If you’re starting a small business, it might sometimes feel like you need to walk around with a dictionary in order to get your head around the different terminology, especially when it comes to taking payments. So, we’ve gone on a jargon-busting mission to produce an A-Z glossary of business and payment terms you may encounter on your journey.
Your annual company accounts provide an overview of your business’s activity over a 12-month period. Your accounts include sections such as a balance sheet, profit and loss statement and cash flow statement, and can be compiled by you or your accountant, then submitted to Companies House. Read our end of year tax checklist for more information.
An acquirer is the bank that processes payments on behalf of you, the merchant. They’re sometimes known as the acquiring bank.
The day-to-day records you keep of your business’s financial activity are known as your bookkeeping.
A bank transfer is the direct transfer of funds between your customer’s account and your business bank account.
A chargebackis where a customer disputes a transaction and asks their bank to reverse it through a refund request. You can dispute the chargeback if you can prove the claim was invalid.
Click and Collect
Businesses that offer Click and Collect allow their customers to buy goods online then collect in-person.
Your cash flowis the money that passes in and out of your business. A positive cash flow is where the former exceeds the latter.
If you own shares in a company you may take dividend payments, which are a share of the business’s profits. You may be entitled to a tax-free dividend allowance each year – find out more on GOV.UK.
A digital walletis another name for customer payments that are made on devices such as smartphones, tablets and computers, or wearable tech such as smartwatches and wristbands. The term ‘mobile wallet’ refers to payments made on smartphones only.
In business vocabulary, equity refers to the total cash value of your ownership, including assets, net income, your product inventory and shares. Essentially, equity can be summarised as the total amount of money you would receive if you were to sell your business in its entirety.
Every business is at risk of fraud. In the broadest sense, fraud refers to wrongful and criminal deception for the means of personal advantage. In the context of payments, it can refer to everything from fraudulent refund claims to the use of stolen cards in-store.
Foreign transaction fee
A foreign transaction fee is an amount sometimes charged by the bank or card issuer to the cardholder when they make a payment or cash withdrawal while abroad. You may see this referred to as a non-sterling transaction fee if you’re buying an item or withdrawing cash at an overseas ATM.
A gift card is a physical card or online payment tool that contains an amount of money, or ‘store credit’, that can be exchanged for goods at specified stores. Gift cards can be branded with your company’s logo and other information, and can often be set up to be used online and may be compatible with POS systems.
In another context, ‘gross’ might refer to something yucky, but as a business term, it usually refers to your total sales transactions before costs have been taken into account. In contrast, your net sales means your gross sales minus deductions.
‘Half year sales’ or ‘half year profits’ refers to business activity over a 6-month period. As a business you may decide to produce half-yearly financial statements (twice a year) as opposed to quarterly (four times a year) or annually (once a year).
A ‘hold’ placed on a credit or debit card is where a bank prevents a cardholder from paying for items until they have verified there is sufficient funds in the account.
Investment refers to the capital you raise for your business, which could come in the form of business loans, venture capital funding, angel investors or crowdsourcing, for example.
An invoiceis a document you send to request a payment from a customer, unlike a purchase order (PO), which is a request to buy goods.
The issuing bank is the bank that issues credit and debit cards to customers, whereas the acquiring bank handles transactions on behalf of you, the merchant.
‘Just-In-Time’ (JIT) inventory management is where materials are moved just before they are required, which could reduce your need to spend money on storage. JIT has become an area of interest for many businesses in the context of post-Brexit supply chain challenges.
A loyalty or rewards scheme may be set up to give your customers points each time they make a payment for your goods or services. These points may be redeemed in exchange for rewards. Once you’ve signed up to Tyl (fees and eligibility criteria apply), shoppers can earn points with Tyl Rewards each time they spend in a store.
The term ‘liquidity’ means the speed at which you can access cash when required. Cash itself can be viewed as a liquid asset, whereas other assets – such as property – may take longer to convert into cash.
Your margin is the percentage profit your business makes after expenses have been subtracted from your sales. A ‘high margin’ would therefore suggest a high percentage of profit on each item you sell, relative to the cost.
Mail Order / Telephone Order (MOTO)payments are payments processed by a business over a virtual terminal when the customer is not present. These payments can be over the phone, email or post.
Near-Field Communication (NFC)is the technology that underpins contactless card payments. NFC allows data to be transmitted between radio waves at a short distance and allows customers to make contactless card payments.
Contributions paid by employees, employers and self-employed business owners to fund social security benefits – see the latest NIC rates on GOV.UK.
The term ‘offshore’ is commonly used in business terminology when companies move activity overseas, from hiring staff to opening offices (and bank accounts).
An overdraft is a deficit in a bank account that means your customer may still be able to pay for goods after their balance has hit zero. A cardholder can have an ‘arranged’ or ‘unarranged’ overdraft with their bank – the former refers to an agreed overdraft limit, and the latter refers to the absence of one.
A PDQ machine (meaning ‘process data quickly’) is a payment machine that allows people to buy goods using a card, rather than cash or cheque. PDQ machines are more commonly referred to as card machines.
PIN (Personal Identification Number)
A PIN is a four-digit code that helps keep a customer’s bank account secure. Customers may have to use their PIN to authorise payments when they buy goods or services from you.
PCI DSS compliance
PCI DSS (Payment Card Industry Data Security Standard) refers to the standards that businesses are obliged to comply with when accepting, storing, transmitting or processing cardholder data. The aim is to prevent fraudulent activity and data breaches.
A POS system (point of sale) is what businesses use to process sale transactions. Originally the POS system in a shop would have been a cash register and a paper accounts book, but now they are usually made up of digital components.
Private Limited Company
A Private Limited Company is a type of business structure where the company is its own legal entity, separate from directors and shareholders. It does not publicly trade shares, unlike a Public Limited Company. Our guide on how to register as self-employed has more information on company structures, including business partnerships.
QR codes (in the context of payments) are black and white symbols that you can display on your business premises – on areas such as tables and walls – so that your customers can make contactless orders.
In the context of business vocabulary, a quota can either refer to restrictions on trade imposed by a government – often with the intention of protecting domestic businesses – or a target, such as a sales quota, which might be the minimum goal a salesperson is expected to deliver.
A receipt is a written, printed or electronic acknowledgement that you issue to a customer as proof of purchase.
Return on investment
Your return on investment (ROI) is the profit you make relative to the amount you’ve spent on a particular area. Your ROI might be expressed as a percentage or a ratio.
A shareholder owns shares in a business’s stock, which can be as little as one share. A company’s share price can rise or fall, so the value of the shareholding could change over time.
Strong Customer Authentication (SCA)
Strong Customer Authentication (SCA) is a security requirement for electronic payments. It ensures that customers need to provide two types of authentication when making a payment.
Your turnover is the total sales made by your business. ‘Turnover’ is often used as an alternative way of saying ‘sales’ or ‘revenue’.
Two-factor authentication is where a customer provides two types of authentication before a payment can be authorised. Read more about Strong Customer Authentication (SCA).
An umbrella companyemploys temporary workers on behalf of an employment agency. You may have freelancers or occasional staff who operate through an umbrella company, and therefore may not be on your payroll.
Value Added Tax (VAT)is a tax applied to the sale of certain products and services. The Tyl guide to small business taxation has more information.
A transaction that has been nullified before the payment is settled, with the information deleted.
A write-off is where an item of expenditure is removed from your accounts, often deducted for tax purposes.
In business terminology, the yield is the earnings made on an investment over a defined period of time.
It might sound apocalyptic, but ‘zombie company’ is a commonly used business term, referring to businesses that earn just enough money to service their debt and continue operating, but have no excess capital to make investments in the company.
This has been prepared by Tyl by NatWest for informational purposes only and should not be treated as advice or a recommendation. There may be other considerations relevant to you and your business so you should undertake your own independent research.
Tyl by NatWest makes no representation, warranty, undertaking or assurance (express or implied) with respect to the adequacy, accuracy, completeness, or reasonableness of the information provided.
Tyl by NatWest accepts no liability for any direct, indirect, or consequential losses (in contract, tort or otherwise) arising from the use of the information contained herein. However, this shall not restrict, exclude, or limit any duty or liability to any person under any applicable laws or regulations of any jurisdiction which may not be lawfully disclaimed.