COMPENSATING BALANCES Definition

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COMPENSATING BALANCES are the funds a business might be required to keep in a deposit or reserve account to help offset what the bank perceives as risk. The lender might require that an amount based on the business' average account balance or a certain percentage of the face value of the loan be maintained in a deposit account.

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BOM see BILL OF MATERIALS.

PRO-FORMA INVOICE is a price quote. It is written as an invoice, and, in effect, says: This is the purchase price and terms we are offering.

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