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Simple English definitions for legal terms
cash collateral
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A quick definition of cash collateral:
Term: Cash Collateral
Definition: Cash collateral is money that is used as security for a loan or debt. It is something valuable that a borrower gives to a lender to make sure they will pay back the money they borrowed. If the borrower cannot pay back the loan, the lender can take the cash collateral to make up for the loss.
Term: Cash Cycle
Definition: Cash cycle is the time it takes for a business to receive money from selling its products or services and then use that money to buy more supplies or materials to make more products or services. It is like a circle that keeps going around and around. The faster a business can complete this cycle, the more money it can make and the more successful it can be.
A more thorough explanation:
Definition: Cash collateral refers to cash that is used as security for a loan or debt. It is money that is pledged by a borrower to a lender to ensure that the lender will be repaid if the borrower defaults on the loan.
For example, if a business takes out a loan from a bank, the bank may require the business to provide cash collateral to secure the loan. This means that the business will have to deposit a certain amount of cash with the bank, which the bank can use to repay the loan if the business is unable to do so.
Definition: The cash cycle is the time it takes for cash to flow into and out of a business. It refers to the period between when a business pays for raw materials or inventory and when it receives payment for the finished product or service.
For example, if a company buys raw materials to manufacture a product, it may take several weeks or months to produce and sell the finished product. During this time, the company will have to pay for the raw materials, as well as for labor and other expenses. The cash cycle is the time it takes for the company to receive payment for the finished product and use that money to pay off its expenses.