Invoice & Billing Glossary

Specific conditions that must be met for work to be considered complete.

Money your business owes to suppliers and vendors for goods or services received but not yet paid.

A ratio measuring how quickly a company pays its suppliers.

Money owed to your business by customers for goods or services delivered but not yet paid for.

Recording revenue and expenses when earned or incurred, regardless of cash timing.

Recording revenue when earned and expenses when incurred, not when cash changes hands.

Expenses incurred but not yet paid or invoiced.

Electronic bank-to-bank transfer processed through the Automated Clearing House network.

Journal entries made at period-end to properly allocate revenue and expenses.

Report showing unpaid invoices grouped by how long they've been outstanding.

A report categorizing accounts receivable by how long invoices have been outstanding.

A measure of how efficiently a company collects its receivables, calculated as net credit sales divided by average AR.

Automatic recurring payment where funds are deducted on a scheduled basis without manual action.

The average number of days between when an invoice is issued and when payment is received.

Accounts receivable that are uncollectible and must be written off as a loss.

Matching your accounting records to your bank statement to identify discrepancies.

Work hours that can be charged to clients, as opposed to administrative or non-billable time.

The process of recording daily financial transactions in accounting books.

The point at which total revenue equals total costs, resulting in zero profit or loss.

Recording revenue and expenses only when cash is received or paid.

The movement of money into and out of a business, measuring actual cash availability.

A formal document modifying the original project scope, timeline, or cost.

A forced reversal of a credit card payment initiated by the cardholder through their bank.

The complete list of account categories used to classify financial transactions.

Organized list of all accounts used to record transactions in your accounting system.

Payment made via paper check drawn on a bank account.

The process of integrating new clients and setting up the working relationship.

A secure online area where clients can access project information and documents.

Journal entries that transfer temporary account balances to permanent accounts at year-end.

A third-party service that pursues payment of debts owed to other businesses.

A customs document required for international trade describing goods and their value.

When uncertain, choose accounting treatments that are least likely to overstate assets or income.

Using the same accounting methods from period to period for comparability.

A single invoice combining multiple orders or deliveries into one billing document.

A potential liability that may occur depending on the outcome of an uncertain future event.

An account that offsets the balance of a related account.

Money or assets invested into a business by owners in exchange for equity.

The amount remaining from revenue after variable costs, available to cover fixed costs.

Pricing method where you charge your costs plus a markup percentage for profit.

The system that enables businesses to accept credit card payments from customers.

A document that reduces the amount owed by a customer, often used for returns or adjustments.

Maximum amount of unpaid credit you'll extend to a customer.

A document issued to reduce the amount a customer owes, often for returns, discounts, or billing corrections.

The conditions under which you extend credit to customers, including limits and payment expectations.

A measure of the average number of days it takes to collect payment after a sale.

A document that increases the amount owed by a customer for additional charges.

Payment received for goods or services not yet delivered, recorded as a liability until earned.

A tangible or intangible output produced as part of a project.

An invoice requesting partial upfront payment before work begins or goods are delivered.

The final date by which invoice payment must be received to avoid being considered late.

The process of systematically following up on overdue payments through a series of increasingly urgent communications.

The process of communicating with customers to collect overdue payments.

A percentage reduction offered to customers who pay their invoice before the standard due date.

A digital invoice transmitted electronically in a structured data format.

A written agreement defining the terms of a professional service engagement.

A payment transaction that did not complete successfully.

The last invoice in a project, showing total charges minus any deposits or previous payments.

Business expenses that remain constant regardless of production or sales volume.

A set project cost agreed upon upfront, regardless of actual time or materials used.

Unforeseeable circumstances that prevent fulfilling contractual obligations.

Requiring financial statements to include all information necessary for informed decisions.

The master record of all financial transactions in a business.

Assumption that a business will continue operating for the foreseeable future.

The excess amount paid for a business above the fair value of its identifiable assets.

A set period after the due date during which payment can be made without penalty.

Revenue minus the direct costs of producing goods or services sold.

The amount charged per hour of work, used to calculate billing for time-based services.

A contractual obligation to compensate another party for losses or damages.

Intangible creations of the mind: patents, trademarks, copyrights, trade secrets.

Creations of the mind protected by law, such as inventions, designs, and content.

A partial invoice issued during a long project before final completion.

The process of reviewing and authorizing invoices for payment.

The date when an invoice is officially issued, which starts the payment term countdown.

Selling unpaid invoices to a third party at a discount for immediate cash.

Selling unpaid invoices to a third party at a discount for immediate cash.

The process of verifying invoices against purchase orders and receipts before payment.

A unique identifier assigned to each invoice for tracking and reference purposes.

The final amount due on an invoice after all line items, taxes, discounts, and fees are calculated.

A record of a business transaction with debits and credits to affected accounts.

Payment due when a client cancels a project after work has begun.

The terms and charges applied when invoice payments are overdue.

A penalty charged when payment is not received by the invoice due date.

A contract clause capping the maximum damages one party can recover.

An individual entry on an invoice describing a specific product, service, or charge.

A contract establishing terms for all future work between two parties.

Recording expenses in the same period as the revenue they helped generate.

The threshold for whether a financial item is significant enough to impact decisions.

A bank account that allows businesses to accept credit and debit card payments.

Invoicing based on completion of specific project phases or deliverables rather than time.

The smallest amount a business will charge for any project engagement.

Payment term requiring full payment within 30 days of the invoice date.

Payment term allowing 60 days from the invoice date to pay in full.

Payment term providing 90 days from invoice date to pay the full amount.

The total profit after all expenses, taxes, and costs are deducted from revenue.

Total revenue minus returns, discounts, and allowances.

A contract protecting confidential information shared between parties.

Day-to-day costs of running a business, excluding COGS and one-time expenses.

Ongoing business expenses not directly tied to producing goods or services.

Money taken out of the business by the owner for personal use.

A payment that covers only a portion of the total invoice amount.

A formal disagreement between parties regarding payment amount, timing, or validity.

Technology that securely transmits payment information between merchants and payment processors.

An agreement to pay an invoice over multiple installments rather than all at once.

Charges assessed for processing electronic payment transactions.

The process of matching received payments to their corresponding invoices.

A notification sent to customers prompting them to pay an upcoming or overdue invoice.

The conditions under which a seller expects to be paid, including due dates and any discounts.

A payment that has been initiated but not yet fully processed or settled.

Small amount of cash kept on hand for minor business expenses.

Payment made before goods are delivered or services are rendered.

A preliminary invoice sent before goods are delivered or services completed, outlining expected charges.

The percentage of revenue that remains as profit after accounting for costs.

Invoicing based on the percentage of work or project milestones completed.

A formal document offering to provide specific services at a stated price.

A formal document issued by a buyer to authorize a purchase from a seller.

A formal estimate of costs for goods or services, often valid for a limited time.

An invoice automatically generated and sent at regular intervals for ongoing services or subscriptions.

Money returned to a customer for a previous payment, typically for returns, cancellations, or errors.

A formal solicitation inviting vendors to submit proposals for a project.

A percentage of payment withheld until project completion or warranty period ends.

A contract where a client pays a regular fee to secure ongoing access to services.

The accounting principle determining when revenue should be recorded in financial statements.

Accounting rules for when revenue should be recorded in financial statements.

Terms defining how many changes or revisions are included in a project price.

An additional charge for expedited or faster-than-normal turnaround.

A government-imposed tax on the sale of goods and services, collected by the seller.

The gradual expansion of project requirements beyond the original agreement without corresponding price adjustments.

A detailed description of the work to be performed under a contract.

An arrangement where the buyer creates invoices on behalf of the supplier.

A document defining project deliverables, timeline, responsibilities, and terms.

The sum of all line item amounts before taxes, discounts, or other adjustments are applied.

Status that exempts certain organizations or transactions from sales tax collection.

Contract provisions specifying how and when the agreement can be ended.

Legal terms governing the business relationship, often included on or referenced by invoices.

A billing method charging for actual hours worked plus materials used, typically with a cap.

A record of hours worked used to calculate billable time and generate invoices.

A report listing all general ledger accounts and their balances to verify debits equal credits.

The percentage of available work hours that are billable to clients.

Setting prices based on the value delivered to clients rather than time spent.

Business expenses that change proportionally with production or sales volume.

A guarantee that work or products will meet specified standards.

Direct electronic transfer of funds from one bank to another, typically same-day for domestic transfers.

The difference between current assets and current liabilities, measuring short-term financial health.

Current assets minus current liabilities; measures short-term financial health.

The formal removal of an uncollectible account from your books, recognizing it as a loss.