Finance jargon, translated
You don’t need to speak finance to run a good business. Here’s what the words actually mean.
- AI
- Software that can read, write and spot patterns.
- Automation
- A computer doing a repetitive task for you.
- Balance sheet
- What you own and owe on a given date.
- Break-even
- The point where a deal or product stops losing you money and starts making it.
- Cash flow
- Money actually moving in and out of the bank. Different from profit.
- Dashboard
- A single screen of charts and numbers.
- FD (Finance Director)
- The person in charge of the money side of the business.
- FP&A
- Financial Planning & Analysis: planning ahead and checking how you are doing against the plan.
- Fractional / virtual
- Part-time. A senior person for the days you need them.
- Integration
- Getting two systems to share data automatically.
- KPI
- Key performance indicator: a number that shows whether the business is on track.
- Management accounts
- A monthly report on how the business is really doing, built to help you make decisions.
- P&L (profit and loss)
- What you earned and what you spent.
- Reconciliation
- Checking your records match your bank.
- Rolling forecast
- A forecast that always looks 12 months ahead, however far through the year you are.
- Statutory accounts
- Year-end accounts filed with HMRC and Companies House. They look backwards.
- Working capital
- The money tied up in running the business day to day (stock and what customers owe you, less what you owe suppliers).
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