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Running a business means you will always be learning. Irrespective of your business interests and where you have reached in your career, there is still stuff to learn. In today’s world, you do not need to be an accountant or a certified financial planner to negotiate and cut deals for your business. The following are some business terms that you need to be conversant to run your business successfully.

Accounts payable-This is a common financial term, and it shows the financial obligations of a business such as debts that are owed to creditors, lenders, and suppliers. To get more info, click https://www.marketbeat.com/financial-terms/. Accounts payable is often abbreviated as AP or A/P and can be short term or long term based on the credit that the business accessed.

Accrual Basis-this refers to the accounting of income when it is earned and expense when they are incurred. The accrual basis accounting is common with large companies who are keen to record, maintain, and keep financial transactions.

Accruals-this is a financial term that refers incurred expenses which have not been recorded in books of accounts. Common examples of accruals are wages and payroll taxes.
Capital-Capital means the overall wealth of a company. Cash accounts, company property, and investments form the capital of a company.

Cash Flow-cash flow is the amount of cash used for the day to day running of the business. Cash flow reports are used to know how much activity took place over a given time, such as one month or the set business accounting period.

Depreciation-depreciation is the measure of loss in value of assets over a specified period. Check it out! for more info. There are various methods used by companies to calculate depreciation of assets.

Balloon Loan-a business loan is a structured borrowing that a business owner gets for his business and commits to making regular payments on an agreed schedule, and a larger payment at the end hereby referred to as balloon payment.

Bankruptcy-It is a term that the federal law uses to declare individuals and companies who are unable to meet their financial obligations mostly debts. Bankruptcy has a negative effect on the company credit score.

Bootstrapping- Refers to the common cases where investors use their own money to start and grow their business. When your business is up and running, and you reinvest the profits, then that is still bootstrapping.

Collateral-Collateral refers to the asset that you offer as a security to secure a loan. It is one-way lenders protect the money that they lend to your business. Learn more from https://www.huffpost.com/entry/tips-organizing-your-finances-fall_n_5bb3bec5e4b01470d04c51cb.

Financial Terms You Should Know

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