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Business Glossary is a handy business tool. It is a repository of business and technical terms that will be helpful to anyone who wants to start or expand their business.

Accounts Payable

How much money your business owes all of its suppliers.


Accounts Receivable

How much money your business is owed by clients.


Acquisition

When one company buys another company or its resources, this is called an acquisition.


Actuary

An actuary works for an insurance company or pension provider. They look at past records and simulate how likely it is that you’ll die or be injured. Then they set the payout accordingly.


Administration

There are two meanings relating to this word in business:


(1) The process of running an organization or a business.

(2) A business going into financial administration, it means that the business has lost so much money that it is unable to pay its creditors. The creditors can get in touch with you to try and recoup any money they are owed.

 

Affiliate Marketing

Affiliate marketing is a type of marketing in which a company compensates third-party publishers for marketing its own products and services. Third parties get paid every time they drive a sale, just like a commission-only sales representative.


Annuity

An annuity is an agreement between you and an insurance company. The insurer must make payments to you, either immediately or in the future.


Arbitrage

The buying and selling of a share or a currency with the intention of making a profit from the difference in the price.


Asset

An asset is a resource with economic value with the anticipation that it will provide a future benefit.


Audit

An official assessment of a company’s, or individual’s, financial accounts.

Business-to-Business (B2B)

Business-to-business (B2B), also called B-to-B, is when a business transacts with another business, rather than between a company and individual consumer. 


Business-to-Consumer

The term business-to-consumer (B2C) means the process of a business selling products and services directly to consumers who are the end-users.


Balance Sheet

A balance sheet is a financial statement that reports the status of a company’s assets, liabilities, and shareholder equity at a given time.


Benchmarking

Measuring key business metrics and comparing them, within business areas or against a competitor, industry peers, or other companies.


Black Swan

A black swan is a rare and unpredictable event that is beyond what is normally expected of a situation and has potentially severe consequences.


Blue Chip

This term comes from poker as blue chips are the highest-valued. A blue-chip company is a large, established, prestigious company that has proved its financial strength over time.


Bond

A bond is a loan from an investor to a corporation or government, where the investor receives regular interest payments and returns the principal upon maturity. Bonds are rated from the safest (AAA) to the riskiest (D).


Bootstrapping

Starting a company with very financial capital, usually with personal savings and keeping costs as low as possible.


Break-Even Point

The point in time when you will have paid back all your debts, or when revenues exactly match expenses.


Bridging Loan

People can apply for this loan when they need funds to cover their day-to-day expenses while they wait for the sale of their property to be completed.


Business Angel

A person who provides capital for a business start-up in return for a stake in the company. Also known as an angel investor.


Business Cycle

Business cycles are marked by the alternation of “up” and “down” times for the economy, and the movement among the different economic variables during these times.

Capital

Resources (usually money) invested into a company or project by its owners or shareholders.


Capital Expenditure (CAPEX)

Capital expenditure (CAPEX) is money spent on major long-term purchases to buy, repair, update, or improve a fixed company asset, such as a building, business, or equipment.

A CAPEX is amortized, or its value is deducted each year based on the total cost and its expected useful life.


The main difference between CAPEX and operating expenditure (OPEX), is that OPEX refers to ongoing yearly costs to run a project, product, service, or system.


Cashflow

The flow of cash into and out of a business.


Collateral

Collateral is a valuable asset that lenders can use to give security against a loan. It is usually a major asset such as a house or building.


Commodity

It is a basic good, usually a resource or raw good, that can be bought and sold. For example precious metals (copper), food products, and crude oil.


Copyright

The exclusive legal right, owned by a creator(s) of a work, or by an individual or group assigned by the originator, to use certain material and to permit others the right to use the material.


Corporate Social Responsibility

Corporate social responsibility (CSR) is a form of self-regulation, it refers to practices and

policies taken on by corporations with the intention to have a positive impact on the community they operate in and the world. Companies integrate social, environmental, and ethical policies into their overall business strategy.


The key idea behind CSR is for corporations to pursue other pro-social objectives while maximizing profits. Common examples of CSR objectives include minimizing environmental

externalities, promoting volunteerism among company employees, and donating to charity.


Creditor

A person or institution (usually a bank) that has lent your business money or to whom you owe money due to outstanding payment.


Critical Success Factor

A critical success factor (CSF) is an element that is necessary and must occur in order for a business to achieve its mission.

Debtor

A person or business that owes money to you or your business.


Depreciation

The reduction in the value of an asset over time, and is usually due to wear and tear.


Diversification

Diversification is an investment strategy used to manage (reduce) risk of a portfolio.

In a business, risk is managed by adding a range of new products, services, customers or markets to your company’s portfolio.


Dividend

This is money paid out by a company to its shareholders, usually periodically or at the end of a financial year.

Financial Administration

A business going into financial administration means that the business has lost so much money that it is unable to pay its creditors. The creditors can get in touch with you to try and recoup any money they are owed.

Green Field Investment

A green-field investment is a type of foreign direct investment (FDI). This is when investment comes from a parent company in country A, and creates a subsidiary in country B by building its operations from the ground up.


This investment comes with incentives from the government, for example, a corporate tax break for 20 years. The parent company could be investing in buildings, distribution hubs, and employee quarters.

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Tumisang Bogwasi