Glossary
20 Docs
Reverse Factoring (Payables Finance)
Last Updated: January 2, 2026Reverse Factoring is a buyer-led financing solution that allows suppliers to receive early payment on approved invoices, based on the buyer’s credit profile rather than the supplier’s. Once an invoice is approved by the buyer, a financing partner pays the supplier early, improving supplier liquidity without changing existing commercial terms. The buyer then settles the...
Invoice Financing
Last Updated: January 8, 2026Invoice Financing lets suppliers improve their liquidity by borrowing against approved invoices. The supplier retains full ownership of the receivable and the customer relationship, while the invoice itself serves as collateral. This type of financing provides quick access to cash without waiting for buyer payments, giving suppliers more flexibility to manage their working capital. Once...
Asset-Based Lending
Last Updated: January 2, 2026Asset-Based Lending is a form of financing where a business secures funding against the value of its assets, such as receivables, inventory, or other balance-sheet items. Instead of relying solely on cash flow or credit history, lenders assess the quality and liquidity of the underlying assets to determine borrowing capacity. As assets are converted into...
BaaS (Banking-as-a-Service)
Last Updated: January 2, 2026Banking-as-a-Service (BaaS) is a model where licensed financial institutions provide banking infrastructure and capabilities to non-bank businesses through APIs and embedded technology. In the context of Liquiditas, BaaS enables the platform to offer embedded banking features like virtual IBANs and payment cards without becoming a regulated bank. BaaS allows fintech platforms and businesses to integrate...
Cash Conversion Cycle (CCC)
Last Updated: January 2, 2026The cash conversion cycle measures the amount of time it takes for a company to sell its inventory, collect receivables, and pay its bills. It tracks how long it takes to turn cash spent on inventory and production into cash received from customers. The formula is: CCC = DIO + DSO – DPO. A shorter...
Credit Limit
Last Updated: January 2, 2026A credit limit is the maximum amount of credit that a financial institution extends to a client on a credit card or line of credit. Lenders set credit limits based on specific information about the applicant, including income, employment status, credit score, and loan repayment history. In supply chain finance contexts, a credit limit represents...
Days Payable Outstanding (DPO)
Last Updated: January 2, 2026DPO measures the average number of days it takes for a company to pay its invoices from trade creditors and suppliers. It represents how long a business takes to pay back its payables. Typically, a longer DPO shortens your cash conversion cycle as it means you can hold cash longer after the sale of inventory,...
Discount Rate
Last Updated: January 2, 2026A discount rate is the rate of return used to determine the present value of future cash flows. It is a critical component in discounted cash flow (DCF) analysis, which helps evaluate investment opportunities. In banking, it also refers to the interest rate the Federal Reserve charges banks for short-term loans. The discount rate expresses...
EBITDA
Last Updated: January 2, 2026EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a measure of a company’s profitability from operating business only, derived by subtracting from revenues all costs of the operating business but not decline in asset value, cost of borrowing, and obligations to governments. The formula is: EBITDA = net income + interest...
Embedded Financing
Last Updated: January 2, 2026Embedded financing refers to the integration of loan products or financing options directly into a service or platform. The lending service takes place through embedded bank accounts connected to stores or online platforms, where users can request a loan and receive a decision in real time without leaving the point-of-sale. This is part of the...
Extended Payment Terms
Last Updated: January 2, 2026Extended payment terms refer to allowing buyers to delay payment for goods or services beyond the standard payment period agreed upon with suppliers. Instead of immediate payment, buyers receive additional time to settle accounts, typically in the form of net 30, net 60, or net 90 days. These terms are negotiated between buyers and suppliers...
Receivables Financing (Factoring)
Last Updated: January 2, 2026Receivables Financing, or more commonly known as Factoring, is a financial solution that enables companies to access funding by selling their accounts receivable (invoices) to a third party, known as the ‘factor.’ The factor pays the company 80-90% of the invoice amount right away. Once the customer pays the factor, the remaining funds are sent...
Supply Chain Finance (SCF)
Last Updated: February 18, 2026Supply chain finance (SCF) is a finance solution that enables companies to offer early payment options to their suppliers. With supply chain finance, suppliers can receive early payment for their approved invoices from a bank or finance provider, while the buyer sends payment to the financial institution on the invoice’s maturity date. This type of finance...
Virtual IBAN
Last Updated: January 2, 2026A virtual IBAN is a unique account number linked to your company’s main bank account. It allows you to automatically allocate payments and provides flexibility for payment solutions. Virtual accounts can be used to accept payments from various systems, for partner payments, bill payments, and can have debit cards added for expenses like advertising. They...
Working Capital
Last Updated: January 2, 2026Working capital is the money used in day-to-day operations. It represents the funds available for running business activities and is a key indicator of a company’s operational efficiency and short-term financial health. Working capital represents the difference between a company’s current assets and current liabilities. It’s a snapshot of your company’s short-term financial health and...
White Label
Last Updated: January 2, 2026White Label solutions allow partners to integrate supply chain finance capabilities directly into their own platforms, applications, or systems under their own branding. This approach enables businesses to offer financial services to their users without building the infrastructure themselves. To learn more about the Liquiditas White Label Program, follow this link.
Dynamic Discounting
Last Updated: January 2, 2026A buyer-funded early-payment program where suppliers can choose to be paid early in exchange for a sliding-scale discount. The discount rate varies based on how early the payment is taken. Generates yield for buyers and accelerates supplier liquidity without external financing. See how to implement this in practice on our Dynamic Discounting solution for buyers...
Digital Wallet & Cards
Last Updated: January 2, 2026Digital wallets are platforms that can be enhanced with virtual account integration to provide multicurrency functionality and streamline international payments. When integrated with virtual IBANs, they empower users with greater control over international finances, eliminate reliance on intermediaries, reduce costs, and simplify payment reconciliation. These virtual accounts can also be connected to virtual cards, which...
Days Inventory Outstanding (DIO)
Last Updated: January 2, 2026DIO is the average number of days it takes to sell your entire inventory. It measures how efficiently your business converts working capital into inventory and back again. Generally, a smaller DIO indicates more efficient inventory management. A higher DIO shows that an organization takes a longer time to sell the inventory, which might point...
Days Sales Outstanding (DSO)
Last Updated: January 2, 2026DSO measures the average number of days it takes a company to collect payment after a sale. It represents the number of days, on average, for a company to collect its receivables. A lower DSO indicates faster collection of receivables, which is generally a good sign of efficient accounts receivable management. AÂ high DSOÂ means that it...