| accounts receivable financing | A secured short-term loan that involves either the assigning of receivables or the factoring of receivables. Under assignment, the lender has a lien on the receivables and recourse to the borrower. Factoring involves the sale of accounts receivable. Then the purchaser, called the factor, must collect on the receivables.
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| banker's acceptances | Agreement by a bank to pay a given sum of money at a future date.
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| carrying costs | Costs that increase with increases in the level of investment in assets (usually refers to current assets).
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| cash budget | A forecast of cash receipts and disbursements expected by a firm in the coming year. It is a short-term financial planning tool.
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| cash cycle | In general, the time between cash disbursement and cash collection. In net working capital management, it can be thought of as the operating cycle less the accounts payable payment period.
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| cash flow time line | Line depicting the operating activities and cash flows for a firm over a particular period.
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| commercial paper | Short-term, unsecured promissory notes issued by corporations with a high credit standing. Their maturity ranges up to 270 days.
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| compensating balance | Deposit that the firm keeps with the bank in a low-interest or non-interest-bearing account to compensate banks for bank loans or services.
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| inventory loan | A secured short-term loan to purchase inventory. The three basic forms are a blanket inventory lien, a trust receipt, and field warehouse financing.
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| liquidity | Refers to the ease and quickness of converting assets to cash. Also called marketability.
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| operating cycle | The time interval between the arrival of inventory stock and the date when cash is collected from receivables.
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| shortage costs | Costs that fall with increases in the level of investment in current assets.
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| short-run operating activities | Events and decisions concerning the short-term finance of a firm, such as how much inventory to order and whether to offer cash terms or credit terms to customers.
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