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Demystifying small business financial jargon (part 1)

Bookkeeper Adelaide

Are you just starting out in small business and baffled by some of the jargon? Here’s a simple explanation of the most common terms you’re likely to come across.

  • creditors/accounts payable

customers that owe you money

  • debtors/accounts receivable

suppliers that you owe money to

  • bad debt

a creditor that’s unlikely to pay you.

  • balance sheet

a statement of your business assets and liabilities

  • bookkeeping

recordingthe financial transactions for your business

  • bottom line

what your net (after-tax) profit is sometimes called

  • break-even point

the point where your income equals your expenses (after that point, you’re making a profit).

  • budget

a forecast of your revenue and expenses for a specific period

  • cash flow

the timing and amount of cash flowing in and out of your business

  • collateral

an asset you put up as security for as loan (e.g. property)

  • depreciation

the decrease in value of an asset over time

  • equity

the value of your ownership in your business (calculated by subtracting your liabilities from your assets)

  • fixed cost

a cost that stays the same over a period of time

  • financial year

the year from 1 July to 30 June in Australia

  • goodwill

the value of your business’ reputation

  • gross profit

your business’ profit before tax

  • inventory

the stock you have of the products you sell

  • invoice

a bill you send to your customers and that your suppliers send to you.

  • liability

any business debt you owe

How we can help

At Scorpion Bookkeeping, we can help you to implement Xero bookkeeping software to help you to easily manage and plan your business finances. We are a Xero-certified partner.

We also provide bookkeeping support services to a diverse range of clients in Victoria, South Australia and New South Wales.

Contact us today for a free, no-obligation consultation to find out how we can help your small business!

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