The credit glossary: the formal terms and the slang

Credit has two vocabularies: the one in the contract and the one on the phone. This glossary covers both — the formal terms you'll meet in credit reports, loan documents and insolvency notices, and the language credit teams actually speak. Slang entries are marked (slang). UK usage throughout; where a legal process belongs to one part of the UK — England and Wales, Scotland or Northern Ireland — the entry says so.

Trading on credit: the basics

Trade credit — Buying goods or services now and paying later, on agreed terms. The biggest source of short-term business finance in the UK — larger than bank lending — and mostly extended by suppliers, not banks.

Trade account / credit account — An account with a supplier that lets a business buy on credit terms instead of paying upfront. "Opening an account" is the moment a supplier becomes a lender.

Credit limit — The most a supplier or lender will let one customer owe at any one time.

Payment terms / credit terms — How long the buyer has to pay, and on what conditions. See "Net 30" and "EOM" below.

Open account — Trading where goods ship before payment on the strength of the relationship, rather than through a payment instrument like a letter of credit. Most trade credit works this way. Open account doesn't have to mean unprotected — retention of title, guarantees and credit insurance can all sit behind it.

Accounts receivable (AR) / trade debtors — Money customers owe the business. "Receivables" in a lender's mouth, "debtors" in an accountant's, "the ledger" in a credit office.

Accounts payable (AP) / trade creditors — Money the business owes its suppliers. Your receivables are someone else's payables.

Creditworthiness — The likelihood that a customer can and will meet its obligations. Two different questions — ability and willingness — hiding in one word.

Credit risk — The risk of loss caused by a customer failing to pay as agreed.

Credit policy — The written rules governing applications, limits, reviews, stops and collections. The difference between a credit function and a series of individual opinions.

Credit assessment / credit decision — The evidence-gathering, and the approve, decline or approve-with-conditions that comes out of it.

Credit application — The form a business fills in to ask for a trade account. Usually asks for company details, bank details and trade references.

Trade references — Other suppliers vouching that a business pays on time. Worth knowing: a business picks its own referees, so it picks the suppliers it pays best.

Credit control — The function that decides who gets credit, how much, and then makes sure the money comes in.

Credit controller / credit manager — The people who run credit control. The controller chases the money; the manager sets the policy. In small firms it's the same person, often also doing three other jobs.

Exposure — Everything at risk with one customer right now: unpaid invoices, plus goods ordered but not yet invoiced, plus anything in transit. Exposure builds after the decision — it's usually highest long after the credit check that approved it.

Group exposure / aggregate exposure — Total risk across connected companies, branches or accounts. Three healthy-looking limits to three subsidiaries can be one dangerous exposure to a single group.

Credit appetite / risk appetite — How much risk a lender or supplier is willing to take on, and with whom. Appetite changes with the economy; limits should change with it.

Overtrading — Growing sales faster than your cash can support. One of the few ways a profitable business goes bust.

Payment terms and invoicing

Net 30 / net terms — Payment due 30 days from the invoice date. Net 60 and net 90 work the same way.

EOM (end of month) — "30 days EOM" means payment is due 30 days after the end of the month the invoice was raised in. An invoice dated 2 June on 30 days EOM isn't due until 30 July.

Pro forma invoice — A preliminary document inviting payment before goods are supplied. Not a VAT invoice — the proper invoice follows payment or supply, and only that one supports a VAT reclaim. (slang use: "put them on pro forma" — a credit team's way of withdrawing credit without closing the account.)

Cash in advance (CIA) / cash with order (CWO) / cash on delivery (COD) — The no-credit options: pay before, pay when ordering, pay at the door.

Early settlement discount — A discount for paying early, written like "2/10 net 30": 2% off if you pay within 10 days, full amount due in 30.

Purchase order (PO) — The buyer's formal instruction to supply. "No PO, no pay" (slang) — many large firms won't pay an invoice that doesn't quote a PO number, however good the goods were.

Invoice — The formal request for payment. The clock on payment terms usually starts here.

Credit note ("CN") — A document reducing what's owed, issued for returns, errors or disputes.

Debit note / deduction / chargeback — The buyer's version: a reduction or claim it raises against an invoice for shortages, damage, returns or agreed rebates. Often taken first and explained later.

Statement (of account) — A monthly summary of everything a customer owes across all invoices. Many businesses pay from the statement, not the invoice.

Remittance advice — The buyer's note saying which invoices a payment covers. Without it, cash lands unallocated and the ledger turns to guesswork.

Self-billing — The buyer raises the invoice on the supplier's behalf. Common in haulage, construction and publishing.

Retention (construction) — Money the customer holds back — typically 5% — until the work is proven sound. Often the last cash a subcontractor ever sees from a job.

Application for payment — In construction, the contractor's valuation of work done to date, submitted for approval before an invoice or payment notice follows.

Pay-when-paid — A clause saying "we'll pay you when our customer pays us." Unenforceable in UK construction contracts since the Construction Act 1996, with one exception: insolvency further up the chain.

Stage payments / milestone billing — Payment in agreed chunks as work progresses, rather than one bill at the end.

Running the account: the day-to-day

Outstanding balance — Everything a customer currently owes, whether due yet or not.

Current / not yet due — Invoiced debt still within terms. Nothing wrong with it — yet.

Overdue / past due — Debt unpaid after its due date. Where credit control earns its living.

Order-to-cash (O2C) — The whole process from accepting an order to allocating the payment: check, order, delivery, invoice, chase, cash, allocation. Credit control is the risk brain inside it.

Credit utilisation / headroom / available credit — How much of a limit is in use, and what remains. A customer at 95% of limit with orders pending is a decision waiting to happen.

Held order — An order blocked pending credit approval — the account is over limit, overdue or flagged. Order release — letting it through.

Temporary limit / limit uplift — A short-lived increase to a credit limit, usually for a specific order or a seasonal peak. The danger is the word "temporary."

Watchlist / early-warning signal — Customers getting closer attention because something has changed: payments slowing, a director gone, cover pulled, a court claim filed. The watchlist is monitoring made visible.

Cash allocation — Matching money received to the invoices it pays. Unapplied cash — money received but not yet matched to anything.

Payment on account — Money received with no instruction about which invoices it settles. Better than nothing; messier than it sounds once a dispute arrives.

Payment plan / time to pay — An agreed schedule for clearing overdue debt. "Time to pay" is also HMRC's name for its own version.

Full and final settlement — Accepting a reduced payment in complete satisfaction of a debt. Get the wording exactly right — the words are the deal.

Collections vs recoveries — Collections is routine chasing on live accounts; recoveries is working distressed, defaulted or written-off debt. Different skills, different phone manner.

Expected credit loss (ECL) — The accounting estimate of future losses on receivables, required under IFRS 9. Provisioning for the loss before it happens, not after.

Recovery — Money collected against a debt already defaulted or written off. In the accounts, a pleasant surprise.

The slang of the credit office

On stop (slang) — No more orders until the account is paid. The credit controller's most powerful lever. "They've put us on stop" is a sentence that stops sites, vans and production lines.

Stop list (slang) — The list of accounts currently on stop. In some businesses it's printed and pinned up; in most it's the first thing sales complain about.

Off stop (slang) — Released to trade again, usually after payment or a promise worth believing.

On hold (slang) — Softer than on stop: orders pause while a query or an overdue balance gets sorted.

Over limit (slang) — The account has hit its credit limit and new orders need a decision, not a process.

Slow payer — A customer who always pays — eventually. Distinct from a bad debt, but slow payers are where bad debts come from.

Stretching (slang) — Deliberately paying suppliers late to fund your own cash flow. "They're stretching us to 90 days." Free finance for the buyer; a loan the supplier never agreed to make.

Short pay (slang) — Paying less than the invoice amount, usually with a deduction the supplier finds out about afterwards.

Knocking an invoice (slang) — Disputing it, sometimes fairly, often to buy time. A rush of queries from one customer just before month-end is rarely about quality.

Query / disputed invoice — The formal version of a knock. An invoice that won't be paid until the dispute is resolved — and the terms clock often stops with it.

"The cheque's in the post" (slang) — The classic stall. Modern variants: "it's with accounts", "the person who does payments is on holiday", "we've had a problem with the bank."

Promise to pay — A commitment to pay by a specific date, logged by the credit controller. A broken promise is the signal that matters — once promises stop meaning anything, the account has changed character.

Won't pay vs can't pay — The first question in collections. Won't-pays respond to pressure; can't-pays don't, because the money isn't there. Treating one like the other wastes time or destroys a customer.

Paying on the drip (slang) — Clearing a debt in small instalments. Sometimes agreed, sometimes just what turns up.

Gone away — Disappeared: mail returned, phones dead, premises empty. Triggers a trace.

Done a runner (slang) — Gone away, with intent.

Gone bust / gone under / gone pop / folded (slang) — Insolvent. Every credit office has its own preferred verb.

Phoenixing (slang) — A company fails owing its creditors, and the same directors start a near-identical business — often from the same premises, sometimes with a near-identical name — free of the old debts. Legal in some forms, notorious in all of them.

Fresh-air invoice (slang) — An invoice for goods or services that don't exist, usually raised to draw money from an invoice finance facility. Fraud, and one of the oldest kinds.

Teeming and lading — Using today's customer receipts to cover yesterday's hole in the ledger, endlessly rolled forward. An old bookkeeping fraud that surfaces when the person running it takes a holiday.

Aged debt / the ageing — Unpaid invoices grouped by how old they are: current, 30, 60, 90+ days. The ageing report is the credit office's daily weather map.

Sales ledger — Everything customers owe you. Purchase ledger — everything you owe suppliers. "The ledger" usually means the sales ledger.

Debtor days / DSO (days sales outstanding) — The average number of days it takes to get paid. The single most-watched number in credit control.

Creditor days — The average time a business takes to pay its own suppliers. Read alongside debtor days, it shows who is funding whom.

Bad debt — Money owed that won't be collected. A write-off is the accounting admission of it.

On tick (slang, older) — On credit. "They've been buying on tick for years."

Contra / set-off — Offsetting what you owe a business against what it owes you and settling the difference. "We'll do a contra" (slang).

Take a view (slang) — Override the normal rule after weighing the circumstances. "The score says no, but we'll take a view." Half of credit management lives inside this phrase.

Good for it (slang) — Believed able to pay — often on less evidence than the speaker implies. "They're good for it" has preceded a lot of bad debt.

Release the order (slang) — Let a credit-held order through. The daily tug-of-war between sales and credit, settled one order at a time.

Trade the balance down / work it down (slang) — Keep supplying selectively while shrinking the total exposure — enough to keep the customer trading, never enough to grow the debt.

Pull the terms (slang) — Withdraw credit and require payment upfront. See "put them on pro forma."

Reduce the line (slang) — Cut the credit limit.

Clean account (slang) — Nothing overdue, nothing disputed, nothing unallocated. Rarer than it should be.

Paying to terms — Paying by the contractual due date. The baseline that days-beyond-terms measures slippage from.

Name risk (slang) — Extending credit mainly because the customer is famous or looks substantial. Carillion was a name.

Robbing Peter to pay Paul (slang) — Paying one creditor with money withheld from another. From the outside it looks like slow payment; from the inside it's triage.

Long-firm fraud — Building a convincing payment record over months, then ordering heavily on credit and disappearing. Patient, professional, and aimed squarely at trade credit.

Bust-out (slang) — The end move: rapidly drawing down every available facility and supplier limit just before failure or disappearance. The long firm's final act — though it also happens at legitimate businesses that can see the end coming.

Chasing payment: collections and enforcement

Dunning — The sequence of chase letters and emails sent as an invoice ages. From an old word meaning to demand payment persistently.

Chasers (slang) — The calls and emails themselves. "I've sent three chasers."

Letter before action (LBA) — The formal warning that court proceedings follow if payment doesn't. Also called a "seven-day letter" (slang) after the usual deadline.

Statutory interest — Under the Late Payment of Commercial Debts (Interest) Act 1998, a business can charge 8% over the Bank of England base rate on late commercial payments, plus fixed compensation per invoice: £40 (debts under £1,000), £70 (£1,000 to £9,999.99) or £100 (£10,000 and over). Rarely charged, mostly because suppliers fear losing the customer.

Fair Payment Code — The voluntary UK code run by the Small Business Commissioner, which replaced the old Prompt Payment Code in December 2024. Signatories earn Bronze, Silver or Gold awards against payment-speed criteria — Gold means paying 95% of all invoices within 30 days; Bronze, within 60.

Payment practices reporting — The legal duty on large UK companies to publish, twice a year, how quickly they actually pay suppliers. Public data, and worth reading before you extend terms to a big name.

Debt collection agency (DCA) — A third party that chases debts for a fee or a percentage. "Passing it to collections" usually means it has left the relationship stage.

Tracing — Finding a debtor who has gone away. Done by trace agents using public records, credit data and shoe leather.

Money claim / county court claim — Suing for the debt. For most trade debts this is the small-print threat behind the LBA.

County court judgment (CCJ) (England and Wales) — A court ruling that the debt is owed. It sits on the public register for six years, marked "satisfied" once paid — unless paid within one month of the judgment, in which case it's removed entirely. For credit teams, a fresh CCJ against a customer is one of the loudest warning signals there is. Scotland's equivalent is a decree; Northern Ireland's courts issue their own judgments.

Enforcement — Making a judgment actually produce money: bailiffs, High Court Enforcement Officers ("sending in the sheriffs" (slang)), attachment of earnings, charging orders.

Statutory demand — A formal written demand for a debt. If a company owing more than £750 doesn't pay or dispute it within 21 days, the creditor can petition to wind the company up. Only for undisputed debts — courts penalise creditors who use it to pressure a debt that's genuinely in dispute. The nuclear escalation.

Winding-up petition — Asking the court to put a company into compulsory liquidation over unpaid debt. "We're winding them up" (slang). Banks freeze accounts when one is advertised, so the threat alone often produces payment.

Personal guarantee (PG) — A director personally promises to cover the company's debt if the company can't. "Did we get a PG?" is often the first question when an account fails.

Retention of title (ROT / Romalpa clause) — A contract term saying goods remain the supplier's property until paid for. If the customer fails, you can — in principle — take your goods back, if you can find them, identify them, and they haven't been built into something else.

Security: what stands behind the credit

Personal guarantees, retention of title and debentures — the ones credit teams use most — are in the collections section above.

Parent-company guarantee — The customer's parent company promises to pay if the subsidiary doesn't. Worth exactly as much as the parent, so check the parent as carefully as the customer.

Bank guarantee — A bank's promise to pay on demand if the customer fails to. Strong, and priced like it.

Letter of credit — A bank undertakes to pay the seller once shipping documents match agreed terms. The classic instrument of international trade, built for deals where neither side trusts the other's courts.

Charge — A legal claim over an asset as security for a debt. Collateral — the asset itself.

Negative pledge — A borrower's promise not to grant security over its assets to anyone else. It protects a lender's place in the queue by keeping others out of it.

Credit fraud

The classics — fresh-air invoices, long-firm fraud, the bust-out — are in the slang section, where they were named.

Application fraud — Lying on the way in: false financials, invented trade references, misstated directors.

Impersonation (of a business) — Posing as a real, creditworthy company — its name, its letterhead, sometimes its premises — to obtain goods on its reputation. The genuine business finds out when the invoice arrives.

First-party fraud — The customer is exactly who they say they are; they just never intended to pay.

Shell company — A company with no real trade behind it, used to obtain credit or move money.

Dormant-company hijack — Taking over a long-registered, inactive company and using its respectable age and clean history to pass credit checks. Age is one of the things scores reward, and fraudsters know it.

When a business fails: insolvency terms

Insolvent — Unable to pay debts as they fall due (the cash-flow test), or owing more than the business owns (the balance-sheet test). A company can be profitable and insolvent at the same time — cash decides.

Administration — A rescue procedure. An insolvency practitioner takes over to save the business or get a better result for creditors than immediate liquidation. Comes with a moratorium that freezes creditor action.

Liquidation — The end: assets sold, proceeds shared out, company dissolved. A CVL (creditors' voluntary liquidation) is started by the directors; compulsory liquidation is forced by a creditor through the court.

Company voluntary arrangement (CVA) — A deal where creditors agree to accept reduced or rescheduled payments while the company trades on. Needs approval by 75% by value of the creditors who vote — and it fails if more than half by value of the unconnected creditors voting are against it.

Pre-pack — An administration where the sale of the business is arranged before the appointment is announced — often to the existing management. Creditors find out after it's done, which is exactly why the term has a reputation.

Receivership — A secured lender's appointee takes control of charged assets. Largely historic for companies now, but the word survives in conversation.

Secured creditor — Holds a charge over assets and gets paid from them first. Unsecured creditor — everyone else, including almost all trade suppliers, paid from what's left. Usually pennies.

Preferential creditor — Jumps part of the queue: employees for certain claims and, since December 2020, HMRC for VAT and PAYE the company collected. Every pound HMRC takes back is a pound unsecured suppliers don't get.

Debenture — The document giving a lender a charge over company assets — fixed charges on specific assets, a floating charge over everything else that shifts (stock, debtors).

Dividend (insolvency) — What unsecured creditors eventually receive, quoted in pence in the pound. "We got 3p in the pound" needs no further explanation.

Proof of debt — The form a creditor files to claim in an insolvency. No proof, no dividend.

Insolvency practitioner (IP) — The licensed professional who runs administrations, liquidations and voluntary arrangements.

Official receiver — The government officer who handles compulsory liquidations and bankruptcies where no insolvency practitioner is appointed.

Moratorium — A legal freeze on creditor action while a rescue is attempted. Automatic in administration; also available as a standalone breathing space for companies.

Creditor waterfall — The strict order of payment in insolvency: secured creditors first, then preferential, then unsecured, then shareholders. Trade suppliers stand near the bottom.

Prescribed part — A slice of floating-charge money set aside by law for unsecured creditors, capped at £800,000. Often the only reason unsecured creditors see anything at all.

Preference — Paying one creditor ahead of the others shortly before insolvency. Liquidators can claw it back.

Transaction at undervalue — Selling or giving away assets for less than they're worth in the run-up to insolvency. Also reversible.

Restructuring plan — A court-supervised rescue tool, introduced in 2020, that can bind dissenting classes of creditors — the "cross-class cram-down." Mostly used by large companies.

Strike-off / dissolution — Removal from the Companies House register. Sometimes the quiet end of a company that owed people money; creditors can object, and can restore a dissolved company to pursue it.

Individual voluntary arrangement (IVA) — The personal equivalent of a CVA: a legally binding deal for an individual to repay part of their debts over time, typically five to six years.

Bankruptcy — The formal insolvency process for individuals in England, Wales and Northern Ireland. Usually discharged after 12 months, though the credit record damage lasts six years.

Sequestration — Bankruptcy under Scottish law. Same fate, different word.

Credit checking and bureau terms

Credit reference agency (CRA) / credit bureau — A company that collects data on borrowers and businesses and sells reports and scores. Experian, Equifax and TransUnion dominate consumer data in the UK; Experian, Dun & Bradstreet and Creditsafe are among the big names on the business side.

Credit report / credit file — Everything the bureau holds on a person or business: identity, accounts, payment history, public records like CCJs and insolvencies.

Credit score — A number summarising the file. Useful shorthand, but remember what it is: a score is an answer without an explanation.

Credit rating — The banded version — often letters or colour bands — of the same judgement.

Failure score — A business score predicting the likelihood of insolvency within the next 12 months. What most "business credit scores" actually measure.

Credit limit recommendation — The bureau's suggested maximum exposure to a business. A starting point, not a decision.

Risk band / score band — Grouping scores into categories (low risk, above average risk, and so on) so humans can act on them.

Soft search — A credit check that doesn't leave a mark other lenders can see. Used for quotes and eligibility checks. Hard search — a full check recorded on the file; too many in a short period is itself read as a warning sign. The mark left is called a footprint.

Trade payment data / payment performance data — Records of how a business actually pays its suppliers, contributed to bureaus by other suppliers. The closest thing to the truth about behaviour, rather than accounts.

Days beyond terms (DBT) — The average number of days a business pays past its agreed terms. A business on 30-day terms with a DBT of 22 is really a 52-day payer.

Adverse data — The bad stuff: CCJs, defaults, insolvency notices, missed payments.

Default (credit file) — A formal record that a credit agreement broke down. On a consumer file it stays for six years from the default date.

Notice of correction — A short statement a consumer can add to their file explaining a past problem. Lenders must read it — humans, at least, do.

Filed accounts — The financial statements a company files at Companies House. For small companies these can be nearly a year old on arrival and disclose very little — which is why bureau scores on small businesses lean so heavily on so few numbers.

Micro-entity / abridged accounts — The minimal filing options small companies can choose. A balance sheet, little else, and the reason "check their accounts" often answers nothing.

Director search — Checking a company's directors: other current and past directorships, failures, disqualifications. Businesses fail; directors repeat.

PSC / UBO — Person with significant control / ultimate beneficial owner: the human being who actually owns or controls the company, however many layers sit in between.

KYC / KYB — Know your customer / know your business: the identity checks done at onboarding. AML — anti-money-laundering, the rules requiring them.

CIFAS marker — A record in the UK's cross-industry fraud-prevention database. Not all markers mean wrongdoing: some record suspected fraud, others mark victims of impersonation, and Protective Registration is a flag people place on their own identity after a data breach. A CIFAS record explains many otherwise mysterious declines — and doesn't automatically mean the person committed fraud.

Thin file — Too little credit history to score well. Credit invisible — no meaningful file at all. Common among the young, the recently arrived, and businesses that always paid cash.

Onboarding — Everything done when taking on a new customer: identity, fraud, credit. The most-checked moment in the relationship — and for many firms, the last time anyone looks.

Monitoring / alerts — Watching customers continuously for changes — new CCJs, filed accounts, director changes, worsening payment behaviour — instead of waiting for the next review to find out.

Annual review — Re-checking a customer once a year. An annual review is a calendar reminder, not a monitoring system.

Reading the accounts

Net worth — Assets minus liabilities: what the shareholders would own if everything were settled today. Tangible net worth strips out intangibles like goodwill — the version credit analysts trust.

Current ratio / liquidity — Current assets divided by current liabilities: can the business cover what's due soon with what it can turn into cash soon?

Gearing / leverage — How much of the business is funded by debt rather than its own money. Highly geared businesses amplify both good years and bad ones.

Cash-flow forecast — The forward view of money in and out. Businesses fail on cash, not profit, so this is the document that predicts survival.

Going-concern warning — A note in the accounts flagging material doubt that the business can survive the next 12 months. As loud as a set of accounts ever gets.

Qualified audit opinion — The auditor signing off with reservations. Read the reservation.

Business lending and finance

Working capital — Formally: current assets minus current liabilities. The cash needed to fund the gap between paying for stock and wages and getting paid by customers is strictly the working-capital requirement (or cash-conversion gap) — and most short-term borrowing exists to bridge exactly that.

Overdraft — Borrowing through the current account, repayable on demand. Flexible, and withdrawable at the worst possible moment.

Term loan — A lump sum repaid over a fixed period. A facility is the agreed pot; a drawdown is taking money from it.

Revolving credit facility (RCF) — A pot the borrower can draw, repay and draw again. An overdraft with a contract and a fixed term.

Principal — The amount borrowed, as distinct from the interest on it.

Maturity / tenor — When the loan must be repaid, and how long it runs.

Margin — What the lender charges above the reference rate. In "SONIA plus 3%", the 3% is the margin.

SONIA — The Sterling Overnight Index Average: the benchmark rate that replaced LIBOR for sterling lending.

Amortisation — Repaying principal gradually over the life of the loan. A bullet repayment clears it all at maturity; a balloon is a small schedule with a large final payment.

Covenant — A promise attached to a loan — keep debt below a level, file information on time. Breach one and the lender can act, even if payments are current.

Secured lending — Backed by assets the lender can take. Unsecured — backed by the promise alone, priced accordingly.

Invoice finance — Borrowing against unpaid invoices. The umbrella term for factoring and invoice discounting.

Factoring — The finance company advances money against your invoices and collects them from your customers itself. Customers know.

Invoice discounting — Same advance, but you keep collecting and customers usually never know. "CID" — confidential invoice discounting.

Selective / spot factoring — Financing single invoices as needed rather than the whole ledger.

Debtor book — All the money owed to a business by its customers; the asset invoice finance lends against. "Lending against the book" (slang).

Advance rate / availability — The percentage of invoice value the lender will advance (often 80–90%), and how much headroom is left to draw today.

Concentration limit — A cap on how much of the funded ledger one customer can represent. Protection against a business that lives or dies on a single payer.

Recourse / non-recourse — Whether unpaid invoices come back to you (recourse) or the funder wears the loss (non-recourse). Non-recourse is narrower than it sounds: protection normally covers specified risks on approved customers and eligible invoices, not every kind of non-payment.

Asset-based lending (ABL) — Lending against a package of assets — debtors, stock, plant, property — rather than just invoices.

Asset finance / hire purchase / leasing — Funding equipment and vehicles by paying for them over their working life. Under HP you own the asset at the end; under a lease you may not.

Merchant cash advance (MCA) — An advance repaid automatically as a slice of daily card takings. Popular in hospitality and retail; the effective cost is often far higher than it looks.

Revenue-based finance — Lending repaid as a percentage of revenue, sized on trading data rather than accounts.

B2B BNPL (buy now, pay later) — Trade credit rebuilt as a fintech product: instant credit terms at a business checkout, with a third party underwriting and often insuring the risk.

Embedded finance — Credit or payments built into someone else's product — the builders' merchant's checkout offering 60-day terms is embedded finance in work boots.

Supply chain finance / reverse factoring — A big buyer's bank pays its suppliers early at a small discount, and collects from the buyer on the full terms. Cheap money for suppliers — until the programme is withdrawn.

Dynamic discounting — The buyer pays early from its own cash in exchange for a sliding discount. Same effect as supply chain finance, different funder.

Trade credit insurance — Insurance that pays out when a customer fails owing you money. Insurers set a credit limit per customer and can cut it mid-relationship — "they've pulled cover" (slang) is a sentence that reprices a whole trading relationship overnight, and often signals trouble before the market sees it.

Discretionary limit — Under a credit insurance policy, the amount you can self-underwrite on a customer without the insurer's named approval, provided you've done the checks the policy requires.

Protracted default — The insurance trigger that isn't insolvency: the customer simply hasn't paid for a defined period past due.

Indemnity percentage — The share of an insured loss the insurer actually pays — typically around 90%. The rest stays with you, so you keep caring.

Waiting period — How long you must wait after the loss event before a claim pays out.

Overdue declaration — The policy duty to report accounts overdue beyond a set point. Miss it and the claim can fail.

Excess / top-up cover — The uninsured first slice of a loss, and extra cover bought above the primary insurer's limit on a customer.

Bridging loan — Short-term, expensive lending to cover a gap — usually until a property sale or refinance completes.

APR — Annual percentage rate: the yearly cost of borrowing including charges. Designed for comparison; routinely misread on short-term products, where a modest-sounding fee becomes a triple-digit APR.

Base rate — The Bank of England's official interest rate, the floor most lending is priced from.

Loan-to-value (LTV) — The loan as a percentage of the asset's value. The lender's cushion, in one number.

Arrears — Behind on payments. The account still lives; the clock is ticking.

Default (lending) — The formal breakdown of the agreement — the point where the lender stops expecting normal payments and starts recovering.

Forbearance — The lender easing terms — payment holidays, extended schedules — to help a struggling borrower through. Kindness, regulation and loss-avoidance in one word.

Non-performing loan (NPL) — A loan no longer being repaid as agreed. Books of them get sold at a discount to specialists.

Provision / impairment — Money a lender sets aside now for the losses it expects later. Watch provisions rise and you're watching a lender's honest opinion of its own book.

Underwriting — Deciding whether to take a risk, and on what terms. The craft the whole industry sits on.

Affordability — Whether the borrower can actually sustain the repayments — a different question from whether they'll be approved.

Open banking — Sharing live bank transaction data, with permission, so a lender can see actual cash flow instead of year-old accounts.

Prime / near-prime / sub-prime — Borrower quality bands, from cleanest history to riskiest. Where you sit sets what you pay.

Alternative lender — Any non-bank lender: fintechs, specialist funds, invoice financiers. Increasingly the first stop for small business credit, not the alternative.

Consumer credit terms

Credit score (consumer) — Each agency scores on its own scale, so "my score is 700" means nothing without knowing whose 700. Lenders use their own internal scores anyway.

Electoral roll — Being registered to vote at your address. One of the simplest things on a UK consumer file, and its absence quietly costs points.

Credit utilisation — How much of your available credit you're using. Maxed-out cards ("maxed out" — slang) read as stress even when payments are perfect.

Minimum payment — The smallest amount a card issuer will accept each month. Designed to keep the debt alive; paying only the minimum can stretch a balance over decades.

Persistent debt — The regulatory definition of that trap: paying more in interest and charges than principal over 18 months, which forces the card issuer to intervene.

0% balance transfer — Moving card debt to a new card with an interest-free promotional window, for a fee. Works if the debt is cleared before the window closes; re-prices brutally if not.

Section 75 — Consumer Credit Act protection: pay by credit card for something costing over £100 and up to £30,000, and the card issuer is jointly liable with the seller if things go wrong.

Default notice — The formal warning a consumer lender must send before terminating an agreement or reporting a default.

Financial association — A link on your file to another person, usually from a joint account or joint application, whose credit behaviour can then influence how lenders see you.

Arrangement to pay (AP marker) — A file marker showing reduced payments agreed with a lender. Softer than a default, but lenders still read it as trouble.

Settled / satisfied / partially settled — How closed items read on a file: settled (paid and closed), satisfied (a judgment paid after the event), partially settled (the lender accepted less than was owed — and the file says so for six years).

Representative APR — The advertised rate that only 51% of accepted applicants must actually receive. The other 49% find out their real rate after the search.

Guarantor loan — A loan where a friend or family member promises to pay if the borrower doesn't. The guarantor often doesn't understand this until the letter arrives.

Payday loan — Small, short, expensive. Now price-capped by the FCA after the sector's excesses; the caps arrived only after the harm did.

Logbook loan — Borrowing secured on your car, which the lender can seize without a court order. One of the last survivals of Victorian bills-of-sale law.

Doorstep lending / home credit — Small cash loans issued and collected at the borrower's home. A shrinking, heavily regulated corner of the market.

Loan shark — An unlicensed, illegal lender. No paperwork, no FCA, no limit on what collection looks like. The debt isn't legally enforceable — the fear is the enforcement.

Credit builder card — A low-limit, high-rate card for people with thin or damaged files, used to demonstrate steady payment and rebuild a score.

Debt management plan (DMP) — An informal arrangement, usually via a debt charity, to repay debts at an affordable rate. No legal protection, but lenders generally cooperate.

Debt relief order (DRO) (England, Wales and Northern Ireland) — A low-cost route to writing off debts for people with low income, minimal assets and debts under £50,000. A quieter alternative to bankruptcy.

Breathing space (England and Wales) — A statutory scheme giving someone in problem debt 60 days of frozen interest and paused enforcement while they get advice. Scotland's equivalent is the statutory moratorium under its Debt Arrangement Scheme.

On the never-never (slang) — Buying on instalments, usually hire purchase. "They got the sofa on the never-never." Older generation's phrase; BNPL is the same idea with an app.

On tick (slang) — See the credit office section: on credit. Used for corner-shop credit long before anyone scored it.

Grand's own vocabulary

A few terms we use at Grand that you'll see across our writing.

Exposure — Everything at risk with a customer after you've said yes. The core observation: exposure builds after the decision, while the information behind the decision gets stale.

Visibility between checks — What you can see of a customer between one credit check and the next. For most firms, the honest answer is nothing.

Snapshot risk — The risk of relying on data that was true the day it was gathered. Filed accounts, scores and reports are all snapshots; customers keep moving after the photo is taken.

Timing failure — Finding out at the annual review what you needed to know in month three. Most credit losses aren't information failures — the signals existed — they're timing failures.

Capacity is not risk — Two different questions that get collapsed into one score: how much trade can this business support (capacity), and how likely is it to fail (risk)? A small, safe business and a large, fragile one need different answers, not the same number.

Trust profile — A business's living record of how it trades and pays — built continuously, owned by the business, and readable by the people deciding whether to extend it credit.

Spotted a term we've missed — or a bit of slang your credit office uses that we should add? Tell us.