Glossary of Terms
Looking to Learn the Lingo?
We know how critical fundraising is to the growth of your business, so let’s make sure you’re crystal clear on terms that you’ll likely come across throughout the process. Whether you want to brush up on finance concepts or double-check on a definition/acronym, you’re in the right place.
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Accounts Receivables aka “A/R”
Your company’s legally enforceable claim to payment for goods / services that have been delivered or used, but not yet paid for. Working with Dwight allows you to leverage your eligible A/R in exchange for working capital.
Your company’s legally enforceable claim to payment for goods / services that have been delivered or used, but not yet paid for. Working with Dwight allows you to leverage your eligible A/R in exchange for working capital.
Appraisal
The process by which lenders determine the quality of your goods and liquidation value of your inventory. We work with a third party to conduct appraisals for companies that use inventory as collateral.
The process by which lenders determine the quality of your goods and liquidation value of your inventory. We work with a third party to conduct appraisals for companies that use inventory as collateral.
Average Order Value aka “AOV”
The average amount of money a single eCommerce customer will spend each time they place an order online.
The average amount of money a single eCommerce customer will spend each time they place an order online.
Cash Dominion
The practice of sending your company’s invoice proceeds to a lockbox to pay down your line of credit. This is standard for all ABL structures, including ours.
The practice of sending your company’s invoice proceeds to a lockbox to pay down your line of credit. This is standard for all ABL structures, including ours.
Concentration
The percentage of your company’s A/R owed by a single debtor. Lenders (us included), typically designate that concentration does not exceed a predetermined number.
The percentage of your company’s A/R owed by a single debtor. Lenders (us included), typically designate that concentration does not exceed a predetermined number.
Covenants
Language in some loan agreements that would restrict your company from certain behavior, such as selling or transferring assets, defaulting, exceeding certain salaries, etc. We pride ourselves on making every effort to avoid restrictive covenants.
Language in some loan agreements that would restrict your company from certain behavior, such as selling or transferring assets, defaulting, exceeding certain salaries, etc. We pride ourselves on making every effort to avoid restrictive covenants.
Customer Lifetime Value aka “CLV”
The total value of all sales generated from a single consumer throughout their lifetime. This metric is key for gauging customer loyalty in DTC.
The total value of all sales generated from a single consumer throughout their lifetime. This metric is key for gauging customer loyalty in DTC.
Debtor
The customer that is responsible for a payment of an invoice associated with A/R. Check out the definition for “Concentration.”
The customer that is responsible for a payment of an invoice associated with A/R. Check out the definition for “Concentration.”
Dilution
The difference between the gross amount of an A/R invoice and the cash actually collected for those invoices. Examples of things that influence dilution are spoilage, promotional spend, and slotting fees for F&B businesses.
The difference between the gross amount of an A/R invoice and the cash actually collected for those invoices. Examples of things that influence dilution are spoilage, promotional spend, and slotting fees for F&B businesses.
Facility
The financial agreement between your company and its lender. This is often referred to as a “line of credit.” Dwight provides working capital facilities, or lines of credit, to growth stage companies in eCommerce, Food & Beverage, Consumer and SaaS.
The financial agreement between your company and its lender. This is often referred to as a “line of credit.” Dwight provides working capital facilities, or lines of credit, to growth stage companies in eCommerce, Food & Beverage, Consumer and SaaS.
Factoring
The process by which a company (aka “a factor”) purchases your receivables, giving them ownership of the payment. Factoring is most beneficial for smaller businesses who lack proactive or complex collection processes.
The process by which a company (aka “a factor”) purchases your receivables, giving them ownership of the payment. Factoring is most beneficial for smaller businesses who lack proactive or complex collection processes.
Field Examination
The process by which a lender analyzes and tests a company’s books and records to validate collateral and reporting accuracy that is required to support a facility. We work with third parties to conduct field exams.
The process by which a lender analyzes and tests a company’s books and records to validate collateral and reporting accuracy that is required to support a facility. We work with third parties to conduct field exams.
Inventory
A company’s merchandise or supplies on hand or in transit. Working with Dwight will allow you to leverage your eligible inventory in exchange for working capital. You’re welcome.
A company’s merchandise or supplies on hand or in transit. Working with Dwight will allow you to leverage your eligible inventory in exchange for working capital. You’re welcome.
Lien
A legal document indicating the existence of a security interest. Dwight has a senior lien on all assets we lend against, which means that we have priority in being paid back in full first, before all other liens. Check out the definition for “Security Interest” and “UCC.”
A legal document indicating the existence of a security interest. Dwight has a senior lien on all assets we lend against, which means that we have priority in being paid back in full first, before all other liens. Check out the definition for “Security Interest” and “UCC.”
Minimum Order Quantity aka “MOQ”
The least amount of inventory that a supplier or manufacturer is willing to accept.
The least amount of inventory that a supplier or manufacturer is willing to accept.
MRR Line of Credit
Working capital financing based on the value of a SaaS company’s monthly recurring revenue. Check out the definitions for “Monthly Recurring Revenue” and “Facility.”
Working capital financing based on the value of a SaaS company’s monthly recurring revenue. Check out the definitions for “Monthly Recurring Revenue” and “Facility.”
Net Promoter Score aka “NPS”
You’ve likely encountered a pop-up that says something along the lines of, “how likely are you to recommend this product/service?” NPS is the difference between the percentage of customers that are likely to recommend your product, and the percentage of customers that are not.
You’ve likely encountered a pop-up that says something along the lines of, “how likely are you to recommend this product/service?” NPS is the difference between the percentage of customers that are likely to recommend your product, and the percentage of customers that are not.
Pass Through
The practice of returning any proceeds from a lockbox to your own bank account when the amount collected exceeds the amount outstanding under your line of credit.
The practice of returning any proceeds from a lockbox to your own bank account when the amount collected exceeds the amount outstanding under your line of credit.
Security Interest
The legal right for a lender to recover an asset from your company if you fail to fulfill your obligations under the lending agreement. Dwight has a senior security interest on all assets it lends against, which means that we have priority in being paid back in full first before all others. Check out the definition for “Lien” and “UCC.”
The legal right for a lender to recover an asset from your company if you fail to fulfill your obligations under the lending agreement. Dwight has a senior security interest on all assets it lends against, which means that we have priority in being paid back in full first before all others. Check out the definition for “Lien” and “UCC.”
Uniform Commercial Code aka “UCC”
A legal form that allows a lender to announce a lien on your company’s assets. A UCC is filed typically filed by lenders (including Dwight) for all of portfolio companies.
A legal form that allows a lender to announce a lien on your company’s assets. A UCC is filed typically filed by lenders (including Dwight) for all of portfolio companies.
Advance Rate
A percentage of your collateral value used to calculate your maximum loan amount. Advance rates are applied to the value of eligible A/R and inventory to determine the maximum amount you can draw. Check out the definition for “Borrowing Base Certificate.”
A percentage of your collateral value used to calculate your maximum loan amount. Advance rates are applied to the value of eligible A/R and inventory to determine the maximum amount you can draw. Check out the definition for “Borrowing Base Certificate.”
Asset-based Lending aka “ABL”
Working capital financing based on the value of your company’s assets, such as A/R and inventory. Through the ABL structure, you can leverage your assets to cover day-to-day expenses, purchase inventory, and maintain cash flow – all while retaining equity.
Working capital financing based on the value of your company’s assets, such as A/R and inventory. Through the ABL structure, you can leverage your assets to cover day-to-day expenses, purchase inventory, and maintain cash flow – all while retaining equity.
Borrowing Base Certificate aka “BBC”
A document summarizing the maximum amount that a client can draw at a given time. We share a BBC with you at the time of each funding based on advance rates and the value of your eligible collateral.
A document summarizing the maximum amount that a client can draw at a given time. We share a BBC with you at the time of each funding based on advance rates and the value of your eligible collateral.
Co-Man aka Co-Manufacturer aka Co-Packer
An external group contracted to manufacture and/or package product on your behalf. While you give up some control over the process, outsourcing allows you to quickly bring a product to market and meet large orders without the startup and maintenance costs of related real estate, staff and equipment.
An external group contracted to manufacture and/or package product on your behalf. While you give up some control over the process, outsourcing allows you to quickly bring a product to market and meet large orders without the startup and maintenance costs of related real estate, staff and equipment.
Contra Account
When you owe one of your customers, a contra account represents payables that offset receivables from the same company. ABL reduces eligible receivable for that customer by the amount of that contra account.
When you owe one of your customers, a contra account represents payables that offset receivables from the same company. ABL reduces eligible receivable for that customer by the amount of that contra account.
Customer Acquisition Cost aka “CAC”
The total cost of all your business initiatives related to a single customer purchase. This includes R&D, marketing, sales, etc.
The total cost of all your business initiatives related to a single customer purchase. This includes R&D, marketing, sales, etc.
Days Beyond Terms aka “DBT”
The number of days beyond the due date that an invoice remains outstanding. This subset of A/R may or may not be eligible to serve as collateral depending on if an invoice surpasses the designated DBT threshold. Check out the definition for “Borrowing Base Certificate.”
The number of days beyond the due date that an invoice remains outstanding. This subset of A/R may or may not be eligible to serve as collateral depending on if an invoice surpasses the designated DBT threshold. Check out the definition for “Borrowing Base Certificate.”
Due Diligence
The process by which a prospective lender determines the feasibility of working together and a proposed structure by understanding your financial performance, collateral strength, and management team. Check out the definitions for “Field Examination” and “Appraisal.”
The process by which a prospective lender determines the feasibility of working together and a proposed structure by understanding your financial performance, collateral strength, and management team. Check out the definitions for “Field Examination” and “Appraisal.”
Dilutive Financing
The idea that as outside equity in your company increases, your ownership decreases. Dwight offers a non-dilutive product, meaning you won’t relinquish control of your business by working with us.
The idea that as outside equity in your company increases, your ownership decreases. Dwight offers a non-dilutive product, meaning you won’t relinquish control of your business by working with us.
Facility Fee
A percentage of the overall line of credit charged as a cost of providing the facility.
A percentage of the overall line of credit charged as a cost of providing the facility.
Float Days
The number of days that it takes for payments received from a debtor to clear the bank; charges continue to accrue to account for this.
The number of days that it takes for payments received from a debtor to clear the bank; charges continue to accrue to account for this.
Funding
The process of drawing on your line of credit. At Dwight, we offer same-day turnaround.
The process of drawing on your line of credit. At Dwight, we offer same-day turnaround.
Invoice
A statement of the amount due to your company for goods or services that have been delivered or used.
A statement of the amount due to your company for goods or services that have been delivered or used.
Lockbox
A bank account set up by a lender to which payments from debtors send invoice proceeds. Check out the definitions for “Cash Dominion” and “Pass Through.”
A bank account set up by a lender to which payments from debtors send invoice proceeds. Check out the definitions for “Cash Dominion” and “Pass Through.”
Monthly Recurring Revenue aka “MRR”
Predictable revenue that a SaaS company can expect to receive monthly. This metric is critical to understanding overall business profitability and cash flow in the industry. Working with Dwight will allow you to leverage your eligible MRR in exchange for working capital.
Predictable revenue that a SaaS company can expect to receive monthly. This metric is critical to understanding overall business profitability and cash flow in the industry. Working with Dwight will allow you to leverage your eligible MRR in exchange for working capital.
Multi-Vendor Mailers aka “MVM”
A book of coupons offering promotions from several vendors issued by a retailer or wholesaler - most notably, Costco.
A book of coupons offering promotions from several vendors issued by a retailer or wholesaler - most notably, Costco.
Overadvance
Funding that exceeds the maximum loan amount according to the predetermined formula. We work with our Credit Committee to evaluate exceptions when this may be permitted.
Funding that exceeds the maximum loan amount according to the predetermined formula. We work with our Credit Committee to evaluate exceptions when this may be permitted.
Return on Ad Spend aka “ROAS”
The amount of revenue your company generates per each advertising dollar spent.
The amount of revenue your company generates per each advertising dollar spent.
Term Sheet
A document from a lender to your company establishing general terms and conditions of the proposed lending facility, establishing a baseline for future discussion. Due diligence begins after the signing of a term sheet. Check out the definitions for “Facility” and “Due Diligence”
A document from a lender to your company establishing general terms and conditions of the proposed lending facility, establishing a baseline for future discussion. Due diligence begins after the signing of a term sheet. Check out the definitions for “Facility” and “Due Diligence”
Warrant
A security enforced by some lenders that grant them the right to buy stock in your company for a set price through a certain date. A warrant is typically expressed in your agreement as a fixed percentage of your loan amount.
A security enforced by some lenders that grant them the right to buy stock in your company for a set price through a certain date. A warrant is typically expressed in your agreement as a fixed percentage of your loan amount.