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Commonly used terms in the Factoring domain


A transaction for purchasing receivables having originated from a Trade Agreement, which may include one or more of the services referenced below:

  • Financing the Supplier through an Advance Payment under an Invoice.
  • Collecting and ledgering the amounts collected in respect of Receivables originating from Invoices.
  • Incurrence of the risk of the Debtor’s non-payment.
  • Remittance, from the Factor to the Supplier, of the amounts collected in respect of assigned Receivables.
  • Other services explicitly agreed upon by the Parties.

A financial institution or a financial company which finances a fixed-term receivables of supplier and which takes over its place in relation to the debtor on the basis of the transfer of the receivables.

A merchant who delivers to a Debtor goods and/or services payable on a certain future date under Deferred Annuity terms versus issued invoices.

A Bulgarian merchant who purchases goods and/or services under Deferred Annuity terms and is obliged to pay on a certain future date the value of an Invoice issued to it.

Means payment due at a date following the date of the goods and/or services delivery, and their invoicing.

The amounts the Supplier is entitled to receive from the Debtor against the invoiced goods and/or services, which are subject to purchasing by the Factor under concluded Factoring contract.

The Supplier assignment to the Factor of Receivables which the Supplier has from the Debtor.

The financing which the Factor has furnished the Supplier with, being part of the invoice value.

The maximum amount of the Advance Payment which the Factor may make, upon its own discretion, for a Receivable assigned.

The Factor's right to require the supplier to pay the already advanced payment in case of non-payment from the debtor.

The residual part of the invoice value after the amount paid in the form of advance payments and from which the factoring company has already deducted the interests and other charges in accordance with the contract upon payment of the initial receivable. The Factor transfers this part to the customer's account.

Asset pledged as collateral in the factoring agreement that serves to offset the Factor in the event of non-payment by the debtor. In order to be accepted as Security, the asset must have a value and to be independent of the debtor's financial position.

Refusal and/or non-payment by the Debtor of Receivables under a Trade Agreement, or its objection, compensation request or third parties’ claims.

The maximum percentage of the value of the assigned Receivable up to which the Factor incurs the risk of non-payment by the Supplier.

The maximum amount, referred to in Application for special terms and conditions, up to which the Factor has incurred the risk of non-payment by the Factor-approved Debtors.

The overall maximum amount within which the Factor may make Advance Payments in favour of the Supplier for an individual Debtor approved by the Factor.

The overall maximum amount up to which the Factor may make Advance Payments in favour of the Supplier for all Debtors approved by the Factor.

The value of the service provided by the Factor hereunder, equal to the amount of the interest accrued on the Advance Payments (if any) for the period from their being made to the effectual collection of all fees and commissions accrued on the amount of the Receivables.

The charge as percent, calculated at the base of invoiced turnover of the supplier.

The interest rate applicable for each interest accrual period, formed from a variable Market Interest Reference Rate plus a fixed premium set out in the Contract and the Tariff.  AIR shall accrue as from the date of the Advance Payment disbursement on the basis of 360 days per annum for the actual number of days of using the Advance Payment (inclusive of the first day and exclusive of the last day of this period).

SOFIBOR, EURIBOR, LIBOR or another generally accepted standard interest rate of a different periodicity calculated and announced by an organization or institution other than the Factor.

The interest determined as a percent, accrued for each day of delay in case of non-payment on the maturity by the Debtor.

All facts, information, decisions or data of a factoring company related to individual clients, their personal information, financial status, business, management, ownership structure, business network or balance of their accounts in financial institutions, or the details of any of the contracts concluded with such financial institutions.

Any event relating to the Debtor, wherefor the Supplier has become aware and which has resulted in the deterioration of the manner of payment and the Debtor’s financial situation.

shall be deemed to have occurred in the following instances:

a)             Liquidation or commencement of insolvency proceedings or court-declared insolvency due to asset insufficiency provided that the Supplier’s receivables have been included in the creditors list;

b)             Reaching an out-of-court Factor-approved settlement with all creditors;

c)             Forcible execution on the Debtor’s property which had not fully satisfied the Supplier’s receivables;

d)             An instance has occurred in the Debtor’s domicile which, in legal terms, corresponds tо the facts set out in items a) through с).