Glossary of Technology Terms & Acronyms
Sometimes, it seems there is a whole other language when it comes to technology in the trade credit world. Well, in fact, there is a whole other language. To really make the best decisions, you'll need to be fluent in "tech speak," so we've prepared this guide to help you along. The source of this glossary is Credit Today's Credit & Collection Technology Buyer's Guide. ACH - The acronym for Automated Clearing House - ACH is essentially a very low cost next day funds transfer process designed to replace paper checks ASP - The acronym for Application Service Provider, which refers to a hosted software solution, usually via the Internet Auto-Cash - Automated remittance processing, where an electronic file generated by a bank's lock box department is used to automatically post cash receipts to individual customer accounts receivable. B2B - The acronym for Business-to-Business as opposed to Business-to-Consumer, which, of course, is B2C Best of breed - Software that provides an advanced solution for a specific type of application such as credit, collections or auto-cash. Also referred to as point solutions Collection Strategy - A sequence of actions - triggered by an account's status, an event, or scheduled by the user - that is embedded in collection software in order to drive collection workflow Compliance - The state of being involved in meeting a proscribed standard. Often used in conjunction with Sarbanes-Oxley regulations. In the consumer goods industry "compliance manuals" set the standard for the trading relationship Credit Screening - The credit evaluation process applied to prospective customers - may involve both subjective and objective criteria in order who to approve Credit Scoring - A statistical or knowledge-based formula used to provide a quantitative assessment of risk CRM - Acronym for "Customer Relationship Management" which refers to a category of software that helps companies manage customer relationships in an organized way Dashboard - An reporting tool that is used to deliver relevant information within a specific subject area via a customized format to a specific person or function. To download the ultimate resource on all aspects of technology in the credit & collection world, check out Credit Today's Credit & Collection Technology Buyer's Guide. Deduction - A short payment on a remittance Dilution - Any inefficiency or quality failure that causes the value of your A/R to diminish. Examples include:
- Slow pay for any reason
- Authorized (i.e. self-inflicted) or unauthorized deductions
- Unearned discounts
This term originated with the vendor community which helped creditors address chargebacks. Sometimes also referred to as "profit dilution." Document Management - A system for storing and retrieving all types of documents (formatted and unformatted data as well as electronic images) DSO - An acronym for Days Sales Outstanding, which is a measure of how fast it takes to collect receivables - DSO = (Total Receivables/Total Credit Sales) X Number of Days EDI - The acronym for Electronic Data Interchange - in the credit and collection area, the most relevant protocols are the EDI 820 series of standards related to remittance processing EFT - The acronym for Electronic Funds Transfer EIPP - The acronym for Electronic Invoice Presentment & Payment, which refers to the electronic distribution and retrieval of invoice data and payments, usually via the Internet ERM - The acronym for Enterprise Report Management, which is the use of the electronic "print-formatted" files that normally get printed ERP - The acronym for Enterprise Resource Planning, which refers to a class of software designed to provide integrated corporate information resources and data processing across a broad spectrum of the business Escalation - The process of advancing deduction and dispute resolution activities to a supervisor when assigned tasks are not completed within corporate performance (cycle time) standards To download the ultimate resource on all aspects of technology in the credit & collection world, check out Credit Today's Credit & Collection Technology Buyer's Guide. eStatements - Electronic statements including the delivery thereof Indexing - The data values that describe an image in a document management system Imaging - The use of electronic images instead of paper Metadata - New data elements that are derived from the data collected by a database. For example, if you have an invoice date and a payment date, a payment time can be calculated and then average payment days, standard deviations and other trending data can be calculated. On demand - Describes a computing hosting environment in which the user only accesses the software as needed via the Internet. This term was coined by IBM and is also referred to as "software as service" by others in the industry. It is a form of ASP (Application Service Provider). Onboarding - The process of setting up a new customer and orienting them to your culture Point solution - Software that provides an advanced solution for a specific type of application such as credit, collections or auto-cash. Also referred to as best of breed Profit Dilution - A deterioration in profitability, often caused by delinquency, payment deductions, and chargebacks, all of which reduce the value of an invoice billed RFP - An acronym for Request for Proposal, which involves soliciting quotes from vendors. May be proceeded by an RFI (request for information). ROI - The acronym for Return on Investment - ROI = Net Income/Net Worth ROIC - The acronym for Return on Invested Capital -
ROIC = (net income after taxes) / [(total assets - excess cash) - (non-interest-bearing liabilities)] Risk Tolerance - An arbitrary point at which an organization will no longer extend open credit. A firm's approach to "risk management" is largely dependent upon the organization's "risk tolerance" Root Cause Analysis - The process of documenting and identifying system weaknesses. The underlying data is commonly derived from dispute and deduction handling activities. Scorecard - A knowledge-based rating system used to assimilate subjective and objective criteria within a consistent framework. "Credit Scorecards" are used to help set credit limits and risk ratings. Segment - A group of customers or customer invoices that share similar characteristics. Segmenting receivables facilitates the use of targeted treatment strategies. To download the ultimate resource on all aspects of technology in the credit & collection world, check out Credit Today's Credit & Collection Technology Buyer's Guide. Server - Any computer that acts as a host system for other computers, as in a client/server environment Six Sigma - A quality improvement initiative used to identify and repair system weaknesses. SLA - The acronym for Service Level Agreement, which is an agreement between a service provider and an organization that is outsourcing the work. An SLA can also be between an operating unit and a shared service center. Software as a service - Describes a computing hosting environment in which the user only accesses the software as needed via the Internet. It is a form of ASP and is also referred to as "on demand" computing. Trade Credit - The offering of credit terms to a trading partner, hence from one business to another (B2B) UCC - The acronym for the Uniform Commercial Code - standards adopted by the various state governments that define commercial transactions. Commonly employed by trade creditors through the filing of a financing statement to register security in a customer's assets Visibility - The ability to see all the details related to a customer and their transactions. Also referred to as transactional transparency. Web Service - Describes a standardized way of integrating Web-based applications using XML, SOAP, WSDL & UDDI open standards over an Internet protocol Working Capital - Current assets minus current liabilities To immediately download the ultimate resource on all aspects of technology in the credit & collection world, check out Credit Today's Credit & Collection Technology Buyer's Guide.
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