A BUSINESS JARGON GUIDE FOR UK SMALL AND MEDIUM SIZED BUSINESSES

Transcription

1 A BUSINESS JARGON GUIDE FOR UK SMALL AND MEDIUM SIZED BUSINESSES

2 Contents 03 INTRODUCTION 04 BUSINESS JARGON: EXPLAINED 27 INDEX 2 Business Jargon Buster

3 Introduction The world of business finance is notorious for its confusing jargon and multiple-meaning terms. Contracts, conditions and legal documents are rife with phrases that can be overwhelming to any business owner. Whilst your accountant or consultant might deal with some of your paperwork, all business owners have to handle their own documents at some point, and they can be difficult to digest. It s vital business owners are able to navigate the words and phrases used by finance providers on a day-to-day basis now more than ever. Banks and other traditional lenders are serial offenders here, with some terms that seem designed to confuse and frustrate. It s important that those who chose to borrow from traditional or non-traditional finance providers know exactly how their loan will work this often comes down to the nitty-gritty terms, the dense jargon and tricky clauses of the paperwork itself. You will find that many contracts or agreements from lending institutions are purposely riddled with complex lexicon fees and charging details are hidden in disbursements and small print. Whilst obtaining finance providers can be a great opportunity for business owners to focus on growth, it s all too easy to get caught out and incur huge charges from seemingly nowhere. This guide has been created to stop this from happening to you and your business. We ve composed easy-to-digest definitions for a vast array of business finance terms that we think the average business owner will encounter on a frequent basis. Our specialist staff from the Legal, Risk and Sales departments all contributed with language they think consumers struggle to grasp. We hope it helps give you and your business a clarity of understanding, and the confidence to deal with all the paperwork you encounter. Business Jargon Buster 3

4 Business jargon: explained A ACCOUNTS PAYABLE A record of all your business yet to be paid, outgoing costs these could be bills, wages, or invoices (other than your own!) ACCOUNTS RECEIVABLE A record all your business incoming payments material goods or services that have been delivered, but you ve not been paid for. A business issues invoices for these payments to its customers (or debtors). ACCRUALS Accounting adjustments made for costs or payments your business has incurred or earnt, that have not yet been recorded in your accounts. ADMINISTRATION A business can file for administration if they are insolvent it is a process by which a company s remaining assets are organised and managed for the benefit of the creditors by an outside party, usually an insolvency practitioner. Advance rate / pre-payment / initial rate The % of the invoice value your business will receive in funding upfront usually between 80 and 90%. ALTERNATIVE FINANCE New methods of financing that are different from traditional, older methods ANGEL INVESTORS Private, independent individuals, working alone or in groups, investing their own disposable finance into start-up businesses for private equity. They will own a stake of your business in return for giving you funds when others might not take the risk. 4 Business Jargon Buster

5 Approval period The amount of time an invoice financing provider will continue to fund your unpaid invoices, after the date they are due. If the invoice remains unpaid after this time, the lender can take back their money. AIM Alternative Investing Market a sub-market of the London Stock Exchange designed for smaller businesses. It allows growing companies to sell shares under simplified regulations, to raise funds from the public markets. ASSETS What your business owns of monetary value these can be tangible objects like equipment, materials and property, or simply how much cash you have saved. ASSET BASED LENDING (ABL) A traditional form of lending in which financing is secured by your business offering up collateral in the form of your assets property, inventory etc. ASSIGNMENT A legal term that describes the transfer of a property owner s rights from the holder of the property to a new party. Audit An official review or survey of your businesses accounts and books usually undertaken by an independent party. B BACS Bankers Automated Clearing System a form of transferring funds between accounts that can take between two and five working days but usually it s three. Business Jargon Buster 5

6 BALANCE SHEET A statement detailing all of the most important financial figures and statistics of your business at a certain time. Used to display performance and current assets. BALLOON PAYMENT When the final repayment of a loan is much larger than previous instalments. Used in loans to help reduce the cost of the standard repayments. BANKRUPT The legal state of an individual that cannot repay his or her debts in the UK only specific individuals can be made bankrupt, not businesses. Either the individual them self or their creditors can apply to make someone bankrupt. BASIS POINT An economic term that equals 0.01%, or one hundredth of a percentage point. It is used to help describe minute changes in financial figures, like stock prices and profit margins. If the Bank of England s Base Rate of interest rises by 50 basis points, the rate has increased by 0.5%. BOND A tradable promise of payment issued by financial providers and companies in order to raise funds like an IOU. The issuer of the bond must pay the bondholder according to the conditions, the value growing with interest over time until the maturity date. BLACK SWANS Extraordinary events or occurrences within the financial world that are nearimpossible to predict and catch business analysts by surprise. BLUE CHIP Internationally renowned companies held in high esteem for their profitability and high quality product. (The name comes from poker!) BOOK DEBT A document or record of all your business s outstanding invoices and incoming payments. Also known as the sales ledger. 6 Business Jargon Buster

7 BRITISH BUSINESS BANK A development bank 100% owned by the government but managed independently. The BBB s goal is to stimulate investment into UK small businesses. C CAPITAL GAIN The profit made on the sale of investment, such as stocks or property. This is then subject to Capital Gains Tax. CASHFLOW The movement of money in and out of your business a healthy and reliable cashflow is key to any business and its working capital. CONTRA-TRADING When your business buys and sells to the same customer, which may result in some form of offset to establish the balance of what is owed and by whom. CHAPS Clearing House Automated Payment System a form of transferring funds between accounts that clears the same day. CHARGING ORDER Applied for by your creditor, a charging order secures any debts you owe and have failed to repay against your own home or property. CHOCCS Client Handles Own Credit Control. When using an invoice financer or factoring provider, your business remains in control of chasing up its own due payments. Great for ensuring that personal touch with your clients, and maintaining customer relations. Business Jargon Buster 7

8 CREDIT CARD A card used by consumers and businesses that allows them to buy things the issuer of the card, usually a bank, actually pays for the purchase. The client must then pay back the provider for what they have bought, with interest building up after a certain time. CREDITOR A business which allows the buyer to pay for their goods or services at a later date. When you owe them money, you ll be sent an invoice. Creditworthy customers These are companies defined as having either turnovers of 15 million plus, are government bodies, charities, a subsidiary of a larger business, or listed on a major stock exchange. COLLATERAL Any private assets offered up by a borrower as security against their loan or debt. COMMERCIAL MORTGAGE A mortgage loan given to businesses with the specific purpose of purchasing commercial property, like office space or a warehouse. Confidential factoring A rare form of factoring which involves the provider pretending to be your business, by setting up trust funds in the borrower s name this ensures your clients remain unaware that you are financing your invoices. 8 Business Jargon Buster

9 Confidential invoice discounting (CID) An invoice finance provider advances funding against your business s sales ledger, but the lending relationship is kept confidential from your clients. Your business remains in complete control of chasing up its own payments. Credit insurance A service that ensures that losses on unpaid receivables (the payments your business is owed) are covered. So if you get finance against an invoice which goes unpaid, you re not on the hook for it. CROWDFUNDING Another form of alternative finance that involves money raised from a pool of online investors, in return for equity in your business. Investors often inject funds into many businesses at once to diversify the risk. Crystallised loss / loss rate The % of advanced funds that are not recovered, thus investors incur a loss. CURRENT RATIO A ratio used to calculate whether or not a business has the ability to pay back its debts. Very simply, it sees a business s current assets, divided by its current liabilities. D fall DEAD CAT BOUNCE A stock market term that describes a small recovery in a stock s price after a sharp the rise is brief, and the downward trajectory is quickly resumed. Business Jargon Buster 9

10 DEBENTURE A charge registered against the assets of a limited company, on behalf of any party owed money by the company DEBTORS Your business s clients. (The ones that owe you money!) DEBTOR DAYS An equation to work out how quickly cash is being collected from your company s debtors, it s worked out as: your current debt, divided by your yearly revenue, multiplied by 365, and it gives an average collection period across the year. DEBT TURN The average number of days taken by customers to pay invoices. DEED A legal document that signifies ownership rights of property or land, given from one party to the other. DEFAULT Your loan can go into default as a result of continued delinquency, i.e you have continuously missed your payments for an extended period time. Once deemed to be in default, the entire loan becomes due immediately. DELINQUENCY Missing payments or failing to the meet regular instalments of a loan. Dilution Anything that can reduce the value of your business invoices that have already been lent against. DIRECT DEBIT An agreement made with a bank to transfer or pay a set amount of money at regular intervals or on a specific date. 10 Business Jargon Buster

11 DIRECTORS A group of individuals, nominated by shareholders and investors, that are in charge of managing a business. Disbursements Extra fees charged by most invoice finance providers for out of the ordinary services - you can be charged for same-day bank payments, receiving letters, credit checks, admin errors, unpaid cheques and overpayments. Disclosed invoice discounting Your business receives advanced funding based on your unpaid invoices, but your customers may know that the money that they owe you has been reassigned to a provider. DIVIDENDS A slice of your business s profits paid out to its investors. DUE DILIGENCE The assessment and examination of a business before a financial investment, purchase or transaction regarding that company takes place. E EBIT Earnings before interest and taxes Your business s total profits in a set period, excluding interest and tax payments. EFFECTIVE INTEREST RATE The nominal or base interest rate, but with accumulation over time included. The effective rate grows each time it is calculated, because it takes into account the previous compounding. For example, a 10% nominal rate compounding monthly, equals an effective rate of % after one year. Business Jargon Buster 11

12 EIS Enterprise Investment Scheme Tax relief provided by the UK government to encourage investment into businesses unlisted on the stock exchange. There are reductions on capital gains tax and income tax in order to reduce the risk of investment for funders. The SEIS (Seed Enterprise Investment Scheme) compliments the original scheme, but is specifically designed to help start-ups looking to attract initial investment. EQUITY The value of owning shares within a company typically sold to investors. EXIT When an investor or shareholder sells their stake in a company in order to make a profit on their investment or cut their losses. F Factoring When a business sells its invoices to a third party (the factor) at a discount. Be wary of lengthy lock-in periods, hidden fees (disbursements) and personal guarantees. FINANCIAL ASSETS Non-physical items that carry monetary value because they legally entitle the owner to what is in effect, money. These include shares, stocks and bonds. As an actual object, these things are worth nothing, but the obligation they hold is the key to their value. FINTECH An abbreviation of financial technology a new business sector which involves using digital and online platforms to provide finance services. FISCAL YEAR A 12 month period used for determining a business s income and spending in that year a company will usually publish a report of their accounts and performance. A fiscal year doesn t always follow a standard calendar year! 12 Business Jargon Buster

13 FIXED ASSETS Assets of monetary worth in actual use by the business, rather than stock or surplus for sale. FIXED CHARGE A business must agree on certain assets to act as security on their loan, prior to it be funded. These assets can t be sold by the company good examples are property and land. FIXED COSTS Expenses a business incurs through its daily running and general functioning, regardless of its sales or production volumes. For example, the monthly rent for your office space is a fixed cost because it is not related to your financial performance. FLOATING CHARGE A form of security which allows the lender to receive money from all a business s assets if their debt is not paid. A business can sell these assets, but they must be replaced by others. In the result of administration, the floating charge becomes fixed and specific assets can be liquidated. FORECAST A calculated prediction of how much business (sales) your company expects within the next financial period. FUNDING LIMIT The most amount of money you can borrow at once from your lender. This figure is usually calculated on your forecast turnover. FUNDRAISING A form of financing through the issuing of shares in a business. Not a charity fun-run! G driven GRANT An injection of cash into a business with no expectation of a return - a gift, not by profit. Business Jargon Buster 13

14 GROSS PROFIT Your business s sales or revenue, minus all of the outgoing costs associated with the production and delivery of that product. H High involvement / concentration / debtor exposure limit Expressed as a %, this figure denotes how much of your sales ledger is allowed to be made up of a single client or customer. If the given limit is 20%, no single client s payments can account for over a fifth of your receivables. This figure is set by our invoice finance provider, and it is used to calculate the risk of lending. I INDEMNITY Essentially a form of insurance indemnity is the obligation for one party to provide compensation for any losses or damages suffered by another party. INITIAL PUBLIC OFFERING (IPO) The first time a company s stock is made available to the general public for purchase on a stock market. INSOLVENCY When a business doesn t hold enough assets to cover its debts, and cannot repay when due. INTEREST RATE The rate of interest paid by borrowers to the funder of their loan. The interest is the charge or compensation paid by the lender for using that borrowed money. INVENTORY The collection of physical goods or materials your business is holding for sale. 14 Business Jargon Buster

15 INVOICE The physical document your business sends to its customers, stating your request of payment. Think of the bill at a restaurant. Invoice discounting when a business receives reduced advanced funding on their yetto-be paid invoices. Invoice finance A form of alternative finance that sees businesses unlock cash tied up in unpaid invoices by selling them to investors as assets. Invoice trade The process of a business putting their invoice up for sale to unlock funds straight away. INVESTMENT MEMORANDUM A document or proposal put together by a business seeking funding in order to attract investors, outlining risk and potential returns. L LEASING FINANCE Allows a business to use an asset (vehicles, machinery) through a series of rental payments with an option to acquire actual ownership. The asset is initially bought buy a finance provider, who make money by recovering the cost of the asset through the rental payments and interest. LETTER OF CREDIT A guarantee issued by a bank that ensures a seller will be paid in full for their goods, in case the buyer cannot make the payment - provided the seller has met the relevant conditions. Business Jargon Buster 15

16 16 Business Jargon Buster LIABILITY Your business s outstanding debts and obligations. Any unpaid loans, outstanding mortgages or missed payments are all liabilities. LICENCE FINANCE Another source of alternative funding provided that sees a business sell its future payments from licence agreements, subscriptions and contracts in advanced for immediate cash. LIEN The right to keep possession of someone s assets until their outstanding debt has been paid. LLP Limited Liability Partnership - A private business, where the owners / partners are only liable for its debts relative to the amount they have invested in the company. LIMITED PARTNERSHIP A type of business structure in which all the owners / partners are liable for a company s debts, but its profits are shared between them also. LIQUIDATION When a company ceases business and breaks down all its remaining assets these are then sold, to pay off the company s debts. Any money left over goes to shareholders. LIQUIDATOR The appointed practitioner to handle and manage a company s liquidation. LIQUIDITY How quickly a business or individual can convert their assets into cash, in a short time frame. Solvency refers to a business s ability to stay on top of its costs in the long run. LIQUID CASH The cash your business has immediate access to, which can be quickly deployed to whatever end.

17 LOAN An agreed amount of borrowed money that must be paid back, almost certainly with interest. LOAN STOCK Shares given out by a business in return for a fixed interest rate loan. M MANAGEMENT ACCOUNTS A report of a business s accounting data that is produced to analyse and predict the company s future financial performance and forecast its growth. MARKET SHARE The % of your business s sales within the entire market your product falls under. The higher the percentage, the more dominant the company is over its competitors. MBI Management Buy-in The acquisition or purchase of a business from the owners by an outside team of managers, often funded by private investors. MBO Management Buy Out The acquisition or purchase of a business from the owners by its own existing directors and executives. Sometimes the MBO is financed by private investors in return for equity shares. MERCHANT CASH ADVANCE A new short term borrowing solution that follows a pay back as you earn model. A loan is agreed online with a set total that needs to be repaid; as your business makes sales, a fixed percentage is taken each time and repaid, usually via a credit or debit card machine. MERGER When two companies combine into a new, larger company, or continue as a larger existing one. To keep shareholders in the two businesses happy, investors are offered stock in the new company. The new company is supposed to benefit from efficiency savings. Business Jargon Buster 17

18 Minimum fee The minimum service fee a factoring provider will charge during the assumption of your sales ledger usually a monthly rate. MISFEASANCE In business, to perform a legal act, illegally a breach of duty usually in relation to the assets or property of a company. N NET PROFIT The actual income of your business a company s revenue minus its expenses and taxes. NET WORTH The relative value of a business its total assets minus its debts and liabilities. NOMINAL INTEREST RATE The rate of interest in its simplest stated form - before it is adjusted for inflation or compounding. Non-recourse factoring A factoring service offered by providers that includes credit insurance for the borrowing business, to protect against default / delinquency. NPV Net Present Value a calculation used to determine the future profitability of an investment within a business. This involves the present value of income and expenditure the value of that money in the present, compared to its future value as a result of interest. A pound in the future is worth less than a pound in the present. 18 Business Jargon Buster

19 O ONLINE UNSECURED LOAN A short-term loan intended for business use with a monthly interest rate can be applied for online with only basic credit checks. Whilst funding can be delivered in hours, the applicant is usually required to offer a personal guarantee. With monthly interest rates of around 2-2.5%, this type of loan can get very expensive over longer periods. OVERDRAFT An agreement between a business and a lender, allowing the former to withdraw more money than the actual amount in their account. A traditional form of lending. OVERFUNDING When a business receives its target amount of equity funding, but continues to accept investments in order to capitalise on its current levels of popularity. OVERHEADS The general costs of running your business; this includes any operational costs like electricity or employee wages. P PAYMENT TERMS The conditions set out by the seller, for the buyer usually the period of which they expect payment for the product. PAYROLL The money your business spends on wages, salaries and other employee costs. PEER-TO-PEER FINANCE A direct contract between a lender (not a bank) and a borrower. Unlike traditional lending, where the bank takes money from one place and lends it to another, peerto-peer brings the original investor and borrower directly together usually over an online platform. Business Jargon Buster 19

20 Personal guarantee Most banks or factoring providers will ask for this a personal supplement offered up as security to the lender in case the business can t recover its advances. They are very rarely enforced these days, and exist more as an incentive for business directors to focus on delivering on their invoices. PHOENIX A new company that takes on the assets and directors of an old company that was insolvent. The old company s remaining assets and bought and transferred to the new company so that it can continue operations. PORTFOLIO A record of all the financial assets held by a business or an individual. Prepayment percentage Also known as the advanced rate the % of the invoice s actual worth your business will be funded upfront usually between 80-90%. PURCHASE ORDER FINANCE A form of alternative finance which allows wholesale businesses to take on unusually large orders that their cash flow couldn t normally manage. A financing provider lends the business funds to immediately pay its suppliers, so that the wholesaler can fulfil the original sales order. Finance will only be provided if the business can provide a verified sales order from a client. P2PFA The Peer-2-Peer Finance Association the trade body representing the peer-to-peer finance industry. Members must adhere to a strict code of practice. 20 Business Jargon Buster

21 Q QUICK RATIO A ratio used to calculate a company s liquidity and its ability to meet immediate obligations. A quick ratio of 1.8 means that a business has 1.80 worth of liquid assets available to cover each 1 of their current liabilities. R RECEIVABLES The payments your business is owed, or quite simply, invoices. These can also be classed as assets. RECONCILIATION The matching up of two separate records to ensure the outgoing and incoming funds correlate within your business. RECOVERY The process of chasing up money from overdue invoices that are yet to be paid. Recourse invoice finance/discounting This is where you get finance against your invoices, but if one of your customers doesn t pay an invoice, you are liable for the payment. Refactoring fee An added charge issued by the factoring provider to cover an invoice that hasn t been paid past the approval period. ROI Return On Investment A figure used to determine the efficiency and success of an investment. It is usually expressed as a percentage, with the return of the investment divided by its initial cost. Business Jargon Buster 21

22 REVENUE The amount of money your business receives from the sale of its services and products. Also known as turnover. RISK In business finance, risk refers to the likelihood of a company or an individual not being able to repay a debt. A high risk business is less likely to pay back its debts. S SALES LEDGER A document or record of all your business s outstanding invoices and incoming payments. Also known as book debt. SECURED LOAN A loan which requires certain assets offered up as security if it cannot be repaid. SEED CAPITAL The original money used to fund a start-up business at its birth. Selective invoice discounting / spot factoring The same as regular invoice discounting, but only single invoices & receivables are sold on to a third party. Factoring services usually take the entire sales ledger of a business. SHADOW DIRECTOR An unofficial director of a business that regularly gives the actual directors instructions. SHAREHOLDER Anyone who owns shares within a business, i.e. they own part of the company. 22 Business Jargon Buster

23 Shortfall When an invoice finance provider fails to recover the money which has been advanced to the participating business. SOLE TRADER A business run on your own as an individual. SOLVENCY The extent to which a business can meet its current expenditures and repay its debts as they are due, over a long period of time. Liquidity describes the ability of a business to meet its short-term needs. Staged invoicing A more risky form of financing for the lender your business receives an advance on an invoice you have yet to fulfil the terms of, e.g you are yet to complete the work or deliver the product. STAKEHOLDER Anyone directly affected by a business s success or failure this could range from its employees and clients, to shareholders and suppliers. SUPPLY CHAIN FINANCE A finance solution which essentially seeks to increase the working capital of both the buying and the selling businesses. An invoice is discounted and funded, usually by a bank, as soon as it is approved by the seller. This lets the buyer pay later, whilst giving the seller an immediate cash injection, improving the cash flow of both parties. SWIFT Society for Worldwide Interbank Financial Telecommunications An international network used by banks and other large financial institutions to transfer money between one another. Business Jargon Buster 23

24 T TARGET MARKET A predetermined section or demographic of the market your business operates under, that is being specifically targeted by your current sales and marketing strategies. TAX RETURN A document issued by the government which must be filled in with various information it is used to calculate how much tax you must pay. TURNOVER The amount of money your business receives from the sale of its services and products. Also known as revenue. U UNDERWRITING An insurance term that sees a financial provider assuming responsibility of an asset, and guaranteeing payment of that asset should it be lost or damaged. UNICORN A privately owned start-up valued at over $1 billion. Actual unicorns are only slightly rarer. UNSECURED LOAN A loan which requires no assets to be offered up as security to the lender. More risky for the lender, so usually the interest rates are higher, and the maximum funding available lower than a secured loan. 24 Business Jargon Buster

25 V VALUATION How much an entire business is deemed to be worth. VARIABLE COSTS These are your business s expenses that fluctuate relative to your sales. The best example of this would be an increase in raw materials in order to manufacture more product. VAT Valued Added Tax The tax added to the purchase of a product or service. VAT REGISTRATION Your business must be VAT registered as soon as it starts to turnover more than 82,000 a year, or you will incur fines. VCT Venture Capital Trust Investment schemes heavily offset by government through tax concessions that are listed on the stock exchange. Investors can buy shares in a VCT, which then in turn invests in small businesses and start-ups that are not yet listed on a public exchange, to boost their growth. The government provides tax relief for VCT investors because the risk in start-ups is high. Venture capital Investors fund promising start-up companies with high growth potential in return for private equity shares. Usually occurs in stages, with investors offering more funding as the start-up achieves growth milestones and the risk of the investment decreases. Business Jargon Buster 25

26 VENTURE DEBT / VENTURE LENDING A debt-based form of financing for businesses funded by venture capital, that lack working capital because they are stuck between growth stages agreed in the initial venture capital investment. W VERIFICATION The confirmation that the contents of a legal document are correct and complete. Warranty A form of security for invoice finance providers, similar to a personal guarantee, but the funder must legally prove a business cannot recover its advances. WORKING CAPITAL The cash immediately available to your business in order to fund its day-to-day running. Whether you re a multi-national corporation or the latest start-up, all businesses require working capital to function and grow. 26 Business Jargon Buster

27 Quick glance index A Accounts payable 04 Accounts receivable 04 Accruals 04 Administration 04 Advance rate / pre-payment / 04 initial rate Alternative finance 04 Angel investors 04 Approval period 05 AIM 05 Assets 05 Asset Based Lending (ABL) 05 Assignment 05 Audit 05 B BACS 05 Balance sheet 06 Balloon payment 06 Bankrupt 06 Basis point 06 Bond 06 Black swans 06 Blue chip 06 Book debt 06 British Business Bank 07 C Capital gain 07 Cashflow 07 Contra-trading 07 CHAPS 07 Charging order 07 CHOCCS 07 Credit card 08 Creditor 08 Creditworthy customers 08 Collateral 08 Commercial mortgage 08 Confidential factoring 08 Confidential invoice 09 discounting (CID) Credit insurance 09 Crowdfunding 09 Crystallised loss / loss rate 09 Current ratio 09 D Dead cat bounce 09 Debenture 10 Debtors 10 Debtor days 10 Debt turn 10 Deed 10 Default 10 Delinquency 10 Dilution 10 Direct debit 10 Directors 11 Disbursements 11 Disclosed invoice discounting 11 Dividends 11 Due diligence 11 E EBIT 11 Effective interest rate 11 EIS 12 Equity 12 Exit 12 F Factoring 12 Financial assets 12 Fintech 12 Fiscal year 12 Fixed assets 13 Fixed charge 13 Fixed costs 13 Floating charge 13 Forecast 13 Funding limit 13 Fundraising 13 G Grant 13 Gross profit 14 H High involvement / concentration / 14 debtor exposure limit I Indemnity 14 Initial Public Offering (IPO) 14 Insolvency 14 Interest rate 14 Inventory 14 Invoice 15 Invoice discounting 15 Invoice finance 15 Invoice trade 15 Investment memorandum 15 L Leasing finance 15 Letter of credit 15 Liability 16 Licence finance 16 Lien 16 LLP 16 Limited partnership 16 Liquidation 16 Liquidator 16 Liquidity 16 Liquid cash 16 Loan 17 Loan stock 17 M Management accounts 17 Market share 17 MBI 17 MBO 17 Merchant cash advance 17 Merger 17 Minimum fee 18 Misfeasance 18 N Net profit 18 Net worth 18 Nominal interest rate 18 Non-recourse factoring 18 NPV 18 Business Jargon Buster 27

28 O Online unsecured loan 19 Overdraft 19 Overfunding 19 Overheads 19 P Payment terms 19 Payroll 19 Peer-to-peer finance 19 Personal guarantee 20 Phoenix 20 Portfolio 20 Prepayment percentage 20 Purchase order finance 20 P2PFA 20 Q Quick ratio 21 R Receivables 21 Reconciliation 21 Recovery 21 Recourse invoice finance/ 21 discounting Refactoring fee 21 ROI 21 Revenue 22 Risk 22 S Sales ledger 22 Secured loan 22 Seed capital 22 Selective invoice discounting / 22 spot factoring Shadow director 22 Shareholder 22 Shortfall 23 Sole trader 23 Solvency 23 Staged invoicing 23 Stakeholder 23 Supply chain finance 23 SWIFT 23 T Target market 24 Tax return 24 Turnover 24 U Underwriting 24 Unicorn 24 Unsecured loan 24 V Valuation 25 Variable costs 25 VAT 25 VAT registration 25 VCT 25 Venture capital 25 Venture debt / venture lending 26 Verification 26 W Warranty 26 Working capital 26 KEY Invoice finance GENERAL BUSINESS FINANCE 28 Business Jargon Buster

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