Business Glossary

All the main terms used by businesses and their employees on a daily basis are contained in our business glossary that is listed a-z and is also useful for business studies students.

Many of these terms are not in a dictionary and below are the definitions and terminology of terms and acronyms that cover finance, marketing, management, internet, money, consulting and much more.

Glossary of Terms

A

Accounts Payable - is the function in an organisation that pays the invoices to suppliers. The accounts payable department was also called bought ledger or purchase ledger because ledgers or books were used before computers were invented.

Accounts Receivable - is the function in an organisation that collects payment of sales invoices from suppliers. The accounts receivable department was also known as the sales ledger department because ledgers were used before computers were around.

Assets - Assets of a company are items that are owned by the company and could be exchanged for cash or something else. Assets are typically broken down into fixed assets such examples might be furniture, equipment and premises that have a useful life of more than one year and current assets such as stock or a bank account that are more liquid and can be turned into ready cash faster.

B

Business Plan - A business plan is a document that shows how a business is going to achieve its objectives laid out in the plan both from a customer marketing viewpoint and the financial statements to back up the written plan. Typically a business plan contains top level business strategy, research data, marketing plans, tactical plans and financial forecasts. A standard business plan written for banks is no more than 20 pages but a plan to put a company through an IPO might be 100-200 pages.

Bonus or bonuses - A bonus is seen as an additional payment over and above a standard monthly or yearly salary. It can be a fixed amount or percentage of salary and is generally based upon some pre-determined targets that have to be met or exceeded at which point the bonus is triggered and paid for. Some companies such as banks are cancelling bonus schemes in the wake of the credit crunch because many bonuses were being paid just for meeting targets which many people felt was just the employee doing their job correctly.

C

Companies House - Companies house is the organisation within the UK government that hold all information on limited companies in the UK. Those companies inform them of changes to directors, shareholding, addresses and file their accounts each year. See more information on companies house direct in our comprehensive guide.

Cashflow or Cash Flow - Cash flow is perhaps normally a financial statement that shows the company's cash balance and what cash is going to move in and out of its bank account or cash float in a given period. Many companies produce daily, weekly and monthly cash flow statements and yearly forecasts to show how (for example) new credit terms have invoices paid faster or slower, how a new loan might be paid for and just to ensure that the business has enough cash to pay its suppliers over the medium to longer term.

Commission - Commission is an amount earned on the sale of a product. Normally commissions are paid to sale people who might earn a % or fixed element of the sales revenue or profits which make up their monthly salary.

G

Gross Profit - the gross profit is a simple calculation in that it is just turnover or sales less cost of goods sold. See more on gross profit margin and the ratios you can develop.

H

Hits - Hits is an outdated term used to describe how busy a website is. In the early days of the internet hits were counted rather than unique visitors. A hit is a call on a server to load something to the website visitor and includes every file required to display a page. If that page contains 20 images, one page file, three CSS style sheets and two javascript files then that one page will have requested 26 files from the server resulting in 26 hits. Of course many browsers cached files on the visitors computer so next time they visit a page not all the files will be loaded. It's much better to talk about unique visitors and page views than hits.

I

IPO - Initial public offering is the first time a company offers shares for public ownership and the first time it goes to the stock market. During the dot-com boom of the late 1990s many, many new businesses had IPOs particularly on the Nasdaq exchange.

L

LLP - The acromyn LLP stands for Limited Liability Partnership and is a legal structure for partnerships in the UK. It is mainly used by professions companies such as accountants or solicitors and means the partners liability is limited but in a LLP it's limited to the amount of money each partner has invested (whereas a sole trader is not limited at all and limited companies hold the liability rather than the shareholders or directors) More on limited liability partnership LLP including how to set one up.

P

Profit - Profit is the amount expressed as a value that is left over from sales once all expenses have been deducted. There are several profit numbers reported that include gross profit, net profit, net profit before income and tax often expressed as earnings before income and tax (EBIT).

PEST Analysis - The PEST acronym stands for political economic and social trends analysis and is used when developing external analysis and goes hand in hand with the SWOT analysis below.

S

SWOT Analysis - The SWOT acronym stands for strengths weaknesses opportunities and threats and is a summary of a company's internal and external analysis when preparing a business plan or strategic review. Internal strengths and weaknesses are in direct control of a company and they can either develop their strengths or reduce their weaknesses. Opportunities and threats are external forces which a company can only influence as they are not in direct control. Advance SWOT analysis has these shown relative to the competition analysed in that if every company has a "strong sales force" then there is no competitive advantage and that strength would no be shown.

U

Unique Visitors - A unique visitor is one person who has come to a website in a specified time period. If one person comes to a website 5 times during the day they will only be counted as 1 unique visitor for that day -- if that is what the calculation is being based around but will be counted as 5 visitors in the total visitors for that day.

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