Fleet financing, defined

The terms below come up across fleet financing generally and in the other notes on this site specifically. Each definition stands on its own; where a term is covered in more depth elsewhere, the entry links there.

Acceptance

The point at which a customer formally confirms that installed equipment works as promised and the payment obligation under the contract becomes unconditional. Financing generally depends on acceptance having already happened, since everything before it is still the manufacturer's execution risk rather than the customer's payment obligation. See What makes a robot fleet financeable.

Advance rate

The share of a payment stream's value that a financing party pays upfront, rather than holding back. Advance rates are set individually through underwriting rather than published as a fixed figure, so this entry defines the concept without stating one.

Assignment

The legal transfer of a contractual right, such as the right to receive payments, from one party to another. Many customer contracts restrict assignment without consent, which is why a fleet financing often requires checking, and sometimes amending, the underlying contract before a payment stream can be sold.

Blanket lien

A security interest that covers substantially all of a company's assets rather than a single, named item, commonly granted to venture lenders and often extending to assets acquired after the loan is made. See Blanket liens and fleet financing.

Concentration

The share of a financed pool attributable to a single customer or a small group of customers. High concentration is a risk even when the customer's own credit is strong, because the financing's outcome then depends more heavily on what happens to that one relationship. See What makes a robot fleet financeable.

Deferred consideration

The portion of a purchase price that is held back at closing and paid later, typically once agreed conditions or release tests are satisfied rather than on a fixed date. It gives a buyer a way to hold back part of the price against risks that only become clear after closing.

Hardware payment stream

The portion of a customer's contracted payments that corresponds to the equipment itself, as distinct from software, maintenance or service fees bundled into the same contract. A financeable hardware payment stream needs to be identifiable and separable from those other economics. See What makes a robot fleet financeable.

Intercreditor agreement

A contract between two or more lenders with claims on the same borrower or the same assets, setting out who has priority and in what circumstances. It lets more than one secured claim exist over related assets without either side having to guess at the other's rights. See Blanket liens and fleet financing.

Master program agreement

A single agreement between a manufacturer and a financing party that sets eligibility criteria and terms for financing future deployments as they occur, rather than negotiating each one from scratch. See Why robotics-as-a-service turns manufacturers into lenders.

Obligor

The party legally responsible for making payments under a contract. In a fleet financing, the obligor is normally the manufacturer's customer, and the obligor's creditworthiness, not the manufacturer's, is what is actually being underwritten. See What makes a robot fleet financeable.

Perfection

The legal step that makes a security interest enforceable against parties other than the borrower itself, such as a buyer or another creditor. For most personal property, perfection is achieved by filing a UCC-1 financing statement. See Blanket liens and fleet financing.

Recourse

Whether, and to what extent, a financing party can seek repayment from the manufacturer if the underlying customer fails to pay, beyond simply collecting what the financed asset itself yields. Financing terms typically distinguish full recourse, limited recourse and no recourse to describe how that risk is allocated.

Redeployability

Whether equipment that comes back from one customer, whether at the end of a term or because a deployment did not work out, can practically be refurbished and placed with a different customer. Standardized equipment is generally redeployable; bespoke, single-purpose installations generally are not. See What makes a robot fleet financeable.

Seasoning

How long a deployment has been installed, accepted and paying as agreed. A more seasoned deployment has a longer track record of actual payment behavior for an underwriter to look at, compared with one that was only recently accepted.

Severability of hardware and service

The degree to which a contract's pricing distinguishes the portion attributable to hardware from the portion attributable to software, maintenance or service. A financeable hardware payment stream requires this split to exist, even if only in the underlying cost model rather than in the customer-facing price. See What makes a robot fleet financeable.

True sale

An outright sale of an asset or a payment right, rather than a loan secured by it. In a true sale, the buyer owns what it purchased directly; it is not merely holding the asset as collateral for the seller's obligation to repay. See Blanket liens and fleet financing.

UCC-1 and UCC-3

A UCC-1 financing statement is the public filing that perfects a security interest in most personal property, made under Article 9 of the Uniform Commercial Code. A UCC-3 is the corresponding amendment form, used to modify, narrow or terminate the collateral description in an existing UCC-1, including a partial release of specific assets. See Blanket liens and fleet financing.

Spotlight uses these terms the way they are defined here. If a deployment of yours raises a question this page does not answer, discuss a financing program.