Category: Glossary
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Ship To Process: How Logistics Connects with Finance
Introduction If you’ve ever looked at a purchase order or an invoice, you’ve likely come across the Ship To process, a small detail that keeps logistics and finance aligned.It might look like a simple address field — but it’s actually one of the most important details that keeps your business…
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What is Credit Risk Reduction?
Definition : Credit risk reduction refers to the strategies and practices implemented by businesses to minimize the likelihood of financial losses due to unpaid debts or defaults from clients, customers, or partners. In the context of accounts receivables, credit risk reduction is essential for maintaining cash flow, securing profits, and…
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What is a Credit Risk Scoring Model?
Credit Risk Scoring Model Definition : A Credit Risk Scoring Model is a mathematical tool lenders, financial institutions, and credit agencies use to evaluate the likelihood of a borrower defaulting on a loan or credit obligation. This model assigns a numerical value, or “credit score,” based on an individual’s or…
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What are Credit Sales?
Definition Credit sales refer to transactions in which a business allows its customers to purchase goods or services without paying immediately. Instead, the customer agrees to pay the business at a later date, typically within a specific time frame. This practice is common in industries where businesses want to build…
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What is a Credit Scoring Engine?
Credit Scoring Engine Definition : A Credit Scoring Engine is a sophisticated algorithm-driven system designed to evaluate the creditworthiness of individuals or businesses. It leverages a wide range of data points, including financial history, transaction behavior, and other relevant factors, to calculate a credit score that reflects the likelihood of…
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What is a Credit Union?
Credit Union Definition : A credit union is a nonprofit, member-owned financial cooperative that provides a wide range of financial services. Unlike traditional banks, which are typically for-profit institutions, credit unions operate with the primary goal of serving their members. As a member, you become a part-owner, giving you a…
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What are Current Liabilities?
Definition : Current liabilities are a company’s short-term financial obligations that are due within one year or within the normal operating cycle of the business—whichever is longer. These liabilities typically arise from a company’s day-to-day operations and are settled using current assets, such as cash or accounts receivable. In accounting,…
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What is Current Yield?
Definition : Current yield is a financial metric used to measure the annual income (interest or dividends) generated by a security—most commonly bonds or dividend-paying stocks—relative to its current market price. It is expressed as a percentage and provides investors with a quick snapshot of the income return they can…
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What is Customer Master?
Customer Master Definition : A Customer Master is a central repository of detailed and structured information about a company’s customers. It acts as a comprehensive, authoritative database that consolidates all customer-related data in one place, allowing businesses to have a single view of each customer across various systems. The master…
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What are Doubtful Accounts?
Doubtful accounts refer to outstanding accounts receivable that a business believes may not be fully collectible due to a customer’s potential inability or unwillingness to pay. These receivables are not yet written off as bad debts but are considered risky and uncertain in terms of collection. Businesses typically identify these…