Common invoicing terms explained
The process of tracking, recording, and reporting financial activity to understand a business's financial health.
Digital tools used to manage, track, and report business finances, replacing manual spreadsheets and paper records.
Money a business owes to its suppliers or vendors for goods or services received but not yet paid for.
Money owed to a business by its customers for goods or services delivered but not yet paid for.
An expense or income that has been recorded before the actual payment occurs—recognizing financial activity when it happens, not when cash moves.
An accounting method where income and expenses are recorded when earned or incurred, regardless of when payment is received or made.
Resources owned by the business that have economic value—things you own that are worth money or help generate income.
An official review and examination of financial records to verify accuracy, compliance, and proper reporting.
Using software to perform repetitive tasks automatically, reducing manual work and human error in business processes.
Copies of financial data stored securely to protect against data loss from hardware failure, theft, or disasters.
Money owed to a business that is unlikely to be collected—invoices that will probably never be paid.
The remaining unpaid amount on an invoice or account—what the client still owes after any partial payments.
A financial statement that shows what a business owns, owes, and is worth at a specific point in time.
Charges applied by a bank for account services, transactions, or maintenance—costs of using banking services.
The process of comparing your accounting records to your bank statement to ensure they match and identify any discrepancies.
The practice of recording day-to-day financial transactions—the foundation of accurate business accounting.
The point where total revenue equals total costs—where you're not making a profit but not losing money either.
An accounting method where income and expenses are recorded only when cash is actually received or paid.
The movement of money in and out of a business over time—tracking when you receive and spend cash.
A financial report showing how cash moves in and out of a business during a specific period.
Money coming into the business from sales, payments, loans, or other sources.
Money leaving the business for expenses, purchases, debt payments, or other obligations.
A structured list of all accounts used by a business to categorize financial transactions.
A payment that has been fully processed and the funds are available in your account.
Following financial laws, regulations, and industry standards that apply to your business.
A legally binding agreement between two or more parties that defines the terms of a business relationship or project.
The direct costs of producing the goods or services sold—expenses directly tied to specific jobs or products.
A document issued to reduce the amount a customer owes, often used to correct billing errors or provide refunds.
Assets that can be converted to cash within one year, including cash itself, accounts receivable, and inventory.
Debts and obligations that must be paid within one year, including accounts payable, short-term loans, and accrued expenses.
A document that increases the amount a customer owes, used when additional charges need to be added after the original invoice.
Money received for goods or services that haven't been delivered yet—payment collected in advance of doing the work.
An upfront payment made before work begins, securing the client's commitment and providing working capital for the project.
The gradual reduction in value of an asset over time as it ages, wears out, or becomes obsolete.
A reduction in price offered to clients, often to encourage early payment, reward loyalty, or secure larger projects.
Records and paperwork that support financial transactions, providing proof of business activities for accounting, tax, and legal purposes.
The deadline by which payment must be received, after which an invoice is considered overdue.
A payment term meaning the invoice amount is due immediately upon the client receiving the invoice.
The owner's share of the business after all liabilities are subtracted from assets—essentially what the business is worth to its owner.
A document providing an approximate cost for work before it's performed, not a binding agreement.
The value of one currency expressed in terms of another, determining how much foreign currency you receive when converting money.
Money spent to operate the business, including costs for materials, services, wages, and overhead necessary to generate revenue.
The process of submitting required tax documents and returns to government authorities by their due dates.
A formal summary of a business's financial position and performance, providing a structured view of income, expenses, assets, and liabilities.
A 12-month period used for accounting, budgeting, and tax purposes—the timeframe for measuring annual financial performance.
A 12-month accounting period that may differ from the calendar year, chosen to align with business cycles.
A cost that remains the same regardless of how much work you do—expenses you pay whether business is booming or slow.
An additional charge applied to international payments, typically a percentage added by banks for cross-border transactions.
The main record containing all accounts and transactions for a business—the master document of all financial activity.
The total amount on an invoice before any deductions like discounts, credits, or adjustments are applied.
Revenue minus the cost of goods sold—the profit remaining after covering direct costs but before overhead expenses.
Money received by the business from sales, services, or other sources—often used interchangeably with revenue.
A scheduled partial payment made over time toward a total amount owed, allowing large sums to be paid in smaller portions.
The cost of borrowing money or the earnings on savings—expressed as a percentage of the principal amount.
A commercial document sent by a seller to a buyer requesting payment for goods or services provided.
The date the invoice is issued to the client—the starting point for calculating when payment is due.
Software that automatically creates professional invoices, handling formatting and calculations so you can focus on your work.
A unique identifier assigned to each invoice, used for tracking, reference, and record-keeping purposes.
A reusable format for creating consistent, professional invoices with pre-set layouts and branding.
A record of a single financial transaction in the accounting system, showing which accounts are affected.
A charge added to an overdue invoice as a penalty for not paying by the due date.
A collection of accounts and transactions, organizing financial records by category to track money flow.
Debts and financial obligations owed by the business—money you must pay to others in the future.
An individual entry on an invoice or estimate describing a specific product, service, or charge.
Money borrowed that must be repaid over time, usually with interest—a common way to finance business growth.
The amount added to the cost of goods or services to determine the selling price, covering overhead and profit.
Payment terms requiring the full invoice amount to be paid within 14 days of the invoice date.
A payment term requiring the invoice to be paid within 15 days of the invoice date.
A payment term requiring the invoice to be paid within 30 days of the invoice date.
Payment terms requiring the full invoice amount to be paid within 7 days of the invoice date.
The final amount due after all deductions, discounts, and adjustments have been applied.
The profit remaining after all expenses, overhead, and taxes are deducted—the true bottom-line earnings.
Costs directly related to running daily business operations—expenses incurred to keep the business functioning.
An invoice that has been issued but not yet paid—money you're still waiting to receive.
An invoice that has passed its due date without payment—a late payment that requires follow-up.
Ongoing business expenses not directly tied to production—the costs of keeping your business running.
An invoice that has been fully paid and settled—the transaction is complete.
A payment that covers only a portion of the total invoice amount, with the remaining balance still owed.
The way a client pays, such as bank transfer, credit card, check, or cash.
Conditions explaining when and how payment is expected—the rules governing invoice payment.
The original amount of money borrowed before interest—the base amount of a loan.
The percentage of revenue that becomes profit—a measure of how efficiently you turn sales into earnings.
A report tracking income against expenses to show financial performance over a period of time.
A preliminary invoice sent before the final bill to confirm details—a quote or estimate in invoice format.
A formal document issued by a buyer authorizing a purchase, specifying items, quantities, and agreed prices before work begins.
The number of units of a product or service being billed—how many items or hours are included on an invoice line.
A fixed price offer for a specific scope of work, valid for a set period—a commitment to honor that price.
A document confirming that payment has been received—proof of a completed transaction.
The process of matching financial records to ensure accuracy—comparing your books to bank statements or other sources.
An invoice that is automatically generated and sent on a set schedule for ongoing services or subscriptions.
Proof or confirmation that a payment has been sent—documentation showing money was transferred.
An upfront fee paid to secure ongoing services, typically applied as a credit toward future invoices.
Money earned from normal business activities like sales and services—the total income before expenses.
A tax added to the price of goods or services at the point of sale, collected by the seller and remitted to the government.
The total amount before taxes or additional fees are applied—the sum of all line items.
Money paid to government authorities based on income or sales—a required contribution to fund public services.
Income or items that are not subject to taxation—excluded from tax calculations.
A unique identification number assigned to a business by the IRS, used for tax reporting, invoicing, and opening business accounts.
The percentage used to calculate how much tax is owed—applied to taxable income or sales.
A report submitted to tax authorities showing income, expenses, and taxes owed or refunded.
