-NeeBo Glossary-

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  • Cancellation clause –this is a provision in a lease or other contract that spells out under what conditions the parties can call off the deal.

  • Capital – money that is used to make money; for example, to buy a business or a rental property.

  • Capital gain – profit on the sale of a capital asset. Capital gains receive more favorable tax treatment than regular income. Depending on your tax bracket and on how long you held an asset before selling it, you may pay about one-third to one-half less tax than you would have paid on the same amount if you had earned it as salary.

  • Capital gains tax – a tax on profits from the sale of investments or real estate.

  • Cash method–this can also be called cash basis. The form of accounting in which you report income in the actual year you receive it and deduct expenses in the year you pay. Most individuals use this method. Under this system, if you built a deck and billed the client in December of one year but didn't receive the check until January of the next year, it would be counted as the second year’s income, not the prior year.

  • Charge Back–an amount of money owed to the factor or "charged back" to the client when the factor is unable to collect the Account Receivable that was factored, based on an agreed upon debtor non-payment clause in the Factoring contract. The factor will typically take this out of a reserve release or an advance.

  • Collateral – the property used as security for a loan. If the debt is not paid, the lender has the right to sell the collateral to recover the value of the loan.

  • Commercial lending – lending to a business.

  • Contract – a legal, written agreement between two parties, or more, to perform certain services in exchange for money or other remuneration; also used to describe a type of funding in which specific services are performed for a fee. Contracts are often awarded on the basis of a Request for Proposal (RFP.)

  • Credit – a contract to receive money, goods, or services now, paying for them over time at an established interest rate.

  • Creditor – refers to the party or business to whom money is owed. Customer–or the account debtor, is the party to whom the original products or services were provided and to whom the factor shall then collect monies from under the terms and conditions of the factored invoice.

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