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Glossary of Credit Management Terms. Letter
C
Capital:
The general idea behind the word ‘capital’
is the “money you started with” or “the money
you have”, but the term is often loosely used so its meaning
should always be clarified. Combined with other words it can have
a more precise meaning e.g:
Nominal
capital: is the amount of money that can be put into a Limited
or Unlimited company in the form of shares. For Public companies
this is known as a Authorised
capital (the term Registered
capital is also sometimes used).
Capital fully employed:
The company’s resources are fully extended;
shortage of cash. This is one of the terms used by banks when answering
status enquiries.
Cash:
Cash in hand, either petty cash or current
accounts at the bank.
Cash flow:
The regular receipt of money to cover outgoings
fully.
CCA:
Consumer Credit Association.
CCA:
Consumer Credit Act, 1974
CCJ:
An abbreviation for County
Court Judgment
CCTA:
Consumer Credit Trade Association
Certificate of incorporation:
When a new Limited
company (or Unlimited company)
is being formed and all the formalities complied with to the satisfaction
of the Registrar of Companies, he will issue a Certificate of Incorporation
which then gives the Company its legal existence.
Charging order:
A form of proceedings to enforce a judgment,
which attaches to property, normally land or shares, owned by the
debtor. The charging order operates like a mortgage in that it is
usually used to secure payment by instalments. Upon default an order
for sale may be made.
C.O.D:
Cash on delivery; payment is due upon delivery
of the goods.
Collateral security:
Security in the form of stocks and shares,
deeds of property or other acceptable substitutes which are deposited
by a borrower as a guarantee that a loan will be repaid.
Company number/Company index number/Company
Registration Number:
When a Limited company is formed it is given
a Company Number, individual to itself, which it keeps, even if
it changes its name, until it is dissolved. All companies are required
by law to show this number on their letter headings.
Compound interest:
Interest calculated on the principal sum
of a debt, plus any interest that has accrued in previous periods.
Each time interest is added, the total becomes the new sum on which
subsequent interest is calculated.
Conditions of sale:
The contractual terms, usually in writing,
upon which goods are sold and services supplied. Also known as Terms
of Trade and Terms and Conditions.
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.
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.
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.
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