In This Section
Percentage of Completion Method 
Accounting method for work-in-process evaluation to determine the current cost of long term contracts. This is often a good indication that progress billings exist within a company.
Payment-in-Kind (PIK)
In financial terms when payment is paid in the form of notes, preferred stock, interest, dividends, or equity instead of cash. This is commonly seen in mezzanine debt agreements where a portion of the interest will be paid in cash and a portion will be PIK.
PASA Trust
The P&S Act establishes trust protection for certain producers and growers doing business with packers and live poultry dealers. Two trusts, a packer trust and a poultry trust, are authorized in the Packers and Stockyards Act (P&S Act).
Participation
Collaboration among lenders to share in the risk of a larger loan.
Parri Passu
When something is treated equal in all respects, at the same pace or rate, in the same degree or proportion, or enjoying the same rights without bias or preference.
Pack and Hold
Merchandise that is finished, packaged and ready to ship, pending the seller receiving notice of the buyer's instructions of when or where to ship the goods to.
PACA Trust
A remedy for produce sellers to obtain payment on undisputed amounts owed for produce sales in or to the U.S. The PACA trust does not cover sales to Canada or other countries. If there is a legitimate dispute resulting in non-payment, then dispute resolution proceedings are used rather than the PACA trust.
PACA (Perishable Agricultural Commodities Act)
Designed to promote fair trading practices in the marketing of fresh and frozen fruits and vegetables sold through interstate and foreign commerce. The Perishable Agricultural Commodities Act (PACA) prohibits unfair and fraudulent practices and provides ways to enforcing contracts. PACA requires anyone buying or selling commercial quantities of fruit and vegetables and some products made from these perishable items to be licensed and to behave with a code of conduct that is enforceable.
Overline Advance
Where the Lender advances funds in excess of pre-established caps for receivables and inventory, but there is collateral value above the caps to cover the loan position.
Overformula Advance
An agreement where the Lender advances funds in excess of caps and there is no collateral value to cover the advances. The advances will stay outstanding and amortize at a pre-determined amount of time.
Overdraft
A deficit in an account caused by drawing more money than the account holds.
Over-advance
The advanced portion of a revolving credit facility that exceeds availability calculated by the borrowing base formula established.
Over Eligible Days
The period of time at which an invoice become ineligible for advance purposes. Asset based lender typically limit eligibility on invoices to a specific amount of days.
Orderly Liquidation Value
An estimate of the gross amount that a tangible asset would get in an auction style liquidation with the seller needing to sell the asset on an as-is, where is basis.
Opportunity Cost
This refers to a benefit that a person could have received, but gave up, to take another course of action.
Operating Lease
Is a contract that allows the use of an asset, but does not give rights of ownership of the asset, for a particular period which is shorter than the economic life of the asset.
Open Market Sale
The sale of goods and services are governed by forces of supply and demand.
Off-Site Inventory
Inventory that is not stored at the owner's facilities and instead somewhere else. The inventory could be Consigned to another party or stored at a third party facility.
Offset
When customer A purchases something from customer B and customer B purchases something from customer A. The balances are subtracted from (offset against) the other, leaving only the net difference to be paid. Sometimes called a "contra relationship."
Obsolete Inventory
Is a term that refers to inventory that is at the end of its product life cycle. This inventory has not been used or sold for a long period of time and is not expected to be sold in the future. This inventory has to be written down.
