303 terms a buying committee meets while selecting a finance system, defined without the vendor gloss, each with a note on why it bears on the decision.
Proving that a ledger balance agrees with an independent source or with the detail that supports it (a bank statement, a subledger, a schedule of open items) and explaining anything that does not. It is the evidence a balance is real.
The money a company owes suppliers for goods and services already delivered, and the process that gets from a supplier invoice to a payment: capture, coding, matching, approval, payment run, and the ledger entries each step creates. It is usually the highest-volume transactional area in a finance function.
The money customers owe for goods and services already invoiced, and the process around it: invoicing, cash application, credit control, chasing, and write-off of what will not arrive. It is the working-capital lever finance teams can move fastest.
An entry that books a cost or a revenue in the period it belongs to rather than the period the cash moves in. If a supplier delivered in March and invoices in April, the March books carry an accrual for the expected amount, which is then reversed or matched off when the real invoice lands.
The Automated Clearing House network used for domestic electronic payments in the United States, settling in batches over one or more business days rather than instantly.
A journal posted during the close to correct or complete the period's records: accruals, deferrals, reclassifications and error corrections. Volume of adjusting entries is a reasonable proxy for how well upstream processes work.
A schedule of open receivables or payables bucketed by how overdue they are, typically current, 1–30, 31–60, 61–90 and 90-plus days. It is the standard starting point for collections work and for estimating what will not be collected.
The rule that spreads a pooled cost across the cost centres, projects or entities that consumed it: rent by floor area, IT by headcount, shared services by transaction volume. Allocations run as part of the close and are usually the least documented step in it.
Writing off the cost of an intangible asset (software, a licence, capitalised development) across the periods that benefit from it. Mechanically it works like depreciation; the distinction is the nature of the asset, not the arithmetic.
The annualised value of subscription contracts in force at a point in time, excluding one-off fees. It is a contract measure rather than an accounting one, and it is not the same as recognised revenue.
The recurring charge on a perpetual licence for updates, fixes and assistance, typically a percentage of the original licence value and subject to annual increase.
A design approach where the interface is built before or alongside the user experience, so anything the screens can do can also be done programmatically.
The routing rules that send a document to the right approvers in the right order, by value, cost centre, category or exception, with delegation, escalation and a record of each decision.
The structure recording how assets contain one another (a site, a line, a machine, a component) so cost, maintenance and depreciation can be reported at any level.
The records and documentation supporting a number or a control: the invoice, the approval, the reconciliation, the system log showing who posted what. Evidence has to be retrievable, not merely to exist.
The record the system keeps of who did what to a transaction and when: who entered it, who changed a field, who approved it, and what the value was before the change. A usable trail is queryable and cannot be edited from inside the application by the people it records.
A contract term under which the agreement continues for a further period unless notice is given by a stated deadline. It benefits whichever party is paying attention.
Contracted work or subscription value not yet delivered or invoiced. In projects it is unperformed scope; in subscriptions it is the remainder of the term.
The estimate of receivables that will not be collected, recognised as an expense before any specific invoice is written off. Approaches range from an aging-based percentage to expected-credit-loss models.
The statement of what a company owns, owes and holds in equity at a single point in time, with assets equal to liabilities plus equity by construction. Every posting in a double-entry system keeps that identity true.
The discipline of holding, for every balance-sheet account, a current schedule that explains what makes it up and who owns it. Substantiation is broader than reconciliation: some accounts have no external source, only a calculation.
How the system exchanges files and messages with banks: host-to-host transfer, a bank portal, a multi-bank network, or an API. It determines how quickly balances and transactions arrive.
Agreeing the cash balance in your ledger to the balance the bank reports, and explaining every difference: payments issued but not yet cleared, deposits in transit, bank charges you had not booked. Modern systems import a statement feed and propose matches, leaving a human to clear the exceptions.
A contractual right to test pricing against the market during the term and to adjust it if the comparison shows the price is out of line, using an agreed method.
The structured list of components, quantities and sub-assemblies needed to make one unit of a product, often several levels deep. Planning, costing and shop-floor execution all read from it.
Time recorded against work a client can be charged for, as distinct from internal or written-off time. The distinction is a coding decision made at entry.
What has actually been invoiced in a period, regardless of when it will be recognised as revenue or collected. It is the bridge between bookings and cash.
Testing a proposed commitment against remaining budget for a cost centre, project or account, and blocking or routing for approval when it would exceed it. Commitments already made are counted as consumed.
The tooling and practice of turning transactional data into reports, dashboards and analysis that people act on, including the semantic layer that gives measures agreed definitions.
Checking whether the plant, the people and the machines can actually deliver the plan, at the level of work centres and time buckets. Rough-cut planning tests the shape of the plan; finite scheduling tests the detail.
Spend on something expected to be useful for more than one period, which is added to the balance sheet and depreciated rather than charged straight to profit. Where the line sits between capitalising and expensing depends on the accounting framework, the policy the business sets, and in some cases on tax rules that differ from both.
Matching money received to the invoices it settles, including partial payments, deductions, and payments that arrive with no useful reference. Automation rates here are the difference between a small and a large collections team.
Projecting cash in and out over weeks or months from receivables, payables, payroll, tax and financing, and comparing the projection to what actually happened.
The statement reconciling profit to the movement in cash, split into operating, investing and financing activities. It can be built directly from cash transactions or indirectly by adjusting profit for non-cash items and working-capital movements.
Establishing how much cash is where today and what is expected in and out over the coming days, so funding decisions can be made deliberately rather than reactively.
A documented, priced and approved change to a contract's scope, schedule or price. It is the mechanism that keeps a fixed-price arrangement honest on both sides.
The structured list of accounts every posting has to land in (assets, liabilities, equity, income and expense) and the numbering scheme that organises them. It sets the shape of the primary financial statements and, in many older systems, was also forced to carry department, location and product coding inside the account number itself.
Recurring revenue lost when customers cancel or reduce, expressed as a rate over a period. Gross churn counts losses; net churn offsets them against expansion.
An account used deliberately as a staging point between two steps of a process: goods received not yet invoiced, payments in transit, payroll clearing. A healthy clearing account nets to nil once both sides land.
The ordered list of tasks that turns a period's transactions into reported numbers, with owners, dependencies and deadlines: cut-offs, accruals, allocations, reconciliations, reviews and sign-off.
An entry made as part of closing a period or year: transferring the result to equity, clearing temporary accounts, or booking the last adjustments before a lock.
The work of getting overdue money in: prioritising accounts, contacting customers, recording promises to pay, resolving disputes and escalating. It is a workflow discipline more than an accounting one.
Recording obligations as they are entered into (an approved requisition or an issued purchase order) so budget consumption reflects what is promised, not only what is invoiced.
A structured session where the configured system is walked through with real scenarios and real data by the people who will use it, before build is finished.
Regimes where transaction data is reported to, or cleared by, a tax authority at or near the moment of invoicing, rather than aggregated into a periodic return.
A list of goods and services at agreed prices from agreed suppliers, presented to requisitioners so that buying the right thing at the right price is the easy path.
The obligation to transfer goods or services for which a customer has already paid or been invoiced: deferred revenue under the current revenue standards' vocabulary.
A control that does not operate as designed, or a design that would not catch the error it targets. Deficiencies are graded by the size of the misstatement they could allow.
The named person accountable for a control operating as described, and usually for producing its evidence. Ownership sits with the business process, not with the audit function.
The documented response to a non-conformance: containment, root-cause analysis, the fix, verification that it worked, and closure. Regulated sectors require the full trail.
A unit of the business that costs are collected against and someone is accountable for: a team, a site, a function. It is a reporting and budgeting construct rather than a legal one, and it does not produce its own statutory accounts.
The annual disclosure by large groups of revenue, profit, tax paid, employees and assets in each jurisdiction, filed with tax authorities and increasingly published.
The block placed on a customer's orders or shipments when exposure exceeds the agreed limit or invoices are far overdue. Releasing it is a controlled decision, not a clerical one.
The maximum exposure a company will accept to a customer, set from credit data, payment history and judgement, and checked when orders are taken. Exposure usually counts open invoices plus unshipped orders.
A document that reduces what a customer owes, issued for a return, a pricing error, a service credit or a settled dispute. It reverses part or all of an invoice and has to reach both the ledger and the receivable it relates to.
Restating an entity's results and balances from its functional currency into the group's presentation currency, typically at closing rates for the balance sheet and average rates for the income statement, with the difference taken to a translation reserve.
The record of each customer: legal and trading names, ship-to and bill-to addresses, tax status, credit terms and limits, and the price agreements that apply.
Tax charged on goods crossing a border, determined by tariff classification, origin and value. It is a cost of the goods, not a recoverable tax like value-added tax usually is.
The window in which you stop transacting in the old system and start in the new one: final balances extracted and loaded, open items brought across, interfaces switched, and the point of no return crossed. It is usually run to an hour-by-hour script over a weekend or a period end.
Storage for large volumes of raw data in its original form, queried where it lies rather than loaded into a fixed schema first. It complements rather than replaces a warehouse.
Moving master data and history out of the old system into the new one: customers, suppliers, items, opening balances, open invoices, and however much transactional history you decide to carry. Almost all of the effort is in cleaning and mapping the data, not in the load itself.
Where data is physically stored and processed, which some jurisdictions and sectors constrain by law or by contract. It covers backups and the locations from which support staff can reach the data, not only the primary database.
How long records must be kept and in what form, set by tax law, company law and data-protection law, and constrained by what a system can still produce years later.
A document that increases what a counterparty owes: a charge back to a supplier for a short delivery, or an additional charge to a customer outside the normal invoice run. It is the mirror of a credit memo.
Money you have billed or collected but have not yet earned, held as a liability until you deliver. A twelve-month subscription invoiced up front sits in deferred revenue and is released to the income statement across the term as the service is provided.
Estimating future demand from history, seasonality, pipeline and judgement, at the grain planning needs. The forecast is an input to planning, not a commitment, and its accuracy should be measured.
Spreading the cost of a long-lived asset across the periods that benefit from it, rather than expensing it all at purchase. The method and useful life chosen determine the charge each period, and the same asset is frequently depreciated differently for statutory accounts and for tax.
Obligations to report transaction-level data electronically to an authority on a defined schedule, short of live clearance. Several jurisdictions are moving from periodic returns to this model.
Coding attached to a posting alongside the account (department, project, location, product line, funding source) so the same transaction can be analysed several ways without inventing new accounts. Vendors call these dimensions, segments, tags, tracking categories or analysis codes, which are broadly the same idea with different limits.
Collecting money by instruction to the payer's bank under a mandate the payer has granted, rather than waiting for them to pay. Common in subscription and utility billing.
The plan and capability to restore service after a serious failure, including where the standby capacity is, how failover happens, and how it is tested.
The convention that every transaction is recorded twice, as a debit in one account and an equal credit in another, so the books always balance. It is the reason a ledger can be proved rather than merely believed.
Producing figures under two frameworks at once (group and local, or old and new standard), usually by holding a base set of entries plus a layer of framework-specific adjustments.
The scheduled sequence of reminders sent to customers with overdue invoices, escalating in tone and eventually to a stop on further supply or to an external agency. Sequences are usually defined per customer segment.
Offering suppliers a sliding discount for payment ahead of terms, where the discount falls as the due date approaches, letting a buyer deploy surplus cash at a known return.
A model in which an invoice must be submitted to a tax authority's platform and validated before it is legally issued to the buyer, rather than merely reported afterwards. Several countries operate a clearance or pre-clearance regime with their own format, signing and identifier rules; others use post-audit reporting or a network model, and requirements are changing in many jurisdictions.
Conducting purchasing electronically end to end: catalogues, requisitions, orders, order acknowledgement, receipt and invoice, exchanged as data with suppliers rather than as documents.
A reduction offered for paying before the due date, such as two per cent within ten days on thirty-day terms. Whether taking it is worthwhile depends on the annualised return against the cost of cash.
The periodic listing of supplies made to value-added-tax-registered customers in other European Union member states, by customer registration number and value.
Connecting a web store to the ledger and to stock: orders and payments in, availability and prices out, with returns and settlement reconciled afterwards.
Electronic Data Interchange: the long-established practice of exchanging structured business documents (orders, dispatch advices, invoices) with trading partners in agreed formats such as EDIFACT or X12.
A consolidation entry that removes the effect of internal transactions and holdings (intercompany sales, balances, investments in subsidiaries) so the group reports only external activity.
A reservation of budget for a commitment not yet spent, used heavily in public-sector and grant accounting where unspent budget cannot simply be reallocated.
A controlled change to a product's design (a component substitution, a revised specification) with an effective date, affected orders and cost consequences.
Accounting for an investment where the group has influence but not control, carrying it at cost plus the group's share of post-acquisition results rather than consolidating the investee line by line.
The European Single Electronic Format: the requirement for listed companies in the European Union to file annual reports in XHTML with the primary statements tagged in inline XBRL.
Extract, transform, load: moving data out of source systems, reshaping it, and loading it into a target such as a warehouse. In the reverse order it is called ELT.
The model where the vendor keeps every customer on the current version, applying updates automatically rather than running version-to-version upgrade projects.
Documentation from a customer establishing that a sale is not taxable (resale, non-profit status, a specific use), which the seller must hold and be able to produce.
The agreed arrangements for leaving a service: data extract format and timing, retention during transition, assistance rates, and deletion certification.
Additional recurring revenue from existing customers: more users, higher tiers, extra products. It is usually the cheapest revenue a subscription business can acquire.
An employee's claim for costs incurred on the company's behalf, with receipts, policy checks, approval and reimbursement, plus tax treatment of the recoverable elements.
How a system is customised without altering its core: configuration, low-code extensions, published extension points, or an application platform alongside it.
The independent examination of financial statements resulting in an opinion on whether they are fairly stated. It tests balances, controls, and the systems the numbers come from.
Scheduling and equipping engineers to work at customer sites: work orders, skills and parts, travel, time capture, and billing or warranty recovery afterwards.
How a company divides its year for reporting: twelve calendar months, thirteen four-week periods, or a 4-4-5 pattern, with a year end that may not be December. Every period-based report depends on it.
The twelve-month reporting period a company uses for its statutory accounts, which may run to any month end. Tax years and fiscal years do not always coincide.
Comparing requirements against what the system does as delivered, and deciding for each gap whether to change the process, configure, extend, or accept it.
The detailed record of every capitalised asset (cost, acquisition date, useful life, accumulated depreciation, location and disposal) that supports the single asset figure on the balance sheet. It is a subledger, and it should reconcile to the ledger every period without manual adjustment.
A review of period-on-period movements in every material account, used in the close and by auditors to spot balances that moved when they should not have, or did not move when they should.
Spreading a shipment's transport cost across the items in it, by value, weight or volume, so each item carries a fair share of the cost of getting it there.
The currency of the primary economic environment in which an entity operates, and therefore the currency it keeps its books in. It is a determination, not a preference, and changing it is a significant event.
The profit effect of exchange-rate movement: realised when a foreign-currency item settles at a different rate than it was booked, unrealised when it is revalued while still open.
Restating monetary balances held in a foreign currency at the period-end rate, so receivables, payables and cash reflect current value, with the movement recognised in profit as an unrealised gain or loss.
Generally accepted accounting principles: the framework of rules and conventions financial statements are prepared under in a given country, of which the United States version is the most cited.
The European Union's data-protection regulation, governing lawful basis, individual rights, retention and transfers of personal data, with obligations on both controller and processor.
The central record of every posting, organised by account, from which the trial balance and the financial statements are produced. Everything the business does in other modules eventually arrives here, usually summarised, and the ledger is the thing the auditors read.
The record that ordered goods or services actually arrived, entered by whoever received them, against the purchase order that ordered them. It creates the liability for what has been received but not yet invoiced, and it is the second leg of three-way matching.
The liability for stock or services received where the supplier invoice has not yet arrived, held in a clearing account and derived from receipts against purchase orders. It is the automated form of a purchase accrual.
The excess of what was paid for a business over the fair value of its identifiable net assets, recognised on acquisition and then tested for impairment rather than amortised under most frameworks.
The calculation from contractual gross pay to the amount an employee receives, applying tax, social contributions, pensions and other deductions in the order each jurisdiction requires.
Producing consolidated statements for a set of entities: collecting their trial balances, translating currencies, eliminating internal activity, recognising minority interests, and reporting the result.
Goods and services tax: the same mechanism as value-added tax under a different name, used in Canada, Australia, India, Singapore and elsewhere, each with its own structure and returns.
A full close with every reconciliation, accrual, allocation and review completed and the period locked, producing numbers fit for statutory reporting and audit.
Planning roles, start dates and fully loaded costs, and reconciling the plan to actual hires and to the payroll cost that follows. It is usually the largest line in an operating plan.
The elective treatment that lets the gain or loss on a hedging instrument be recognised in the same period as the exposure it hedges, subject to documentation and effectiveness testing.
The intensive support period immediately after go-live, with elevated staffing and response times, ending on agreed exit criteria rather than on a date alone.
International Financial Reporting Standards, used for consolidated reporting in more than a hundred jurisdictions and mandatory for listed companies in the European Union and much of Asia.
Writing an asset down when its recoverable amount falls below its carrying value: a plant no longer used, goodwill from an underperforming acquisition, a capitalised project abandoned.
Implementation services cost expressed as a multiple of first-year software cost, the shorthand buyers use to sanity-check a proposal. Multiples vary by complexity and by tier.
The consultancy that configures the system, migrates the data and trains the users, often a different company from the one that sells the licence. Vendor directories rank partners by tier, which reflects certifications and sales volume rather than the quality of any particular team.
The statement of revenue, cost and resulting profit over a period, also called the profit and loss account. It is the report most managers outside finance actually read, usually against budget and against the same period last year.
Use of licensed software through another system rather than by a person at a screen: an integration reading data, a portal that queries the ledger. Some vendors licence it separately.
Removing transactions between entities of the same group so the consolidated accounts show only dealings with the outside world. A sale from one subsidiary to another is real for each entity's own books but is not group revenue, and any profit still sitting in unsold stock has to come out too.
Agreeing balances and transactions between entities of the same group before consolidation, so that what one entity records as owed matches what the other records as due.
A process designed to prevent or detect error and fraud: an approval limit, a reconciliation, a system-enforced separation of duties, a review. Controls are described, performed, and evidenced.
The statistical declaration of goods moving between European Union member states, filed by businesses above thresholds and derived from dispatch and arrival data with commodity codes and values.
Knowing what stock exists, where it sits, what it cost and what it is committed to. It spans item master data, locations and lots, valuation, and the transactions that move quantities between states.
How many times stock is sold and replaced over a period, computed as cost of goods sold divided by average inventory. Low turnover means cash sitting on shelves; very high turnover can mean stock-outs.
The method that puts a cost on stock on hand and on goods sold: standard cost, weighted average, first-in-first-out, or specific identification. The choice changes reported margin and is constrained by the accounting framework in each country.
Integration platform as a service: hosted tooling for connecting applications with pre-built connectors, mapping, scheduling and monitoring, instead of bespoke point-to-point code.
The international standard for an information-security management system, certifying that a documented, risk-based programme exists and is being followed.
A posting to the ledger, with debits equal to credits, that records something the transactional modules did not already record: an accrual, a reclassification, a correction, an allocation. Manual journals are the finance team's own instrument, which is exactly why they are watched closely.
A saved structure for a journal (accounts, dimensions, descriptions, sometimes amounts or formulas) used to standardise entries that recur or that several people prepare.
A control relied upon to address a specific risk of material misstatement, and therefore tested by auditors. Not every control is key; identifying which are keeps testing proportionate.
The full cost of getting goods to their destination: purchase price plus freight, duty, insurance, handling and any other charge, applied to inventory value rather than expensed separately.
Recognising leases on the balance sheet as a right-of-use asset and a lease liability, unwinding both over the term, with remeasurement when terms change.
A company that exists in law, files its own statutory accounts and tax returns, and holds its own set of books. A group is a collection of them, and the reporting structure the business talks about day to day often cuts across the legal one.
A country's own accounting framework, which may differ from the group's on depreciation, provisions, revenue and presentation. Statutory accounts must follow it even when the group reports otherwise.
The country-specific behaviour a system needs to be usable in a jurisdiction: statutory chart requirements, tax calculation and filing formats, invoice layout and numbering rules, payroll and payment file formats, language, and whatever the local authority mandates electronically. It is supplied by the vendor in some countries and by a partner or third-party add-on in others.
A bank service that receives customer payments on a company's behalf and returns a structured file of the payments and their remittance detail for automatic application. It is common in the United States and rare elsewhere.
The United Kingdom regime requiring value-added tax records to be kept digitally and returns to be filed through software with a digital link from the underlying records.
Ongoing operation, support and small-change delivery by a third party after go-live, priced by subscription, ticket volume or a retained capacity of days.
The auditor's written observations to management on control and process weaknesses found during an audit that fall short of a formal reporting matter, with recommendations.
Reporting produced for internal decisions rather than for statute: profit by product, by customer, by project, against budget, at whatever grain management works at. It is where dimensions earn their keep.
The governance and tooling that keeps shared records (customers, suppliers, items, accounts) consistent across systems, with ownership, validation and a survivorship rule for conflicts.
The calculation that turns demand, stock on hand, open orders and lead times into what to buy and make, and when. It runs on the bill of materials and is the engine behind most purchase suggestions in an ERP.
A deficiency, or combination of them, severe enough that a material misstatement could go undetected. For a listed company it is a disclosable event with consequences beyond the finance team.
The threshold above which an error or omission would change a reader's decision, set in judgement and used to scope both close work and audit work. Below it, precision is not worth its cost.
Buying that bypasses agreed suppliers, catalogues or approval routes: the invoice that arrives with no purchase order behind it. It costs more per unit and is invisible until it is paid.
Software sitting between applications to move, transform and route data between them, whether a message broker, an integration bus or a hosted platform.
Invoicing on the achievement of defined contract milestones rather than on time elapsed or cost incurred. Billing and revenue recognition may follow entirely different patterns.
The share of a subsidiary's equity and results belonging to owners outside the group, shown separately in consolidated statements. Also called non-controlling interest.
The same contract measure expressed per month, used where contracts and changes to them are frequent. Movements are usually decomposed into new, expansion, contraction and churn.
Combining the accounts of several entities into one set of group figures: translating foreign currencies, eliminating internal transactions, and accounting for the share of subsidiaries the group does not own. The mechanics differ under IFRS and various national frameworks, so the reporting standard a group applies shapes what its system has to do.
An architecture in which all customers run the same version of the application, with their data separated logically, and everyone is upgraded together on the vendor's schedule. The alternative, a single-tenant or hosted instance per customer, allows deeper modification and version control at the cost of doing your own upgrades.
The connection between a business and a United States jurisdiction that creates an obligation to register and collect tax there, arising from physical presence or from economic activity above a threshold.
A recorded instance of something failing to meet specification (an incoming batch, a produced item, a process step), with disposition, root cause and corrective action.
A supplier invoice with no purchase order to match against, so it must be coded and approved on its own. Utilities, professional fees and rent are legitimately non-PO; much else is not.
The balance an account starts a period or a system's life with. In an implementation, opening balances are loaded at cutover and are the first thing an auditor tests.
The end-to-end process from taking a customer order to collecting the money: order entry, credit check, fulfilment, invoicing, cash application and collections. It crosses sales, operations and finance.
Operating the old and new systems together for a period and comparing their output, most common for payroll where a wrong answer has immediate consequences.
The structured instruction sent to a bank to make payments, in a format the bank accepts, such as an ISO 20022 message or a national scheme format. Format details vary by bank and country.
The batch process that selects due invoices, applies payment terms and discounts, groups by supplier and method, produces the payment file, and posts the ledger entries.
The accounting entry generated by a payroll run: labour cost by cost centre, employer contributions, net pay liability, and the deductions owed to third parties.
The periodic calculation of gross pay, statutory and voluntary deductions, employer costs and net pay, producing payments, filings and the journal that posts labour cost to the ledger.
An international network and document specification for exchanging electronic invoices and orders through accredited access points, mandated or encouraged in much of Europe and beyond.
Recognising revenue and cost on a long contract in proportion to progress, measured by cost incurred against expected cost, by units delivered, or by surveyed effort.
A distinct promise in a contract (a licence, a hosting service, an implementation, support) that revenue is allocated to and recognised against as it is satisfied.
The routine that finishes a month, quarter or year: posting the remaining accruals and adjustments, reconciling the subledgers to the ledger, reviewing the results, and locking the period so nothing moves after it is reported. Most finance teams measure it in working days from period end to reported numbers.
The setting that prevents further posting into a closed period, usually per module, per entity and per user role, sometimes with a controlled reopening for late adjustments.
The international agreement imposing a minimum effective tax rate on large multinational groups, requiring jurisdiction-level effective-rate calculations and top-up tax where the rate falls short.
Turning a purchase order into an invoice on the supplier's behalf, either in a portal or automatically on receipt, so the invoice matches by construction rather than by reconciliation.
Cash paid in advance for something you have not yet consumed (insurance, an annual software subscription, rent), held as an asset and released to expense over the period it covers. It is the mirror image of an accrual.
The schedule of documents and reports an auditor asks the company to produce for fieldwork: trial balances, reconciliations, samples, access listings, contracts.
The currency the group's financial statements are shown in, which may differ from every entity's functional currency. Choosing it does not change the underlying transactions, only their expression.
The structured set of prices, discounts and currencies applicable to customers or segments, with effective dates. Quotes and orders price from it rather than from typed figures.
The end-to-end process from identifying a need to paying the supplier: requisition, approval, purchase order, receipt, invoice, matching and payment, with the ledger entries each step creates.
Tracking revenue and cost against a project rather than only against the ledger: time and expenses booked to a job, work in progress, billing on milestones or on time and materials, and margin per engagement. Services businesses and construction firms usually need it; product businesses often do not.
A liability recognised for an obligation whose amount or timing is uncertain: warranty claims, restructuring, legal exposure. It is measured on a best estimate and revisited each period.
A link from the buying system into a supplier's own web store, where the requisitioner shops and returns with a basket that becomes a requisition, using contracted prices.
The exercise of recognising an acquired business at fair value: identifying assets and liabilities, allocating the price, recognising goodwill, and aligning the acquired entity's policies and calendar to the group's.
The document that commits the business to buying something at an agreed quantity and price, issued to the supplier after whatever internal approval the spend requires. It is the authorisation record that later invoices are checked against, and it also gives you a view of committed spend before any invoice exists.
A defined check at goods receipt, in process or before dispatch, with sampling plans, characteristics measured, and a pass or fail that gates the next step.
The commercial front of order to cash: configuring and pricing an offer, approving discounts, getting signature, and turning the signed contract into an order and a billing schedule.
A journal that posts on a schedule with the same structure and either the same or a calculated amount: rent, depreciation, standing allocations. It removes repetitive keying from the close.
Re-running tests over unchanged functionality after a change, to confirm nothing that used to work has stopped. Automation is what makes it affordable at each release.
How often the vendor ships changes and how much choice a customer has about taking them: continuous, monthly, twice-yearly, or on the customer's own schedule for on-premise software.
The note a payer sends saying which invoices a payment covers, arriving as an email attachment, a portal download or a structured message alongside the payment. Without it, cash application becomes detective work.
The continuation of a subscription at the end of its term, either automatically under the contract or by a new agreement, often with a price change and a re-negotiated scope.
A structured invitation to vendors to propose against defined requirements, commercial terms and evaluation criteria, with responses compared on the same basis.
A structured request to suppliers for prices against a defined specification and quantity, with responses compared on a like-for-like basis. It is the sourcing step before a purchase order.
An internal request to buy something, approved before any commitment is made to a supplier and converted into a purchase order once it is. It is where budget control belongs.
An interface exposing a system's data and operations over standard web requests, so other software can read and write records under the same rules a user would face.
A portion of a contract payment withheld until completion or acceptance, common in construction and engineering. It sits as a receivable or payable until released.
Cumulative profit not distributed to owners, carried in equity. At year end the income statement's result is closed into it, resetting revenue and expense accounts to zero for the new year.
Deciding when and how much revenue to record, which is not the same question as when you invoice or get paid. The prevailing frameworks (ASC 606 under US GAAP and IFRS 15) work through identifying the contract and its distinct promises, setting a transaction price, allocating it across those promises, and recognising each as it is delivered; local frameworks elsewhere may differ, and any specific treatment is a matter for your auditors.
The period-by-period plan for recognising a contract's revenue, generated from its obligations and their delivery pattern, and adjusted when the contract changes.
A mechanism shifting the obligation to account for tax from the seller to the buyer, used for cross-border services and some domestic sectors. The buyer charges and reclaims the tax itself.
An entry created specifically to be reversed automatically in the following period, used for accruals so the estimate does not have to be removed by hand once the real transaction arrives.
Granting permissions to roles and assigning people to roles, rather than granting rights person by person, so access can be reviewed and reasoned about.
The sequence of operations, work centres and standard times required to make a product. Together with the bill of materials it defines how a work order will be planned, scheduled and costed.
Recovery point objective is how much data you can afford to lose, measured in time; recovery time objective is how long you can afford to be down. Both are commitments, not aspirations.
Standard Audit File for Tax: a structured export of ledger, master data and transactions in a schema an authority specifies, required in Portugal, Poland, Norway, Romania and elsewhere.
Inventory deliberately held above expected demand to absorb variability in demand and supply. Setting it is a trade-off between service level and the cash and space the stock consumes.
The United States model: sales tax charged by the seller where it has an obligation, and use tax self-assessed by the buyer where the seller did not charge it. Rates vary by state and by thousands of local jurisdictions.
Selecting a subset of transactions to test rather than examining all of them, with the population, the method and the size documented so the conclusion can be defended.
Splitting a sensitive process so that no one person can complete it alone: the person who sets up a supplier is not the person who approves its invoices or releases the payment. In a system this is expressed as roles and permissions, and as rules about which combinations of them one user may hold.
An arrangement where the buyer raises the invoice on the supplier's behalf under an agreement, common in agency, haulage and commission models. Tax rules impose specific conditions on it.
The Single Euro Payments Area scheme for euro credit transfers and direct debits across participating European countries, with standard message formats and mandates.
An audited report on a service organisation's controls for security, availability, integrity, confidentiality and privacy. A Type 2 report covers operation over a period, not just design.
A faster, lighter close run in interim periods: key accruals and reconciliations only, enough for management reporting, without the full statutory rigour. Many groups soft-close monthly and hard-close quarterly.
The documented, tested controls over financial reporting required of companies listed in the United States under the Sarbanes-Oxley Act, including controls embedded in systems and in access to them.
The share of total third-party spend that runs through defined sourcing and purchasing processes, with agreed suppliers, prices and approvals. The remainder is unmanaged by definition.
Valuing production at a pre-set expected cost per unit and reporting the difference from actual cost as variances: price, usage, labour, overhead absorption. It makes manufacturing performance legible at the cost of a periodic revaluation exercise.
The contractual description of what an implementer will deliver: scope, deliverables, assumptions, responsibilities, acceptance criteria and price basis.
A prescribed account structure a country requires accounts to be reported in, as in France, Belgium, Poland and others. It coexists with a group's own management structure.
A return a company must submit to an authority on a schedule: payroll returns, tax returns, statistical declarations, statutory accounts. Each has a format, a deadline and a penalty.
The filings a business is legally required to produce: annual accounts in the local framework, tax returns, and in many countries periodic electronic submissions in a prescribed format. What is required, in which format, and how often varies substantially by jurisdiction, and management reporting rarely satisfies it as-is.
The distinction between numbers prepared to satisfy law and standards and numbers prepared to run the business. They come from the same transactions but often use different groupings, adjustments and calendars.
Counting physical inventory and reconciling it to the recorded quantities, either as a full count or as continuous cycle counting of subsets. Differences are posted as adjustments with a reason.
A detailed ledger for one class of transaction (receivables, payables, fixed assets, stock) that holds the line-by-line records behind a single summary balance in the general ledger. The subledger is where you see which customer owes what; the ledger only shows the total.
Invoicing recurring charges on a cycle, handling mid-term changes, usage, credits and renewals, and producing the entries that feed revenue recognition.
Paying an ongoing fee for the right to use software, usually per user per period, as against a perpetual licence bought once with an annual maintenance fee on top. The subscription is an operating cost that continues for as long as you use the system; the perpetual model front-loads the spend and is increasingly hard to buy for cloud products.
The record of each supplier: legal name, addresses, tax identifiers, payment terms and bank details, with the approval history of changes to them. It is the highest-risk master data a finance system holds.
Bringing a new supplier into the system: collecting bank and tax details, verifying identity and sanctions status, agreeing terms, and creating the master record.
An arrangement where a funder pays suppliers early against approved invoices and the buyer pays the funder at or after the original due date, extending buyer terms without squeezing suppliers.
Planning and executing the flow of goods from supplier to customer: sourcing, planning, inventory, warehousing, transport and the visibility to manage them together.
A holding account for entries that cannot yet be classified, intended to be emptied before the books close. Common sources are unmatched bank items and failed integration postings.
Testing that the connected systems work together end to end (the ERP, the warehouse system, the bank, the tax engine) rather than each component in isolation.
Any prescribed extract an authority can demand of a company's accounting records, of which SAF-T is the best-known family. Content, format and retention are set by the authority.
The configured combination of rate, treatment and reporting box that a transaction line is stamped with, driving both the amount charged and where it appears on a return.
Deciding which tax applies to a transaction, at what rate, on what basis, from the parties' locations and registrations, the item's classification and the transaction's nature.
The component that decides what tax applies to a transaction (the rate, the jurisdiction, the treatment of a cross-border or exempt sale) and keeps that logic current as rules change. Some systems have a capable one built in; many businesses with complex footprints run a specialist third-party engine alongside.
Checking a counterparty's tax registration number against the issuing authority's register (a VAT number against the European Union's system, for example) and recording the result with a date.
The authority whose rules apply to a transaction: a country, a state, a county, a city, or a special zone. A single United States address can sit in several at once.
Accumulated customisations, workarounds and undocumented interfaces that make each future change more expensive, most often created by pushing process into code rather than changing the process.
A right to end a contract without cause, on notice and often with a fee. Where it exists at all it is usually one-sided in the vendor's favour on implementation contracts.
Checking that a control, as described, would actually address the risk it claims to: the right person, the right evidence, the right frequency, before anyone asks whether it was performed.
Checking that a control actually operated over the period, usually by sampling instances and inspecting evidence. Design and effectiveness fail independently and are tested separately.
Checking a supplier invoice against both the purchase order that authorised the spend and the goods receipt that confirms it arrived, before the invoice is approved for payment. All three have to agree on quantity and price, within whatever tolerance you set.
Pricing that changes with volume, either in bands where each band has its own rate or in steps where the whole volume takes the rate of the band reached.
A contract that bills actual hours at agreed rates plus costs incurred, sometimes with a cap. Risk sits mainly with the customer, and margin depends on rate discipline.
The record of how someone's hours were spent, by project, task and activity, submitted and approved on a cycle and feeding costing, billing and payroll.
What the system costs over a realistic horizon, not what the licence costs: subscription or licence and maintenance, implementation, integration, data migration, third-party add-ons, infrastructure where relevant, training, and the internal time the project consumes. The last item is usually the largest and the least often written down.
The prices charged between entities of the same group for goods, services, financing and intellectual property, which must be defensible as arm's length and documented for tax authorities.
Managing cash, debt, investments and financial risk: knowing the position, funding it, and hedging exposures. In smaller companies it is a task; in larger ones a function with its own systems.
A listing of every account with its balance at a point in time, where total debits equal total credits. It is the working view a finance team reviews before the statements are drawn from it, and the file most often handed to auditors as a starting point.
Running a large system at head office and a lighter one in subsidiaries or newly acquired businesses, with the smaller entities reporting up rather than being migrated onto the corporate platform. It trades the cost and disruption of a full rollout for the work of keeping two systems in step.
Charging by measured consumption (transactions, users, storage, calls), with rating rules, tiers and commitments applied to metered data before an invoice is produced.
The stage where the people who will actually use the system run their own real processes through the configured build and say whether it works, as against the implementer demonstrating that it does. Scripts are written from the business's own scenarios, and defects found here are ranked and fixed before go-live.
The share of a person's available time spent on billable or productive work. Definitions vary in what counts as available, which makes cross-company comparison unreliable.
Explaining the difference between two sets of numbers (actual against budget, this period against last, forecast against actual) by decomposing it into drivers such as price, volume and mix.
Value-added tax: a consumption tax charged at each stage of supply, where a business charges it on sales, reclaims it on purchases, and pays over the difference. Rates, exemptions and filing rules are national.
A single-use or merchant-locked card number issued for a specific payment or spend limit, used to pay suppliers or fund employee purchases with controls set before the transaction.
Following one transaction end to end through a process with the people who perform it, to confirm the process works as documented. It is how auditors and implementers both find undocumented steps.
The system that directs physical movement inside a warehouse: putaway, picking, replenishment, packing and shipping, usually with barcode or voice devices. It may be a module of the ERP or a separate product integrated with it.
Tax deducted at source from a payment (to a contractor, a licensor, a foreign supplier) and paid to the authority by the payer, who must also give the payee a certificate.
Value that has entered production but is not yet finished goods: materials issued, labour booked, overhead absorbed, sitting on the balance sheet until output is recorded. In services it is unbilled work on a project.
The instruction to make a specific quantity of something, carrying the materials to consume, the operations to perform, and the costs collected against it. It is the unit of work manufacturing accounting is built on.
The cash tied up in the operating cycle: receivables plus inventory less payables. Improving it means collecting sooner, holding less stock, or paying later, and each of those is a different team's job.
Removing a balance from the books when it will not be recovered or settled: an uncollectable receivable, obsolete stock, an abandoned asset. It is recognition of a loss that has already happened.
eXtensible Business Reporting Language: a tagging standard that makes financial statements machine-readable by mapping each figure to a defined concept in a taxonomy.
The close that ends a fiscal year: the full monthly discipline plus tax provisioning, statutory adjustments, retained-earnings roll-forward and the opening balances of the new year.