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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
Secured charges

Secured charges are created when a company borrows money against security. The company is then required to register information about such charges at the Companies' Registry. The reason for this is to show ordinary unsecured creditors that in the event of a company being dissolved, someone else has prior claim over some or all of the assets of the company.

Secured creditor

A creditor who holds title to an asset of his debtor, which can be held as security for a debt and sold if necessary to recover the debt (e.g. a company taking out a mortgage with a bank to create overdraft facilities, will put up its property as security for the bank, to cover the eventuality of being unable to pay back any money owed).


Collateral provided by a debtor to support his or her promise to pay. A creditor may require some rights over valuable property in order to lend or supply, e.g. a charge over land. The security will be used to satisfy that creditor in the event of default.

Selling/administration expense

The expenses other than financial or payroll e.g. rates, telephone, travel, etc.


A form of defence whereby a debtor may acknowledge the claimant's demand but pleads his own claim in order to extinguish the claimant's demands either in full or in part.

Share premium

The amount paid to a company by shareholders, in cash or other consideration, over and above the nominal value of shares issued to them.


The nominal capital of a Limited company is divided into shares which may be in units of £1 or more, or 50p or as small as 0.05p. There are two main types of shares, ordinary shares and preference shares.

Ordinary shares: These generally carry no fixed rate of dividend, unless they are deferred ordinary shares. They may receive a dividend, in accordance with the amount of net profit made by the company (or deriving from previous years' profits retained in the business) but these days many private companies do not pay dividends, retaining all the profits for the business.

Preference shares: These normally carry a fixed rate of dividend which is paid before the dividend on Ordinary shares. There are many types of preference shares, such as non-cumulative, cumulative, redeemable, etc. Preference shares sometimes do not carry voting rights.

Shell company

A limited company that has never started, or has ceased its trading activities (e.g. a subsidiary transferring its business to its parent or a fellow subsidiary), but has not been dissolved. Annual returns are still filed, but the accounts state that the company did not trade during the year. A company is kept on the "live index" in this way, so that it can be easily reactivated if it wants to start trading again in the future. It is also known as a Dormant company.

Sole trader/proprietor

An individual who runs an unincorporated business on his or her own. Generally, a sole proprietor of a business is known as a sole trader and a sole proprietor of a professional practice is known as a sole practitioner.

Start-up scorecard

A scorecard which has been designed rather than statistically derived. These usually apply in situations where there is no (or insufficient) data available from which to develop a statistical scorecard. This is typically for new product launches. Also known as Generic scorecards.

Statutory company

A company formed by a special Act of parliament.

Statutory interest

The right to interest on commercial late payment under the Late Payment of Commercial Debts (Interest) Act 1998. For debts pertaining to contracts made between 1st November 1998 and 6th August 2002, the legislation is referred to as the Late Payment of Commercial Debts [Interest] Act 1998. For debts pertaining to contracts made on or after 7th August 2002, the legislation is referred to as the Late Payment of Commercial Debts [Interest] Act 1998, as amended and supplemented by the Late Payment of Commercial Debts Regulations 2002.

Stock and work in progress

Represents the current estimated value of stocks after allowing for any deduction in respect of damaged or obsolete stock together with the Directors' assessment of the value of the work in progress.

Stock turnover

Measures sales turnover as a ratio of stocks, and is intended to show how fast stock is moved. The higher the score, the more liquid the position.


A company controlled by another company, the controlling company holding over 50% of the issued voting shares of the subsidiary company.

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