Glossary of key financial terms | Business finances


Hiya Folks!

Here it is some words to update ur business vocabulary!

A

Accounts payable – a record of all short-term (less than 12 months) invoices, bills and other liabilities yet to be paid. Examples of accounts payable include invoices for goods or services, bills for utilities and tax payments due.

Accounts receivable – a record of all short-term (less than 12 months) expected payments, from customers that have already received the goods/services but are yet to pay. These types of customers are called debtors and are generally invoiced by a business.

Accounts receivable finance – see Factoring.

Accrual accounting – an accounting system that records transactions at the time they occur, whether the payment is made now or in the future.

Amortisation – the process of expensing for intangible assets such as goodwill and intellectual property over a period of time. See also Depreciation.

Assets – are things you own. These can be cash or something that can be converted into cash such as property, vehicles, equipment and inventory.

Audit – a physical check performed by an auditor or tax official on a business’ financial records to check that everything is accounted for correctly.

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B

Bad debts – money owed to you that is unlikely to be paid to you in the foreseeable future.

Balance sheet – a snapshot of a business as of a particular date. It lists all of a business’ assets and liabilities and works out the net assets.

Balloon payment – a final lump sum payment due on a loan agreement. Loans with a larger final ‘balloon payment’ have lower regular repayments over the term of the loan.

Bank reconciliation – a cross-check that ensures the amounts recorded in the cashbook match the relevant bank statements.

Bankrupt – an individual is bankrupt when they cannot pay their debts and aren’t able to reach an agreement with their creditors.

Bankruptcy – a process where an individual is legally declared bankrupt and their assets and financial affairs are administered by an appointed trustee.

Benchmark – a set of conditions against which a product or business is measured.

Benchmarking – the process of comparing your business to similar businesses in your industry.

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