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Accounts Receivable Factoring
The process by which a financial institution or a factor buys accounts receivable from a business (the client) at a discount and takes in return an assignment of the accounts receivable. Factoring is done with or without recourse. Factoring with recourse means that if the factor is unable to collect from the debtor, the seller (the client) must repay the money advanced to it against the accounts receivable. Factoring without recourse means that the factor accepts the risk that the accounts receivable may be uncollectable.

Accounts Receivable Put Option (A/R Put)
Put Options cover non-payment of accounts receivable obligations due to a particular customer’s bankruptcy or liquidation (as applicable) that occurs during the contract period.

Bankruptcy
A filing for federal bankruptcy protection under Chapter 7 or Chapter 11 of the Bankruptcy Code.

Credit insurance
see “Trade Credit Insurance”

Credit Protection
A general term that could refer to any of the various credit protecting products, including, trade credit insurance, accounts receivable factoring and put options.

Credit Put Option
see “Accounts Receivable Put Option”

Factoring
see "AccountRecievable Factoring"

Hedge
A general term for an investment made in order to reduce the risk of adverse price movements, by taking an offsetting position

Liquidation
(i) a case under Chapter 7 of the Bankruptcy Code or (ii) a cessation of operations coupled with a liquidation of assets under Chapter 7 or Chapter 11 of the Bankruptcy Code.

Post Petition Put Option
An Accounts Receivable Put Option, referring to a customer that is not currently under bankruptcy protection and is at risk of a bankruptcy filing.

Prepetition Put Option
An Accounts Receivable Put Option, referring to a customer that is operating under bankruptcy protection and is at risk of liquidation.

Put option
see “Accounts Receivable Put Option”

Receivables Put Option
see “Accounts Receivable Put Option”

Trade Credit Insurance
Generally, a casualty insurance that protects a company’s commercial accounts receivable from unexpected and catastrophic losses.

Trade Receivables
see “Accounts Receivable”

Trade Receivables Put Option
see “Accounts Receivable Put Option”

Vendor Protection
see “Credit Protection”





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