Accounting and Payment Glossary

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A

Accounting

Accounting is the process by which businesses and financial experts keep a detailed record of financial transactions and standing.

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Accounting software

Accounting software is any computer program designed to assist accountants, bookkeepers, and business owners in their efforts to record financial transactions.

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Account number

A bank account number is a string of numerals (and sometimes letters) that’s designed to identify an individual bank account and its owner.

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Accounts payable

Accounts payable is an account that includes all of a company’s debt obligations to creditors and suppliers in the short-term.

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Accounts receivable

Accounts receivable refers to money that is due to a business or organization in exchange for products or services that have been delivered but which the receiving customer has not yet paid for yet.

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Accrual accounting

Accrual accounting measures business transactions by recording revenue and expenses when a transaction occurs, rather than when payment is made or received.

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Asset

An asset is something that has definable economic value and is owned or controlled by a business or individual.

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Automated Clearing House

The Automated Clearing House (ACH) Network is a U.S. system for electronic funds transfer, or EFT.

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B

Balance sheet

A balance sheet is an essential financial document for businesses that reports the company’s liabilities, assets, and shareholder equity at a given moment.

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Book value

Book value is the value of an asset according to what is listed on a company’s balance sheet. Book value is often also applied to the valuation of companies.

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Business entity

A business entity is an organization set up by an individual or group of individuals and recognized by the government as a legitimate, authorized business.

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C

Capital

Capital refers to financial assets held by a business or individual. It’s often applied specifically to liquid, available cash, versus assets that may be sold in order to obtain capital.

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Cash flow

Cash flow is the amount of cash (and cash-equivalents) that are flowing into and out of a business through transfers, payments, investments, and financing.

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Cost allocation

Cost allocation is the process of assigning costs to specific areas, products, projects, departments, programs, or organizations within a company.

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Cost of Goods Sold

Cost of Goods Sold (COGS) is an accounting term for the direct costs associated with producing goods that are sold by a business.

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Credit

Credit is a broad term that can apply to a range of different situations in both business and personal finance.

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Credit card

A credit card is a payment card issued by a lender or creditor that features a revolving line of credit that the cardholder can use to make purchases.

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D

Debit

A debit is an accounting entry that either increases a company’s recorded assets or decreases its recorded liabilities.

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Disbursements

Disbursement is the act of disbursing or paying out money, particularly as it relates to expenses in a business.

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Dividend

A dividend is a distribution of some portion of a company’s earnings to specific groups of shareholders.

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E

eCheck

An electronic check is a means of making payments online through the internet or other network, designed to perform the same functions as a paper check.

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Electronic billing

Electronic billing, or e-billing, is the general term for the process and infrastructure associated with paying, processing, and receiving payments online.

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Electronic funds transfer

Electronic funds transfer, or EFT, is the transfer of money from one bank account to another, conducted electronically.

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Equity

Equity refers to the level of someone’s ownership over an asset that has value, particularly when measured relative to the liabilities associated with that asset.

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Expense

An expense is any cost directly associated with a company’s efforts to generate revenue.

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F

Fintech

Fintech is the name for software and modern technology designed to provide financial services tool for businesses and individuals.

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Fiscal year

A fiscal year is a 12-month period that’s used by businesses and the government to serve as a reporting and budgeting period for finances.

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Fixed cost

A fixed cost is any cost that’s regularly incurred by a company and does not increase or decrease based on changes to a company’s goods or services sold.

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G

General ledger

A general ledger is one of the primary record-keeping systems used by a company for financial data relating to debit and credit accounts records.

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Generally accepted accounting principles

Generally accepted accounting principles, or GAAP, are a set of accounting principles and standards issued by the Financial Accounting Standards Board (FASB).

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Gross margin

A company’s gross margin is the result of subtracting its cost of goods sold (COGS) and its net revenue from sales.

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Gross profit

Gross profit is the amount of money a company has left after it has subtracted the cost of goods sold (COGS) from its revenue (sales).

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I

Income statement

Income statements, also known as profit and loss statements, are designed to focus on a company’s revenue and expenses during a period of time.

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International bank account number (IBAN)

An international bank account number (IBAN) identifies an international or overseas bank account according to a standardized international numbering system.

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Inventory

Inventory is any goods that are currently available for sale by a business or raw materials possessed by the business that could be used to produce those goods.

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Invoice

An invoice is a document sent from a business to a customer or client requesting payment after a good or service has been delivered.

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Invoice matching (2 way)

2-way invoice matching is an automated process that checks for discrepancies between purchase orders and invoices before invoices are approved and paid.

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L

Liability

A liability is an entity owed by an individual or business. In most cases, this refers to an amount of money.

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Liquidity

Liquidity is a word used to describe how easily and/or quickly a company or individual’s asset could be turned into cash.

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M

Machine learning

Machine learning is a subset of artificial intelligence that involves the use of algorithms that automatically evolve, improve, and adapt with the introduction of more data.

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N

Net 30

Net 30 is a term used on invoices to describe the deadline for payment of an invoice— in this case, 30 calendar days.

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O

Online bill pay

Online bill pay is a service offered by a range of financial institutions and businesses for paying bills online.

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Overhead

Overhead is the catch-all term for business expenses that are not directly attributed to the production or creation of a product or service.

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P

Payment automation

Payment automation is any tool a business uses in order to automate their process of paying vendors.

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Payment management software

Payment management software is any software designed to support a business in the process of payment management.

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Payroll

Payroll describes the entirety of a company’s processes, reporting, and standards for paying their employees and withholding proper payroll taxes.

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Payroll management

Payroll management is the process by which a business manages its payroll— the employees, salaries, hourly wages, payments, and taxes relating to payroll.

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Positive pay

Positive pay is a system for detecting check fraud that compares checks presented at a bank to a list of approved checks provided by the issuer.

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Present value

Present value is a means of assessing the current value of a future sum of money or income stream, accounting for a specific rate of return.

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Procure-to-pay

Procure-to-pay is a term used to describe the process used by an organization to purchase materials and services for their business.

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Profit and loss statement

A profit and loss statement (P&L) is a financial statement that acts as a summary of revenues, costs, and expenses that a business has incurred during a period.

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Pro forma invoice

A pro forma invoice is a bill of sale (a document detailing a transaction) sent from a seller to a buyer before a shipment or delivery of goods arrives.

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Purchase order

A purchase order (PO) is an official document that is sent from a buyer to a seller, documenting the agreement for the sale of specific products and/or services.

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R

Receipt

A receipt is an official document that serves as a proof and record of a transaction between a customer and an individual or business who delivered that customer a good or service in exchange for payment.

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Return on investment

Return on investment is a measurement used to evaluate whether an investment generated positive returns (earnings), and if so, how much.

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Revenue

Revenue is total income generated by a company as a result of the company’s normal business operations, before any of the company’s costs have been subtracted.

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Routing number

A routing number is a nine-digit sequence of numbers that’s used to identify and send funds to specific banking institutions in the U.S.

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T

Trial balance

A trial balance is a worksheet used in accounting and bookkeeping that involves compiling the balance of a company’s ledgers into debit and credit columns.

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V

Virtual card

A virtual credit card (also known as a virtual card) is a temporary digital card number that is used for online transactions.

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W

Wire transfer

A wire transfer is a direct transfer of funds completed electronically, managed through one bank or financial institution and sent to a desired recipient.

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