provided for an invoicing contract and the total invoice.