One of the things that we pride ourselves on at PBATS is not following the stereotypes of the industry, not just the stuffy suits but also avoiding using loads of jargon. However, sometimes we just can’t avoid a little jargon, so we’ve made this handy guide to help you out when you’re not sure what we mean!
- Assets – These are things you own, not just physical things like your computers and equipment, but also your money in your bank.
- Liabilities – These are what you owe, the bills outstanding that you need to pay.
- Debtor – Someone who owes you money.
- Creditor – Someone you owe money to.
- Debtor days – How long it takes to be paid.
- Prepayment – Something you’ve paid for that you’ve not yet received in full, such as an insurance policy, which may span more than one financial period.
- Cost of goods sold – The total of your expenses for making your goods you’ve sold.
- Overheads – Regular monthly costs such as rent & utilities.
- Net profit – Your sales less all of of your business costs.
- Gross profit – Your sales less your cost of goods sold.
- Turnover – The total of all your income from sales & services sold.
- Stock turnover – How long stock will take to sell
- Break even point – The point at where your sales cover the cost of your expenses (so future sales would be profit).
- Cash Flow – The money that is going in and out of your business account(s), income from invoices & outgoings for paying bills. A cash flow forecast will predict how your cash flow will be based on past information in your books and known future information (such as upcoming jobs or sales), predicting any potential issues you may have when funds get low.
- Accrual – This is a charge for work that has been done but not yet invoiced, such as if you pay for your annual accounts monthly in advance of them being done, for which provision is made at the end of a financial period.
- Balance Sheet – A report that shows the value of your assets plus everything you need to pay out – this should be a positive figure, if it’s negative then we can help look at how to improve your finances.
- Management Accounts – A series of reports produced regularly, usually monthly or quarterly, showing profit & loss and other useful financial information for the company, produced to suit your company and help you get useful information out of your books.
If there’s anything else you think should be on here please let us know!