Client (Banking & Finance) meaning

In banking and finance practice, Client describes the funder’s corporate counterparty in receivables finance and asset-based lending transactions. In a receivables purchase, invoice discounting or factoring agreement, the Client is the entity selling or assigning its trade receivables to the finance provider (often also labelled Seller or Assignor). It is the finance provider’s customer, not the underlying debtors (commonly called Customers or Account Debtors). In asset-based lending (ABL) facilities, many lenders’ templates use Client to refer to the borrower/obligor under the revolving or term facility. Client is not a statutory or case-law term; its meaning is set by the finance documents and any related security documents. Usage is broadly consistent across England and Wales, Scotland, Northern Ireland and Ireland, though local law governs how receivables are transferred and how security is perfected. The designation matters because the Client is the party that gives warranties and undertakings about receivables, meets eligibility and concentration tests, provides borrowing base information, complies with collection and trust/agency provisions, grants security and guarantees, and is subject to reserves, covenants and events of default. Precise drafting in the facility and receivables purchase documents determines the Client’s obligations and risk allocation.