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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
Consortium

Usually a group of companies or firms working together on a project too large or complex for a single company to undertake; or several concerns forming a temporary joint organisation in order to achieve a common goal.

Contractual interest

Interest on late payment as stipulated in a seller's contract with the debtor. The seller should decide the rate of interest and credit period for the debtor, and should obtain agreement from the debtor to meet these terms. A seller may be challenged in a court of law if either the rate of interest or the length of the credit period are deemed unreasonable. See also Statutory Interest.

Controlling interest

A company is said to have a controlling interest in another company when it holds over 50% of the shares carrying voting rights.

County Court

The County Courts, since June 1991, have had jurisdiction to hear all liquidated claims. From 26 April 1999, under the new Civil Procedure Rules, there are different procedures applicable to claims, depending on their value, as follows:

1. small claims track: covering all claims up to £5,000
2. fast track: covering all claims between £5,000 and £15,000
3. multi-track: covering all claims above £15,000
County Court Judgments

A concern or person may take another to Court for non-payment of debt, and judgment will be given in many cases against the claimant (the party bringing the action). A County Court Judgement is given for a particular amount, which may be for all or part of the original claim. In England and Wales, the County Courts are used for many of these cases.

Court appointed receiver

In certain circumstances the court may appoint a receiver to execute a judgment or to protect property, which is subject to a dispute. The receiver appointed by the court must comply with the order of the court in which his powers and duties will be defined. A court appointed receiver is an officer of the court and not an agent of the company or a creditor and will be personably liable on contracts entered into in the execution of his functions.

Credit

The word 'credit' is derived from the latin word 'Credo', its meaning being 'I believe'. Credit is the power to obtain finance, materials on trust by promising to pay for them at some definite time in the future.

Credit insurance

Insurance against bad debts. This form of insurance has expanded since it became the practice for the insured to accept liability for an agreed portion of the debt, as otherwise there would be little to inspire the creditor to hurry the debtor for payment.

Credit reference

The information returned as a result of an enquiry to a credit reference agency. Information will be compiled from the electoral roll, CCJ data and commercial enquiries.

Credit scoring

A method that assigns a 'score' to various attributes of a potential debtor for assessing statistically the likelihood that credit will be repaid punctually.

Current assets

Cash or other assets readily convertible into cash (e.g. stocks, debtors, short term investment).

Current liabilities

Amounts which fall due for payment within 12 months of the Balance Sheet date (e.g. creditors, bank overdrafts, current taxation, etc.).

Current ratio

A calculation made to show the liquidity of a business. Obtained by dividing current assets by current liabilities. The higher the ratio, the greater the protection for the trade creditors.

Cut-off score

That score which represents the boundary between accepting and rejecting an application for credit. This figure is movable and is determined by the credit grantor.

D.S.O.

Days sales outstanding; an average guide to the length of time it takes a company to receive payment for goods sold. It is a measurement obtained by calculating the number of days' or months' sales that are owed to the company.

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