Glossary of Financial Terms

Understanding the world of finance can be complex, with many terms, phrases, and jargon that can be difficult to parse through. To help, we put together this glossary of finance terms. This glossary contains commonly used terms you’ll encounter, along with straightforward definitions. This can be an invaluable resource for finance teams, startup founders, SMBs, and more.
A
ach-transfer
ACH transfer

Automated Clearing House (ACH) transfers are direct deposits sent through the National ACH network. ACH transfers are initiated once appropriate paperwork is filed with a financial institution. Intermediary banks, credit unions, and other financial institutions process ACH requests in batches. This means these transfers can take up to three business days to process.

ACH transfers vs wire transfers
audit
Audit

Audits are an independent financial review of a company’s internal controls and financial reporting. Governments have strict rules for external audits. This ensures audits can be used for reports to the investors, legislators, and the general public. An audit can provide an external tick of approval that a company’s financial statements and performance are all being accurately reported.  And an audit can also provide insights about any financial controls or processes that management needs to improve.

Managing Ramp's first audit
Annual percentage rate (APR)

Annual percentage rate (APR) is the total annual cost of a loan, including all interest and fees. This is calculated using the original loan amount, or principal, and is expressed as a percentage. It's important to understand APR, because it indicates the actual cost of borrowing.

activity-based-budgeting
Activity-based budgeting

Activity-based budgeting is a budgeting process that involves extensive analysis of activities that incur costs in a company. Those activities are evaluated and broken down with the intent of discovering how to create efficiencies. It’s a three-step process of identifying cost drivers, projecting how many units are affected, and then calculating the cost per unit.  

average-daily-rate
Average daily rate

Average daily rate (ADR) is a term used by the hotel industry to express the average daily revenue potential from renting a single room. The ADR is multiplied by the occupancy rate to determine total revenue for any given day. These numbers are critical for reporting the financial performance of the property.   

B
business-credit-cards
Business credit cards

Business credit cards enable cardholders to make purchases by using credit issued by the credit card company (think American Express, Visa or Mastercard). Instead of using cash for each purchase, it’s issued as a loan and noted in a monthly credit card statement. This loan amount—the credit card balance—must be paid back in installments to the card provider over a period of time, with an additional amount of interest specified by the card provider.

Best business credit cards: Automation is key
balance-sheet
Balance sheet

Balance sheets detail business’s assets, liabilities, and any owners' equity at a certain point in time.

How to create a balance sheet
Balloon loan

Balloon loans are loans that are designed so that small business owners pay frequent payments on a predetermined schedule and then make one ‘balloon’ payment at the end. These can be appealing to young companies because the payments are smaller at first when the company is more likely to be under financial stress. However, the final balloon payment is often substantial.

bnpl
Buy now, pay later (BNPL)

Buy now, pay later is used to describe a transaction where the buyer can make an agreement to purchase an item and pay for it later. It’s like a short term loan, but the financing is typically handled by the seller or their bank. BNPL has taken off online recently to target Gen Z users. 

bitcoin
Bitcoin

Bitcoin is a digital currency. Unlike traditional currency, which has value set by a Central Bank, Bitcoin’s value is volatile and determined by user adoption and trading volume. Bitcoin was created by Satoshi Nakamoto, which is a pseudonym for a person who has yet to identify themselves publicly.   

C
Cashback

Cashback is when you receive a percentage of a transaction as a cash reward, as a credit on your account. For example, if you bought a $100 office chair with a corporate card provider that gives you 1.5% cashback, like Ramp, you would receive $1.50 in cashback. Cashback is an alternative to loyalty points that is a better fit for small businesses that want to incentivize saving and cash flow.

What is Cashback
charge-card
Charge cards

Charge cards are payment cards where the balance must be paid off in full at the end of each month. And it’s only when the balance isn’t paid off in full each month that a charge card’s interest rate kicks in. Charge cards can be an effective way of managing budgets when you have financial predictability. Some charge card issuers may also allow for more flexibility with monthly spending limits, based on fluctuating factors, such as quarterly sales.

What’s the difference between credit cards and charge cards?
Corporate cards

Corporate cards are credit cards companies can issue to their employees. Staff can use their corporate card to pay for work expenses, like home office equipment, work lunches, or tickets and travel to conferences. Modern corporate cards provide businesses with a way to manage their spending, away from the traditional approach of reimbursements, expense reports, and procurement policies.

What are Corporate Cards
Capital gains / capital losses

Capital gains are the difference between the current value and the initial purchasing price. The gain is merely a paper gain until the asset or investment is sold. A capital loss is a drop in the value of an asset or investment since purchase.

Cash flow

Cash flow is the amount of operating cash that "flows" through a company and influences its liquidity. Cash flow reports show activity over a set time frame, usually a month or one accounting period. Maintaining strict cash flow control is critical if your business is new, because available cash may be limited until the company grows and produces additional working capital.

D
dilution
Dilution

Dilution is a reduction in your share of company ownership. It’s important later in a company’s life too, if it ‘goes public’ with an Initial Public Offering (IPO) or offers additional shares through a secondary stock offering. In short, the more shares a company offers the more ‘diluted’ its ownership becomes. If your company provides non-qualified stock options to your employees—and one or more of them exercises their options—then this would cause dilution.

What is dilution?
deferred-revenue
Deferred revenue

Deferred revenue is synonymous with unearned revenue. It’s a prepayment for goods or services that have not yet been delivered. When the money is received, it’s recorded on the balance sheet as a liability until the obligation is met by the company. Once that happens, it can be listed under gross revenue.

depreciation
Depreciation

Depreciation is a term used to describe the decrease in value of a material asset over time. Examples of this are the values of manufacturing or computer equipment. Both have a book value or “fair market value” that goes down as months and years go by. In financial reporting, depreciation is listed as an expense on the income statement.

E
expense-reports
Expense reports

Expense reports are reports that list various business costs. These costs are typically incurred by individual employees, units, or entire departments. Sometimes the expenses are project-based, sometimes they are ongoing. There are a few different kinds of expense reports, including T&E expense reports, monthly expense reports, and recurring expense reports. Each kind of expense report includes an itemized list of expenses, like meals, transport fares, and home office equipment. Accurate expense reporting helps businesses record department-wide and company-wide costs, which can then be reported (and often claimed) to state and federal governments in tax reports.

10 reasons to kill expense reports
EBITDA

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. EBITDA is a proxy for free cash flow (FCF) because it includes depreciation and amortization.

edi-payments
EDI payments

Electronic Data Interchange (EDI) payments are electronic data exchanges used for payment processing. Businesses use EDI to send inventory and customs documents, shipping notices, bills of lading, payment documents, invoices, and purchase orders. EDI payments are not actual payments, like EFT and ACH. 

equity-multiplier
Equity multiplier

The equity multiplier is the percentage of company assets that is financed by shareholder equity, as opposed to debt. It’s calculated by dividing total assets by total shareholder equity. When the equity multiplier is low, the company is not heavily reliant on debt. Higher equity multipliers signify higher debt.

emv-chip-card
EMV chip card

The letters “EMV” stand for Europay, MasterCard, and Visa. An EMV chip card is a credit card branded by one of those providers with a “smart chip” embedded in it. The chip is a secure data storing technology that was designed to replace the more traditional magnetic strip seen on credit cards in the past.

F
financial-forecasting
Financial forecasting

Financial forecasting involves building department-level and company-wide budgets, analyzing the performance of strategic plans and investments, and predicting what might need to change based on analytics and expected performance. Importantly, financial forecasting is used to estimate key metrics such as revenue, profits, sales, and earnings.

What is financial forecasting?
Finance automation

Finance automation uses machine learning and artificial intelligence to reduce manual tasks for finance teams, such as accepting and lodging paper checks as payment, manually chasing up invoices by phone or email, or entering AR and AP data into Enterprise Resource Planning software.

What is Finance Automation
Founder guarantees

Founder guarantees require small business owners to personally guarantee their business's debt in the underwriting process of acquiring a business credit card for their new business. However, if a founder or business owner signs an agreement where these terms apply, personal assets like cars and homes are at risk of repossession.

What is a personal founder guarantee?
FICO score

Fair Isaac Corp developed the process for computing a credit score. FICO scores range from 300 to 850, and the higher the score, the better the loan or credit card terms. Low credit scores (below 620) may make it challenging to obtain low-interest credit.

fund-flow-statement
Fund flow statement

A fund flow statement is a document prepared by auditors or financial analysts to show the underlying reasons for financial changes on the balance sheet between two reporting periods. It breaks down cash inflows and outflows, lists sources of revenue, and analyzes how funds are being applied for business costs and expenses. 

G
gaap
GAAP (Generally accepted accounting principles)

GAAP, or generally accepted accounting principles, define financial reporting rules and conventions. GAAP helps standardize financial statements and ensures reporting consistency. GAAP is a commonly accepted set of accounting principles, standards and procedures as issued by the Financial Accounting Standards Board (FASB). Public US companies are required to follow GAAP when compiling financial statements.

What are GAAPs
general-ledger
General ledger

A general ledger is a tool used in bookkeeping and accounting to record debits and credits for a business entity. In larger companies, the general ledger is compiled from a collection of journals and ledgers submitted by departments. Examples of these ledgers would be accounts payable, accounts receivable, and purchasing.

H
hedge-accounting
Hedge / hedging

Hedging is a strategy used by investors and businesses to protect their investments from unforeseen changes and external risks. Diversification, staying in cash, and arbitrage are common examples of hedging.

What is a hedge?
Human resources information system (HRIS)

The HRIS is a repository of employee master data that human resources uses to complete core HR processes. Data include names and ID numbers, social security numbers, historical performance appraisals, benefits, and bank details. Common functions of a HRIS include employee onboarding and offboarding, leave management, and issuing corporate cards.

hybrid-annuity
Hybrid annuity

A hybrid annuity is a retirement investment account where investors can allocate portions of their account to both fixed-rate and variable-rate return funds. Fixed-rate returns are safer, whereas variable-rate funds are more high risk. Hybrid annuities offset some of that risk by balancing variable-rate return funds with fixed-rate investments.

holding-costs
Holding costs

Holdings costs are the costs of storing unsold inventory. These can include the rent or lease payments on the storage space, utility payments, insurance premiums, any labor costs associated with the space, and any price the company pays for lost, damaged, or spoiled goods. Holding costs are fixed costs allocated to the “inventory” category.   

I
Interest rates

Interest rates determine how much you pay a lender for access to some form of credit as a borrower. That could be a loan, a corporate card, or bond. Interest rates can be fixed or variable. They are typically payable on a recurring basis, like every month, but some interest payments fall due all at once.

What are Interest Rates
Invoice financing

Invoice financing is the practice of borrowing against your accounts receivable (AR). Invoice finance companies will float you the amount payable, along with a fee. Invoice financing is used to shore up cash flow, especially when a business does not yet have predictability about its aged receivables / day sales outstanding (DSO).

What is Invoice Financing
interchange
Interchange

Interchange, or “interchange fee,” is a fee charged by the payment processor for processing credit card transactions. The fee is charged to the merchant, which is why many merchants require a minimum transaction amount to accept credit cards as payment. The payment processor collects the fee and then pays it to the bank that issues the credit card.

issuer
Issuer

In finance and investing, the issuer is the entity that registers and sells securities to finance their operations. An example of this is a public company that issues stock to sell on the open market. The company is the issuer. The buyer is a shareholder once the deal is complete. An issuer can also be a financial institution that issues credit cards.

issuer-processor
Issuer processor

The issuer processor is the entity that manages the record of transactions and issuance of credit cards from financial institutions. They also do transaction authorization and record settlements. The issuer processor is the connecting piece between the payment processing network and the issuing bank that issues the credit card.

J
Joint credit

Joint credit is a credit facility between two or more people. In a startup, that might be the co-founders. Financial institutions issue joint credit, based on both parties’ income, assets, and credit scores. Each borrower has a shared responsibility to repay the debt. And if payments are missed—or if there is a default—then both borrowers’ credit scores will be affected. Joint credit is often used when one founder or business partner has a stronger credit score than the other.

What is Joint Credit
K
Know Your Business (KYB)

KYB is the process of due diligence that financial institutions need to carry out to prevent  crimes such as money laundering, tax fraud, and outright theft. The KYB process involves verifying identities, owners, company registration records and financial statements, and the purposes of business relationships. KYB also involves ongoing monitoring to ensure transactions or parties are not flagged on anti-money laundering (AML) watchlists.

What is KYB?
Know Your Client / Know Your Customer (KYC)

Know Your Customer and Know Your Client (KYC) standards mean financial institutions must verify their customers, and gather information about their risk tolerance, political exposure, and financial profile. Both KYB and KYB are regulated. They’re standards financial services businesses need to meet whenever they onboard new customers and clients. For example, the U.S. Financial Crimes Enforcement Network requires that financial institutions verify the identities of anyone with at least 25% ownership⁠ of a company.

What is KYC?
key-rate
Key rate

Key rate is a term used for the interest rate that banks pay if they need to borrow from other banks or the Federal Reserve Bank. In the United States, there are two key rates. The discount rate is used for funds borrowed from the Federal Reserve Bank. The federal funds rate is for bank-to-bank lending. 

L
liquid-assets
Liquid assets

Liquid assets are assets that can quickly be converted to cash without losing market value. They help businesses respond to market shocks or pay off debts. Examples of liquid assets include cash, checking and saving accounts, and investments such as securities, stocks, bonds, and mutual funds.

What are liquid assets?
M
Maverick spend

Maverick spend occurs when someone purchases goods or services from contractors or non-preferred suppliers outside a company’s set procurement policy. Your firm won't receive any of the discounts you worked to obtain if you buy items or services outside of a contract — or from unapproved vendors.

How to control maverick spend
#multi-cloud-management
Multi-cloud management

Multi-cloud management is the processes and tools needed to manage multiple cloud accounts that companies utilize for data storage and online operations. These tools are used for optimization and organization, both of which get more complex as the number of cloud accounts increases. 

machine-learning
Machine learning

Machine learning is a process used by artificial intelligence to improve itself without additional human programming. This is not done through sentient thought processes, but with a series of algorithms that use historical data to improve future output and function. 

month-end
Month end

In accounting and finance, month end refers to the final reports issued after the month is closed out. It can also be used to describe the date on which a company’s fiscal month will end, which is not always the same as the calendar date. Some firms choose the last Friday or end of business week that’s closest to the calendar month end date.

materiality-threshold
Materiality threshold

Materiality threshold is a number used by auditors to describe the likelihood of any material misstatements on financial reporting. It typically ranges between 5% and 10%. It’s calculated by weighing the volume and value of transactions in relation to the total annual revenue of a company. Materiality threshold is sometimes described as “margin for error” on financial reports.     

N
Net profit margin

Net profit margin is a ratio that shows the percentage of sales and other income that remain after deducting all business costs, such as cost of goods sold (COGs), operating expenses, interest, and taxes—all expressed as a percentage. It can also be seen as a measure of overall profitability for the business.

What is Net Profit Margin
noncurrent-liabilities
Noncurrent liabilities

Noncurrent liabilities are liabilities that are listed on the balance sheet but not due for at least a year. They are also known as “long-term” liabilities. Examples of noncurrent liabilities include long-term loans, lease payments, bonds payable to investors, and deferred revenue that has been invoiced.   

net-revenue-retention
Net revenue retention

Net revenue retention is a number used to measure the effects of revenue churn. It is calculated by subtracting total revenue churn, which includes expired contracts, cancellations, and downgrades, from total revenue. The remainder represents the total amount of revenue that has been retained.  

non-liquid-assets
Non-liquid assets

Non-liquid assets are assets that are difficult to quickly liquidate into a cash asset. The most common examples of this are real estate and land. Either of these could take several months to sell and weeks after that to process payment. Business interests are also non-liquid assets for the same reason.   

What is a non-liquid asset?
O
operating-budget
Operating budget

An operating budget is a budget that includes all of the cash and non-cash expenses of operating a company. Operating expenses include wages, rent, depreciation and profits on investments.

What is an operating budget?
ocr
Optical character recognition (OCR)

Optical character recognition (OCR) is a process where images of text are translated into machine-encoded text. It’s most often used when converting JPEGs that contain text into a Word document or Google Doc. OCR as a functionality is normally baked into other software packages or online services.  

opportunity-cost-formula
Opportunity cost formula

The opportunity cost (OC) formula is best described as the return on the most profitable option (MP) minus the return on the chosen investment option (C). Mathematically, that’s OC=MP-C. The difference is how much it costs to pursue that opportunity, when compared to a more profitable option.

P
points
Points

Points are rewards credit card providers give you in return for spending. Card providers have created systems for giving their customers different numbers of points for different dollar amounts and purchases. Some points translate into equivalent points within other loyalty schemes, such as frequent flyer programs. Cardholders can also redeem their points for goods and services at partner retailers or the card issuer’s loyalty store.

Why Ramp is committed to cash back over points
Procurement

Procurement is the process of buying goods or services, typically prior to their use. The purpose of procurement is to buy items where cost, quality, and time of delivery are the prime considerations. The purchasing department, which manages the process of procurement, is responsible for ensuring that goods or services are bought at the right time and for the best price.

What is Procurement
Purchasing cards

Purchasing cards, or p-cards, are a type of corporate charge card that allows purchases to be made without going through the typical purchase procedure. Unlike charge cards, p-cards were first introduced specifically with finance, HR, and procurement teams in mind.

What are P-Cards
pni-finance
PNI finance

The acronym “PNI” stands for “Paid/No Issue.” It is used to describe any payment that is made without issuing a check. Examples of this are cash payments and any other non-check payments issued by the company. 

purchase-price
Purchase price

The purchase price is the amount of money that a buyer pays to a seller to secure a product or service, including sales tax and warranty charges. For investors, the purchase price of a security also becomes their cost-basis, which is a base metric used to measure performance. Purchase price differs from “sticker price” because it’s the amount actually paid on final sale. 

Q
Qualified stock options (a.k.a. incentive stock options)

Qualified stock options, also known as incentive stock options, are a stock option only given to company employees. As a result, they come with preferred tax treatment. Employees pay no tax on qualified stock options when they are granted or exercised. If an employee exercises their options on the stock, they then must hold it for a year to retain its status as a qualified stock option. Unlike non-qualified stock options—which can be issued to anyone inside and outside a company—qualified stock options can’t be claimed as an operating expense.

How to evaluate your 409a valuation
R
rewards
Rewards

Rewards are incentives, usually provided by credit card companies and banks, for depositing a certain amount each month or hitting a certain spending volume. Others will tie these rewards to repayment consistency. Most financial institutions structure these rewards as ‘points’, with no monetary value. Others offer partner rewards—vendor discounts in the form of credits, percentages off, or exclusive access to services.

What are rewards?
rpa-finance
RPA finance

Robotic Process Automation (RPA) finance is the automation of basic financial tasks. It’s generally used for repetitive tasks like data entry on spreadsheets and forms, cross-checking for accuracy, and record-keeping functions of accounting departments. RPA is utilized as a time-saver to streamline operations. 

rolling-budget
Rolling budget

A rolling budget is a budget that is updated at the completion of each budgeting period. A common example of this is an annual budget that is modified at the end of each month in the annual period. This requires constant attention by budget creators, so it may not be the most cost-effective choice for a smaller company. 

rolling-forecast
Rolling forecast

Rolling forecast is a term used to describe a report that projects future numbers based on an analysis of past history. Rolling forecasts are commonly used for financial reporting and budgeting, so this is an important concept to understand. A rolling forecast is a valuable tool for making business and investment decisions.   

revolving-line-of-credit
Revolving line of credit

A revolving line of credit is a type of loan where the borrower is approved for a certain amount, but not obligated to take it all. It’s also renewable, so when an amount borrowed is repaid, the borrower can take more funds up to the limit stated on the original line of credit agreement. Lines of credit can be either business or personal use.  

S
spend-analysis
Spend analysis

Spend analysis is the process of gathering, cleansing, and categorizing spend data to help identify trends and discrepancies across expense categories. The data from these analyses can help teams identify inefficiencies and ultimately increase spend visibility across their business.

5 expert tips on executing an effective spend analysis
spend-management
Spend management

Spend management is about getting value for money from company spend, while decreasing the costs of vendor, supplier, and contractor relationships. Analyzing spend, sourcing, and supplier relationships are key to spend management.

How to solve the spend management issues wrecking your budget
saas-management
SaaS management

SaaS management is the process of strategically managing your spending on software subscriptions at a company-wide level, using the best pricing and usage intelligence possible to drive contact negotiations and value for money. SaaS management is key to spend management for high-growth companies, who quickly find themselves exceeding traditional SaaS pricing tiers.

SaaS management strategies to maximize the ROI of your tools
subscription-creep
Subscription creep

Subscription creep is a concept where consumers are paying for subscriptions they no longer use. Common examples of this are gym memberships and streaming services like Netflix or Amazon. Not cancelling these when you’re no longer using them could cause other payments to bounce and potentially cost you hundreds of dollars over time.

settlement
Settlement

Settlement is used two ways in finance: It can describe the final payment on a bill or contract.Alternatively, settlement can be an offer made to resolve a contract or outstanding balance. An example of this latter case is when a credit card balance is settled with a collection agent for less than the total amount due.

T
tail-spend
Tail Spend

Tail spend is a high-volume of low-value expenses, such as office supplies and small tools, that make up an average of 80% of most company’s transactions—and 20% of total spend, according to Deloitte.

How to curb miscellaneous expenses with better tail spend management
Transactions

Transactions are an exchange between two parties, for example a buyer and a seller, or a payer and a payee. The simplest transactions involve the transfer of cash. Other more complex transactions involve an exchange of assets or liabilities with a cash value, such as receivables, property, or stock options.

What are Transactions
t-e
T&E

The term T&E refers to “travel and expense” or “travel and entertainment expense.” It’s a category used on expense reports and accounting documentation to describe expenses incurred while traveling or entertaining clients and customers. T&E expenses are tax deductible, so accurate record-keeping is important. 

top-line-growth
Top line growth

Top-line growth is a measurement of the increase of gross sales or revenue over a defined period. It differs from bottom-line growth because interest payments, taxes, and other general and administrative costs are not included in the calculation. Think of top-line growth as gross, while bottom-line growth is net.

treasury
Treasury

The term “treasury” refers to the funds or revenue that an institution, company, or government has accumulated. The word is also used to describe the place or account where those funds are stored. An example of this is that the word “treasury” can be a reference to both the “treasure” and the “vault” where that treasure is kept.

U
Underwriting

Underwriting is when financial institutions take on a risk in exchange for a profit. Underwriters are involved in everything from banking and insurance through to securities. A common example of underwriting is when a bank raises capital on a corporation’s behalf through equity or debt securities.

What is Underwriting
unearned-revenue
Unearned revenue

Unearned revenue is money received as payment for goods or services that have not yet been delivered to the buyer. It’s listed on the balance sheet as a liability until the terms of the agreement have been realized. An example of this is a pre-payment for an item that needs to be manufactured or assembled before delivery.  


V
virtual-cards
Virtual cards

Virtual cards are a temporary card designed to safeguard businesses and consumers against fraud and cybercrime. A virtual card has a randomly-generated card number, expiry month and year, and security code tied to your actual account. Many cards can be set up for a single use, or a small number of transactions.

Virtual cards for business: improve spend control & security
vendor-management
Vendor management

Vendor management involves viewing and controlling the products, supplies, and services you purchase to operate your business. A sound vendor management program will help your business clearly see and control who supplies your business, modify contracts based on needs, and ensure spending aligns properly with service and product usage.

What is vendor management?
variance-reporting
Variance reporting

Variance reporting is the compiling and publishing of reports that show the difference between planned financial outcomes and actual financial outcomes. Variance reports are useful for analyzing costs, including materials, labor, and overhead. They are also a tool for creating and managing corporate budgets. 

variable-expenses
Variable expenses

Variable expenses are expenses that change based on a company’s production or sales volume. Examples of this are materials costs, piece rate labor, billable staff wages, and credit card fees. As production and sales increase or decrease, these costs go up and down in relation to that.

W
Wire Transfers

Wire transfers are rapid electronic fund transfers (EFTs) of funds between two entities, such as consumers or businesses. Here’s how wire transfers work: you can send the remittance through a bank or third-party payment provider, such as Western Union. You’ll need the recipient’s name, their bank account number, their routing number, and the amount of money to transfer. Third-party wire transfer services will also require the recipient’s address.

ACH transfers vs wire transfers
waiver-of-exemption
Waiver of exemption

A waiver of exemption is a concept found in some consumer credit contracts. It’s a provision where the consumer waives their rights to protection from asset seizure in the event of a default, even if the state they reside in exempts the consumer from those actions. Waivers of exception are regulated by the Federal Trade Commission (FTC). 

working-capital-formula
Working capital formula

The working capital formula is a calculation used by businesses to determine liquidity. That number can be arrived at by subtracting current liabilities (accounts payable, wages payable, etc), from current assets (cash and cash equivalents, property, etc). The remainder is the amount of working capital a company can spend. Working capital can also be expressed as a ratio: current assets/current liabilities.

X
xenocurrency
Xenocurrency

Xenocurrencies are a foreign currency. Xenocurrencies are those traded on markets outside the country where a central bank issued them. The US dollar is often used as xenocurrency, as is the Japanese Yen.

What is xenocurrency?
x-efficiency
X-efficiency

X-Efficiency is a measurement of the efficiency of people and companies when competition is limited or non-existent. This term is commonly used for monopolies and duopolies where management and production staff don’t have the motivation to compete aggressively because there aren’t many (or any) competitors.  

Y
year-to-date
Year-to-date

Year-to-Date is the beginning of the current fiscal year to a specified date before the year’s end. Finance teams use year-to-date when reporting on the current fiscal year.

What is year-to-date?
year-fraction
Year fraction

A year fraction is a portion of an interest period expressed as a decimal. An example of this would be breaking down an APR into individual days or months to find out how much you’ll pay in interest during that period. It’s calculated by dividing the number of days in the portion you’re looking at by the total number of days in the interest period.

yield-variance
Yield variance

Yield variance is a manufacturing term that describes the difference between what a manufacturer actually produces in comparison to what the standard industry production rate is. It’s calculated by multiplying the standard unit cost by the difference between the actual yield and the standard yield.

Z
zbb
Zero-based budgeting (ZBB)

Zero-based budgeting is a way of allocating departmental and company-wide resources based on necessity rather than historical budgets or assumptions. Think of ZBB as budgeting done from scratch.

What is zero-based budgeting?
zombie-spend
Zombie spend

Zombie spend occurs when recurring charges continue even when a service or product is no longer needed. Think of software subscription purchased for a short-term project, or an independent contractor engaged by an employee or team that has since got the internal resources to do the same work internally. Much like tail spend—a high-volume of low-value expenses—zombie spend can become a larger problem if left unaddressed.

What is zombie spend?
zero-fraud-liability
Zero fraud liability

Zero fraud liability is a protection policy offered by some credit card issuers that absolves the consumer of any responsibility for charges made with a lost or stolen credit card. The Fair Credit Billing Act states that you can be held responsible for up to $50 in those circumstances. Zero fraud liability brings that down to $0.