Invoicing & Business Glossary

Accounts Aging Report

A financial report that categorizes outstanding receivables by how long they have been unpaid, typically grouping invoices into buckets of 0–30 days, 31–60 days, 61–90 days, and 90+ days past due.

Accounts Payable

Money a business owes to its vendors, suppliers, or contractors for goods and services received but not yet paid for.

Accounts Receivable

Money owed to a business by its customers for goods or services that have been delivered but not yet paid for.

Accrual Accounting

An accounting method in which revenue is recorded when it is earned and expenses are recorded when they are incurred, regardless of when cash is actually received or paid.

Balance Sheet

A financial statement that shows a business's assets, liabilities, and owner's equity at a specific point in time, providing a snapshot of the company's financial position.

Billing Cycle

The recurring time interval — typically weekly, bi-weekly, monthly, or quarterly — at which a business invoices clients for goods or services delivered during that period.

Break-Even Point

The level of revenue or sales volume at which total income equals total costs — the point at which a business neither makes a profit nor incurs a loss.

Burn Rate

The rate at which a business spends its cash reserves in excess of revenue generated, typically expressed as a monthly figure and used to calculate how long existing cash will last.

Business Expense

A cost incurred in the ordinary course of running a business that may be deductible from taxable income, reducing the total tax owed.

Cash Basis Accounting

An accounting method in which revenue is recorded when cash is actually received and expenses are recorded when they are actually paid, regardless of when they were earned or incurred.

Cash Flow

The net movement of money into and out of a business over a specific period, reflecting the actual cash received from clients and paid to vendors, suppliers, and operating expenses.

Cash Flow Forecast

A financial projection estimating future cash inflows (expected payments from clients) and outflows (planned expenses) over a specific period, used to anticipate cash shortfalls or surpluses.

Chargeback

A forced reversal of a credit card or payment transaction initiated by the cardholder through their bank, which returns funds to the buyer and removes them from the seller's account.

Client Onboarding

The structured process of welcoming a new client, establishing working agreements, collecting necessary information, and setting expectations before beginning work.

Client Portal

A secure online interface where clients can view invoices, track project status, access shared documents, and make payments — centralizing the client relationship in one accessible location.

Collections

The process of pursuing payment for overdue invoices through escalating means, ranging from reminder notices to third-party collections agencies or legal action.

Contract

A legally binding written agreement between two or more parties that defines the terms of an exchange of services or goods, including scope, compensation, timeline, and remedies for breach.

Credit Note

A document issued by a seller that reduces the amount a buyer owes, typically used to correct an overcharge, acknowledge a return, or apply a discount after an invoice has been issued.

Days Sales Outstanding

A metric measuring the average number of days it takes a business to collect payment after issuing an invoice, used to assess the efficiency of accounts receivable management.

Deposit

A partial payment made upfront by a client before work begins, securing the service provider's time and covering initial project costs.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the gradual decline in the asset's value through use, age, or obsolescence.

Double-Entry Bookkeeping

An accounting system in which every financial transaction is recorded in at least two accounts — as a debit in one account and a corresponding credit in another — ensuring the books always balance.

Due on Receipt

A payment term indicating that the invoice must be paid immediately upon receiving it, with no grace period.

Early Payment Discount

A reduction in the invoice amount offered to a buyer in exchange for paying before the standard due date, typically expressed as a percentage discount for payment within a shorter window.

Equity

The residual value of a business's assets after all liabilities are subtracted — representing the owner's financial interest in the business. Also called net worth or owner's equity.

Estimated Tax

Advance tax payments made by self-employed individuals throughout the year to cover federal (and often state) income taxes and self-employment taxes, in the absence of employer withholding.

Freelancer

A self-employed individual who provides services to clients on a project or contract basis rather than as a permanent employee of any single organization.

General Ledger

The master accounting record of all financial transactions made by a business, organized by account type and used to prepare financial statements.

Gross Income

The total revenue earned by a business before any deductions for expenses, taxes, or other costs. For individuals, gross income is total earnings before income taxes and deductions.