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The A to Z Glossary of Credit Keywords

There are 166 entries in this glossary.
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Term Definition
Acid test ratio

A term used to measure the short-term ability of a business to meet its obligations. It is calculated as current assets, less stocks and work in progress, divided by current liabilities (also known as Quick ratio).

Administrative receiver

Appointed by a creditor under a specific power arising under the terms of a fixed or floating charge. The receiver's duty is to realise the value of the asset charged for the benefit of his creditor/client. A company can continue to trade while in receivership but it cannot prevent a petition for its winding-up being presented to the court. An administrative receiver must be an insolvency practitioner.


A person authorised expressly or by implication to act for another, called the principal, who is, as a result of the authority delegated by him, bound by the acts of the agent.

Annual return

By law, a limited company must each year draw up an annual summary of its capital and shares, together with an up-to-date list of directors and members (shareholders) with their names, addresses and number of shares held, occupation and other directorships of a director and statement of the indebtedness of the company in respect of secured charges.

Associated companies:

Companies which by some common link or bond are considered Associated. The most common occurrence is directorate associations.

Auditors report

A statement from the auditors (accountants) that they have examined a business' books of accounts to check whether they have been properly kept and whether they represent a true and fair view of the company's trading.

Authorised Capital

This is the amount of money that can be put into a Public company in the form of shares. For a Limited or Unlimited Company this is known as Nominal capital (the term Registered capital is also sometimes used.)

Bad debt

Money owed to a company which is not recoverable and therefore written off as a loss.

Bad debt ratio

A comparison between total sales and those for which payment is not recoverable and therefore written off as losses.

Balance sheet

A statement showing the assets and liabilities of a business at a certain date. The balance sheet forms part of the accounts of a company, and is normally prepared annually.

Bank reference

The information returned as a result of a written request which is sent to the applicant's bank asking for its opinion regarding the financial standing of the applicant. The response can take one or two weeks to be received and will be couched in predefined phraseology.


A person is declared bankrupt by a Court which may happen at his own request or as a result of action taken by a creditor. A receiver will be appointed and assets be realised as effectively as possible.

Behaviour scoring

A scoring system for assessing the continued risk on an existing loan account. The score is recalculated regularly (typically monthly) and is used in both collections and marketing activities.

Bill of Exchange

Defined by Bills of Exchange Act 1882,s. 1 as an unconditional order in writing, addressed by one person (the drawer) to another (the drawee and afterwards acceptor), signed by the person giving it, requiring the person to whom it is addressed to pay on demand, or at a fixed or determined future time, a sum certain in money to, or to the order of, a specified person or to bearer (payee).

Bill of lading

A receipt from a carrier given to a shipper or consignor, undertaking to deliver the goods upon payment of the freight, to the person described in the bill. The delivery of this document to the consignee is sufficient to transfer property in the goods. It is a document of title and a document of carriage.

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