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Obligor
Also called account debtor, primary obligor.
Whoever owes money under a given instrument - which, depending on which document you are reading, may be the business, a guarantor, or the customer who owes a factored invoice.
Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.
What it means
The word is defined locally in each agreement and does not carry a fixed meaning across the industry. In a promissory note the obligor is the borrower. In a guarantee the guarantor is a secondary obligor. In factoring and receivables documents the obligor is frequently the account debtor - your customer - because the instrument being discussed is the invoice, not the funding agreement.
The distinction between primary and secondary obligor determines the order of enforcement. A creditor can generally pursue a primary obligor immediately; whether it must do so before reaching a secondary obligor depends on whether the guarantee is one of payment or of collection.
In securitisations and participations the term appears again, referring to the underlying business whose payments support the paper.
Where this one catches people
In factoring documents, obligor usually means your customer, not you. Reading a repurchase or credit-limit clause with the wrong party in mind reverses its meaning entirely. Check the definitions section of the specific document rather than assuming the usage carries over from the last one you read.
Where you will meet this term
Read next
Obligor — common questions
What does obligor mean?
Whoever owes money under a given instrument - which, depending on which document you are reading, may be the business, a guarantor, or the customer who owes a factored invoice.
Where does obligor catch people out?
In factoring documents, obligor usually means your customer, not you. Reading a repurchase or credit-limit clause with the wrong party in mind reverses its meaning entirely. Check the definitions section of the specific document rather than assuming the usage carries over from the last one you read.
Is obligor the same as an interest rate?
Obligor is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.
Which products does obligor apply to?
Invoice Financing, Asset-Based Lending.
Is there a worked example of obligor?
Not on this entry. Where a term is arithmetic, the arithmetic is shown; this one is not primarily a calculation.
What else should I read alongside obligor?
Notice of assignment, Personal guarantee, Promissory note, Receivable, Recourse.
Has this definition been checked?
Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.
Is this legal advice?
No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.
Can I suggest a term?
Yes — [email protected]. The glossary grows from what people are actually shown in contracts.