Portman triangles
Unravel the complexities of business finance with our comprehensive Financial Glossary. Build your financial literacy and make informed decisions by learning key industry terms with our easy-to-understand explanations.


Acceptance Certificate

When the leased asset(s) have been received in good condition, an acceptance certificate is signed by the lessee confirming that the equipment is fit for purpose, usually marking the start of the lease agreement. In doing this, the lessee’s risk of paying for equipment that is damaged, faulty or has not been delivered is minimised, and the lessor’s risk of paying a fraudulent supplier or dealing with customer complaints, is also reduced.


The process of spreading the cost of intangible assets (such as patents, copyrights, or goodwill) over their useful life. It represents the gradual reduction of the asset’s value on the balance sheet over time.


A type of item that can be leased, funders will generally categorise assets as either a ‘Hard’ or ‘Soft’ asset which reflects the security that is intrinsically found in the asset and usually affects the pricing of the agreement (hard assets usually have better rates to reflect the reduced risk to the lessor as hard assets typically retain value). Assets can also be both tangible such as plant or equipment or intangible like software.

Asset finance

Asset finance can provide significant cash flow benefits to customers looking to purchase equipment for their businesses. The customer would typically obtain the equipment through a hire purchase or equipment leasing agreement whereby the lender or hirer takes ownership of the equipment for the duration of the term of the agreement and the customer pays an agreed sum to the lender or hirer for use of the assets.



Balance sheet

A statement that discloses the financial position of a business, showing the firm’s assets, liabilities and shareholders’ funds.

Balloon Payment

A balloon payment is the final amount due on a loan that is structured as a series of small monthly payments followed by a single much larger sum at the end of the loan period. The early payments may be all or almost all payments of interest owed on the loan, with the balloon payment being the principal of the loan. Balloon payment value is often relative to the estimated final value of the asset purchased or leased, often used for auto loans.



Capital expenditure

Capital expenditure is money spent by businesses on acquiring or maintaining their fixed assets. When a company invests in fixed assets. Leasing can a beneficial way of securing these assets without paying up-front capital expenditure, especially for capital-intensive businesses, such as construction or manufacturing businesses, that require large capital assets for proper business function.

Cash Flow

The net amount of cash and cash equivalents moving into and out of a business, reflecting its operating, investing, and financing activities over a specific period. It indicates a company’s ability to generate cash and meet financial obligations.

Corporation tax

A percentage of taxable profits paid as tax based on accounting profit with certain adjustments. Tax allowances may be claimed in certain circumstances.

County court judgement (CCJ)

A court ruling in favour of a legal entity claiming that they haven’t been paid monies owed to them, applying to both businesses and individuals. Once the CCJ has been issued and noted in the public domain, it will be used by credit reference agencies as a means to reassess the creditworthiness of that person/business – resulting in a negative impact.

Credit Terms

Credit terms are the agreed-upon conditions of a credit arrangement, including repayment schedules, interest rates, and collateral.


A creditor is an individual, organisation, or entity that lends money or extends credit to another party.




A payment made at the start of a finance agreement which has the effect of reducing the monthly payments throughout the term. Referred to on a hire agreement as an ‘initial payment’. Its purpose is to reduce the risk for the lessor caused by any loss in value for assets as soon as they are no longer classed as new.


The allocation of the cost of tangible assets (such as buildings, machinery, or vehicles) over their useful life. It reflects the decrease in the value of these assets due to wear and tear, obsolescence, or usage over time.

Direct debit

A regularly scheduled mandate from the lessee, arranged by lessors to collect lease payments direct from the lessee’s bank account.



Early settlement

Where a lease agreement is cancelled by the lessee before the end of the contracted primary or minimum period. Terms of this may vary depending on if the credit agreement is regulated or non-regulated.


(Earnings Before Interest, Taxes, Depreciation, and Amortization): A measure of a company’s operating performance calculated by adding its earnings before interest, taxes, depreciation, and amortisation expenses. It provides insight into a company’s profitability from core operations before non-operating expenses. Read more on EBITDA.



Hard assets

Typically assets that meet the DIMS criteria (Durable, Identifiable, Moveable and Saleable) designed to be held for the longer term and hold onto their value which offer the Lender or Lessor a greater deal of security from the finance agreement.



Introducer Finance (Vendor Finance)

Financial solutions, most often leasing, offered by vendors to their customers that is not manufacturer (captive) finance. The vendor introduces the customer to either a broker or funder. Around a quarter of total new asset finance business in the UK market is sold through the vendor channel.



Know your customer (KYC)

A mandatory process of identifying and verifying the identity of a customer before entering into any finance agreement. This helps prevent finance from being used to facilitate crime and terrorism. Lessors, brokers and introducers will check they are dealing with a genuine business before approving finance. More information on KYC requirements and other anti-money laundering legislation can be found on the Government website.



Landlords wavier

An agreement between the lessor and the landlord of the lessee’s building. It gives the lessor the right to enter the premises to inspect or remove their assets during the period of the finance agreement.


An agreement where the asset owner (referred to as the ‘lessor’) allows use of an asset to another party (the ‘lessee’) for a certain amount of money. The use of this term indicates that it’s a hire agreement with no guaranteed purchase option at the end of the lease period.

Lease term

The minimum amount of time that the lessee agrees to lease an asset. It can be referred to as the non-cancellable period or primary lease term.

Lease with secondary rental period

A lease agreement where the lessee can continue to rent the equipment at the end of the original term. This can continue for a long as the customer requires the use of the equipment.


The party (an individual or company) that becomes a user of an asset owned by another party (the ‘lessor’) through a lease agreement.


The owner of an asset that can be hired through a lease agreement.


A measure of a company’s ability to meet its short-term financial obligations with its available assets, typically cash or assets that can be quickly converted into cash without significant loss. High liquidity implies greater financial flexibility and lower risk.



Minimum lease period

A lease that will continue until it is cancelled after the defined minimum hire period. Also referred to as an open-ended lease, minimum term rental or infinite rental.




A Partner is a supplier, vendor or service provider who introduces their customers to Portman for business finance.
Previously, we used various terms like introducers, vendors, suppliers, and service providers to describe our valued business relationships. While these terms are accurate, we believe Partner more accurately reflects the collaborative and mutually beneficial nature of our association.
Moving forward, the Portman Partnership scheme will be the official term used to describe our network of businesses. This unified term reinforces our commitment to a collaborative approach, fostering growth for both your business and Portman. Within our content and documents, any reference to “Partner” refers specifically to the Portman Partnership scheme. Should you encounter any of the previously used terms, such as “Introducer” or “Vendor,” rest assured that they fall under the umbrella of the Portman Partner Network.

Personal guarantee (PG)

It can enable lessors to fund equipment that would have otherwise been declined due to perceived credit appetite risk. If a business or individual is unable to pay the amount due, it becomes the responsibility of the guarantor to clear any fees and maintain future payments. Learn more about Personal Guarantee.


The pattern of payments over the lease period.

For example, a 3+33 profile means the lessee’s first payment/initial rental will equate to 3 months’ worth of payments, which is then followed by 33 ‘normal’ monthly payments. I.e., if the monthly payments are £200, the initial rental would be £600, followed by 33 months of £200 payments.



Sales and leaseback

A means of releasing equity through selling assets to a lessor for a lump sum and leases the assets back over time. Sale and HP back options are also available. This form of equipment refinancing is offered through Portman.

Soft assets

Soft assets are generally assets which typically have little or no re-sale value. They may not be designed to be held onto for a long term and can include assets which are intangible, such as software.


SONIA (Sterling Over Night Indexed Average) | SONIA is an interest rate that applies to overnight borrowing in British Pounds. It’s based on actual transactions between banks and other financial institutions, and is considered risk-free because it doesn’t include any credit risk from the borrower. SONIA is expected to become the new standard interest rate used in global financial markets, replacing LIBOR.

Stage payments

When a lease is arranged for assets that require a specific payment structure to the supplier (this could be due to installation and quality control), the agreement may specify that payments are to be released to the supplier in stages following written instruction from the lessee.


Any type of business whose main function is to sell equipment, including resellers and dealers. They can sometimes offer vendor finance to their customers, which can be arranged by manufacturer or distributor schemes, or organised through a broker or with a lessor directly. Other terms include vendor or vendor partner. Portman can offer vendor finance for providers of equipment & services.




The non-cancellable agreed period of a finance agreement.




The decision process of whether a prospective customer should be offered finance. This is done through a risk assessment and credit check to determine the affordability of the proposed finance for the customer.

Universal document

A lease agreement used by brokers or equipment suppliers which typically has the branding of the broker or supplier. This document will be acceptable by several lessors and can provide a simpler process for customers where a broker or supplier has a number of funders on their panel.



Value added tax (VAT)

A form of consumption tax on a product. For leases without a bargain purchase option, VAT on an asset is charged on the rental payments. For hire purchase agreements, VAT is paid upfront.

Vendor Finance (Introducer Finance)

Financial solutions, most often leasing, offered by vendors to their customers that is not manufacturer (captive) finance. The vendor introduces the customer to either a broker or funder. Around a quarter of total new asset finance business in the UK market is sold through the vendor channel.



Working Capital

The difference between a company’s current assets (such as cash, inventory, and accounts receivable) and its current liabilities (such as accounts payable and short-term debts), representing the funds available for day-to-day operations.

Portman News & Articles