A
APRAPR (annual percentage rate) is the total yearly cost of borrowing —…AccrualAn accrual records an expense incurred or income earned before any…Accruals: What They Are and Why They Matter for Your Company AccountsAn accrual is an accounting entry that records a cost or income in…Aged creditorsAged creditors is the mirror of aged debtors — the report showing…Aged debtorsAged debtors is the report that groups the money customers owe you by…AmortisationAmortisation is the process of repaying a loan in regular instalments…Annual accountsAnnual accounts (statutory accounts) are the formal, once-a-year…Annuity (loan repayment)An annuity repayment is a loan repaid in equal, regular instalments,…Arrangement feeAn arrangement fee is a one-off charge a lender makes for setting up…ArrearsArrears are payments that are overdue — money your business owes that…Arrears in Business Lending: Meaning and ManagementArrears arise when scheduled loan payments are not made by their due…Asset financeAsset finance lets a business acquire equipment, vehicles or…Asset-based lending (ABL)Asset-based lending is revolving finance secured against a pool of…
B
Bad Debt: Write-Offs, Provisions and the Impact on Company AccountsBad debt is money owed to a business that is unlikely ever to be…Bad debtBad debt is money owed to your business that you no longer expect to…Balance sheetA balance sheet is a snapshot of what your business owns and owes at…Balloon paymentA balloon payment is a large lump sum due at the end of a finance…Bank reconciliationBank reconciliation is the routine of matching your accounting…Base rateBase rate is the headline interest rate set by the Bank of England,…Break-even pointThe break-even point is the sales level where revenue exactly covers…Bridging loanA bridging loan is short-term finance used to cover a gap until a…Bullet Repayment — Business Finance GlossaryA bullet repayment is the full return of principal in a single lump…Bullet loanA bullet loan is one where you pay only interest during the term and…Burn rateBurn rate is the speed at which a company spends through its cash…
C
Capex vs opexCapex is money spent acquiring or improving long-term assets; opex is…CapitalCapital is the money, funding and valuable assets a business holds…Capital Expenditure (CapEx): What It Means and How It Flows Through Your AccountsCapital expenditure is money spent on acquiring or improving…Capital and interestCapital and interest are the two components of a loan repayment: the…Cash conversion cycleThe cash conversion cycle measures the days between a company paying…Cash flowCash flow is the movement of money into and out of your business over…CollateralCollateral is an asset a borrower pledges to a lender as security for…Contribution marginContribution margin is what each sale contributes towards fixed costs…Contribution marginContribution margin is what's left from a sale once you take off the…Cost of capitalCost of capital is the blended rate a business effectively pays to…Cost of goods sold (COGS)Cost of goods sold (COGS) is the direct cost of the products or…County court judgment (CCJ)A county court judgment (CCJ) is a court order to pay a debt, issued…CovenantA covenant is a promise or condition written into a loan agreement…Covenant (Loan)A loan covenant is a contractual obligation embedded in a facility…Credit facilityA credit facility is an arrangement that lets a business borrow up to…Credit limitA credit limit is the maximum amount a company can borrow on a…Credit utilisationCredit utilisation is the proportion of your available credit that…Creditor daysCreditor days measure the average time your business takes to pay…Creditor days (DPO)Creditor days, or days payable outstanding (DPO), is the average…CreditworthinessCreditworthiness is a measure of how likely a business is to repay…Cross-Default — Business Finance GlossaryA cross-default clause provides that a default under any other…Current Ratio: Formula, What It Shows, and Healthy Benchmarks for UK CompaniesThe current ratio divides current assets by current liabilities to…Current assetsCurrent assets are the things a business owns that it expects to…Current liabilitiesCurrent liabilities are the amounts a business owes and must pay…Current ratioCurrent ratio measures whether a company's short-term assets are…
D
DebentureA debenture is a legal document that secures a loan against a…Debt Restructuring: Business Options in the UKDebt restructuring is the process of renegotiating the terms of…Debt service coverage ratioThe debt service coverage ratio (DSCR) measures whether a business…Debt-to-equity ratioDebt-to-equity ratio compares how much a company has borrowed with…Debtor Days: Formula, What It Measures, and How to Improve Collection SpeedDebtor days — also called days sales outstanding — measures the…Debtor daysDebtor days measure the average time your customers take to pay — the…Debtor days (DSO)Debtor days, or days sales outstanding (DSO), is the average number…DefaultDefault is when a borrower fails to meet the terms of a loan — most…Default in Business Lending: Triggers and ConsequencesDefault occurs when a borrower breaches a material term of a loan…Depreciation: Methods, Accounting Treatment, and the Difference from Capital AllowancesDepreciation is the systematic allocation of a fixed asset's cost…Director's loan accountA director's loan account records money moving between a director and…DrawdownDrawdown is the act of taking money from a loan or credit facility…Drawdown — Business Finance GlossaryA drawdown is the formal act of requesting and receiving funds under…Due Diligence in Business Lending and AcquisitionsDue diligence is the structured process of verifying financial,…Due diligenceDue diligence is the structured investigation a lender, investor or…
E
EBITDAEBITDA (earnings before interest, tax, depreciation and amortisation)…Early payment discountAn early payment discount is a small reduction a supplier gives for…Early repayment chargeAn early repayment charge (ERC) is a fee some lenders apply when you…EquityEquity is the owners' residual stake in a business: the value of its…
F
FacilityA facility is a formal arrangement under which a lender makes a…Facility Fee — Business Finance GlossaryA facility fee is a periodic charge levied on the total committed…Factor RateA factor rate is a simple multiplier applied to a business advance to…Factor rateA factor rate is a fixed multiple — typically between 1.1 and 1.5 —…FactoringFactoring is a form of invoice finance in which a business sells its…Financial Covenants in UK Business Loan AgreementsFinancial covenants are contractual ratios or thresholds in a loan…Fixed Charge: Asset Security in UK Business LendingA fixed charge is a security interest attached to a specific…Fixed Costs: Definition, Examples, and Why the Fixed/Variable Split MattersFixed costs are business expenses that remain constant in total…Fixed chargeA fixed charge is security a lender takes over a specific,…Fixed vs variable costsFixed costs stay broadly the same whatever you produce; variable…Flat rateA flat rate charges interest on the original loan amount for the…Floating Charge: Security Interest in UK Business LendingA floating charge is a form of security over a class of assets that…Floating chargeA floating charge is security a lender takes over a changing pool of…
G
GearingGearing is the ratio of a business's debt to its equity, showing how…Gearing ratioThe gearing ratio compares a company's debt with its equity — high…Grace periodA grace period is a window at the start of a facility, or after a…Gross marginGross margin is gross profit as a percentage of revenue — how much of…Gross marginGross margin is revenue minus the direct cost of sales, expressed as…GuaranteeA guarantee is a legally binding promise by a third party to repay a…GuarantorA guarantor is a person or company that agrees to repay a debt if the…Guarantor and Personal Guarantees in UK Business LendingA guarantor is a person or entity that agrees to be liable for…
H
I
Indemnity in Business Finance: Meaning and Key DifferencesAn indemnity is a primary, standalone obligation to hold another…Input VATInput VAT is the VAT your business pays on its purchases, which you…InsolvencyInsolvency is the state in which a company cannot pay its debts as…Insolvency: Types and Process for UK BusinessesInsolvency is the state in which a company cannot pay its debts as…InstalmentAn instalment is one of the regular scheduled payments that repay a…Intercreditor Agreement — Business Finance GlossaryAn intercreditor agreement is the contract between two or more…Interest coverInterest cover is the ratio of a company's operating profit to its…Invoice discountingInvoice discounting lets a business borrow against unpaid invoices to…
L
LeverageLeverage is the use of borrowed money to fund a business, amplifying…LienA lien is a legal right to retain possession of another party's…Limited liability partnership (LLP)A limited liability partnership (LLP) is a partnership whose members…LiquidityLiquidity is how readily a business can convert assets into cash to…Liquidity: What It Means for a Business and How Directors Manage ItLiquidity is a measure of how readily a business can convert assets…Loan-to-value (LTV)Loan-to-value (LTV) expresses how much you are borrowing as a…
M
Management accountsManagement accounts are internal financial reports, prepared monthly…MarginMargin is the fixed percentage a lender adds on top of a reference…Marginal reliefMarginal relief is the mechanism that gradually raises the effective…Material Adverse Change (MAC) — Business Finance GlossaryA material adverse change clause allows a lender to refuse drawdown…MaturityMaturity is the date on which a loan or facility reaches the end of…Merchant cash advanceA merchant cash advance is a lump sum of finance repaid automatically…Mezzanine Finance — Business Finance GlossaryMezzanine finance is a hybrid layer of capital that ranks below…
N
Net MarginNet margin is the percentage of revenue that remains as profit after…Net Present Value (NPV): What It Means for Business FinanceNet present value (NPV) is a method of evaluating an investment by…Net marginNet margin is the profit left at the very bottom of the accounts —…Net working capitalNet working capital is your current assets minus your current…Non-Utilisation Fee (Commitment Fee) — Business Finance GlossaryA non-utilisation fee — also called a commitment fee — is charged on…
O
Origination feeAn origination fee is an upfront charge a lender applies for…Output VATOutput VAT is the VAT your business adds to its sales and charges…OverdraftAn overdraft is a flexible borrowing facility on a business current…Overdraft (Business)A business overdraft is a revolving credit limit attached to a…Overtrading: What It Is, Warning Signs, and How Growing Businesses Can Avoid ItOvertrading happens when a business takes on more revenue than its…
P
Personal guaranteeA personal guarantee is a director's legally binding promise to repay…Personal guarantee insurance (PGI)Personal guarantee insurance (PGI) is cover a director buys to repay…PrincipalPrincipal is the original sum of money borrowed on a loan, before any…PrincipalIn business lending, principal is the original capital sum advanced…
R
ReceivablesReceivables (or accounts receivable) are the amounts your customers…Reducing balanceReducing balance means interest is charged only on the outstanding…RefinancingRefinancing is replacing one or more existing debts with a new…Repayment holidayA repayment holiday is an agreed, temporary pause in loan repayments…Retained Earnings: What They Are and How They Build Over TimeRetained earnings are the cumulative net profits a limited company…RetentionA retention is a percentage of a payment a client withholds as…Return on Investment (ROI): A Plain Guide for UK DirectorsReturn on investment (ROI) is a ratio expressing the net gain from an…Revolving creditRevolving credit is a flexible facility with a set limit that you can…RunwayRunway is how long your cash will last at the current rate of…
S
Secured loanA secured loan is borrowing backed by a specific asset — property,…SecurityIn lending, security is an asset or legal claim a lender can enforce…Security Trustee — Business Finance GlossaryA security trustee holds security interests on behalf of a group of…Senior Debt — Business Finance GlossarySenior debt is the most senior layer in a company's borrowing…Solvency: What It Means Under UK Company LawSolvency is a company's ability to meet its financial obligations as…Subordinated Debt — Business Finance GlossarySubordinated debt ranks below senior obligations for repayment and…
T
Taxable profitTaxable profit is the adjusted profit figure your corporation tax is…Term SheetA term sheet is a non-binding summary document that sets out the…Term loanA term loan is a fixed lump sum borrowed upfront and repaid over a…Total cost of creditThe total cost of credit is everything you pay to borrow money over…Trade creditTrade credit is the time a supplier gives you to pay after delivering…TurnoverTurnover is your business's total sales income over a period, before…Turnover: What It Means, How It Differs from Profit, and Why Both MatterTurnover — also called revenue or sales — is the total income…
U
V
VAT returnA VAT return is the report — usually quarterly — that tells HMRC how…Variable Costs: How They Behave, Examples, and Their Role in Pricing DecisionsVariable costs are expenses that rise and fall in direct proportion…Variable rateA variable rate is an interest rate that can change over the life of…
W
Weighted Average Cost of Capital (WACC) ExplainedWeighted average cost of capital (WACC) is the blended rate a company…Working capitalWorking capital is the money a business has available to fund its…Working capital cycleThe working capital cycle is the loop your cash travels through the…Working-capital cycleThe working-capital cycle is the time it takes for a pound spent on…Write-offA write-off is the removal of a debt or asset from a company's…
Y
Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.