Glossary

DBA

Abbreviation for “Doing Business As” when using a trade name, i.e., a name that is less or other than the full legal business name. Typically, the DBA name is the name seen by the public. In the U.S., a company must register its DBA at the county or sometimes state level. 

De Minimis

Any benefit to an employee that is so low in value that accounting for it would be unreasonable. Cash benefits are never excludable as a de minimis benefit. Benefits that may be excluded as de minimis transportation fare, meals, copy machine use, holiday gifts with a low fair market value, occasional parties,  and entertainment.

Debit Balance

A balance that represents an asset or an expense of the company. In accounts payable general ledger accounts, a debit balance represents an amount owed by the vendor to the company; it can occur as a result of product returns, allowances, rebates, and chargebacks.

Debit Transaction

An electronic payment transaction that results in a debit to a cardholder's account and a credit to the merchant account.

Debt Buyer

A purchaser of accounts receivable or portfolios. Unlike a factor, if collection attempts are unsuccessful, a debt buyer will either place receivables with an external collection agency or resell all or portions of the receivables to other debt buyers. Defined as a collection agency under the Fair Debt Collection Practices Act. Also called bad debt buyers.

Debt Collection Improvement Act of 1996 (DCIA)

The U.S. government's response to the increasing amount of delinquent non-tax debt owed to the U.S. The act centralized the collection of debts to the Treasury and the Financial Management Service (FMS). Also under the act, federal agencies are required to turn over all non-tax debt to FMS for collection. Collection of delinquent tax debt was added in 1999. 

Debt-to-Equity Ratio

Total debt divided by total equity. A high debt-to-equity ratio may indicate that a company might not be able to generate sufficient cash to satisfy its obligations.

Debtor

A party that owes a creditor and has the obligation to pay off the debt.

Deficit Weight

The difference between the actual weight of a shipment and a higher "bill-as" weight, intentionally applied to take advantage of lower per-unit rates at higher weight brackets — resulting in a reduced total freight charge despite the higher billed weight.

Delivery Note

A written document from the seller to the buyer that accompanies a delivery of goods and specifies  of goods and quantity.

Delivery Receipt

A document dated and signed by the consignee or its authorized agent at the time of delivery, stating the condition of the goods received. 

Denied Persons List

A list published by the U.S. Department of Commerce's Bureau of Industry and Security (BIS) containing the names, addresses, and countries of individuals and companies whose export and re-export privileges have been denied or revoked by the U.S. government. Click here to access the Denied Persons List.

Depreciation

 (1) A reduction in the value of a tangible asset over time due to wear, age, or obsolescence. (2) The allocation of the cost of an asset over its useful life for accounting and tax purposes — the annual depreciation charge in financial accounts represents the portion of capital assets consumed or used up during the accounting period. (3) A decrease in the value of one currency relative to another.

Direct Payment

A method of collection where a debtor authorizes a creditor to debit their account to collect payment.

Disbursement

Paying out in the discharge of a debt or expense; actual payment made for a product or service to a contractor or vendor.

Disputed Stop Payment

A stop payment initiated by the writer of a check due to a dispute over goods or services.

Dividends

Dividends are generally payments made to owners of a company. These payments can be in the form of cash or the issuance of additional stock. Dividends are generally used as a way to allow the owners to participate in the profits generated by the company.

Document

Generic term for any piece of paper with important data such as an invoice, inventory sheet, application, etc.

Dodd-Frank Act

The Wall Street Reform and Consumer Protection Act was signed into law in 2010 as a response to the financial crisis of 2008. It places regulation of the financial industry in the hands of the federal government.

Drop shipping

When one company makes the sale and is in charge of the accounts receivable, but a separate wholesale or manufacturing company actually fulfills the order and ships it to the customer.

DSO, Countback

A method of calculating DSO that provides a more precise figure than the standard DSO calculation by accounting for month-to-month fluctuations in sales, past-due balances, and the actual number of days in each month. The calculation gives more weight to the current month's sales, since the majority of the accounts receivable (AR) balance should reflect current rather than prior-period sales.

DSO, Sales Weighted

Sales Weighted DSO is a method of calculating DSO that takes into account credit sales and terms of sale. Sales Weighted DSO = [($ in Current Age Bucket / Credit Sales of Current Period) + ($ in 1-30 Day Age Bucket / Credit Sales one month prior) + ($ in 31-60 Day Age Bucket / Credit Sales two months prior) + (etc.)] x 30.

Due Diligence

In AP, typically refers to efforts made by a business to find the owner of property. Performing due diligence usually includes sending a search letter to the owner’s last known address within 60 to 120 days before the end of the dormancy period. However, rules tend to vary by state. Can also refer to efforts to verify vendor legitimacy when doing business with a new vendor.

Dunning Letter

A collection letter with defined language sent to a customer with an outstanding account as part of a series of escalating collection letters.

Dunning Letter Service

A service that distributes dunning letters.

Duplicate Invoice

More than one invoice issued for the same transaction. Duplicate invoices can result in duplicate payments and may be issued as a method of fraud. May also occur as a result of inadequate internal controls, such as duplicate vendors within the vendor master file.

Earnings

The profit remaining after all expenses, taxes, and costs have been subtracted from total revenue over a given period.

EBITDA

Earnings before interest, taxes, depreciation and amortization. This measurement provides insight into a company's operating profitability, although it is not regulated by GAAP.

EBPP

Electronic Bill Presentment and Payment generally refers to the billing and payment process for consumers or B2C applications.

EBT

Electronic Benefit Transfer. A form of electronic funds transfer in which state governments credit money to a pseudo account belonging to a low-income individual, who is given a plastic EBT debit card. EBT funds can only be used to purchase specific items, such as food and other necessities.

EDI

Electronic Data Interchange refers to the computer-to-computer transmission of information between two companies, including such documents as purchase orders and invoices.

EDM

Electronic Document Management refers to software that allows specific imaged documents to be retrieved based on queries about data on the images.

EFT

Electronic Funds Transfer refers to any process of electronically transferring funds to or from an account; EFT does not involve the exchanging of hard currency. A Federal law to allow the transfer of funds electronically was passed in the United States in 1978. In the U.S., common forms of EFT are ACH and wire transactions.

EIN

Employer Identification Number is a number assigned to all business entities by the IRS for taxation purposes. An EIN is required on all business tax returns, documents and statements.

EIPP

Electronic Invoice Presentment and Payment is the digital exchange of invoices and payments between businesses, typically facilitated by a third-party platform over the internet.

Electronic Banking

The use of computers and other technology to handle banking transactions and to access bank accounts. Financial institutions usually issue a PIN (Personal Identification Number) and/or ATM or debit cards for this purpose.

Electronic Bill Delivery

A system that sends customer bills via computer or telephone.

Electronic Bill Presentment and Payment (EBPP)

A system that sends bills and other information electronically to customers and provides a way for them to make the payment.

Electronic Check Clearing House Organization (ECCHO)

A non-profit organization that is a national clearinghouse for its member institutions. It provides the rules for check image exchange for member financial institutions that exchange and settle check payments. For more information visit ECCHO.

Electronic Payment

An alternative payment method to the paper check that is made electronically via computer, telephone or ATM.

Electronic Signatures in Global and National Commerce Act (ESIGN)

A federal law designed to facilitate the use of electronic records and signatures in interstate and foreign commerce.

Embezzlement

Financial fraud involving misappropriation of funds placed in one's care. Similar to larceny, except in the case of embezzlement, the criminal gains access to the funds rightfully before appropriating them wrongfully.

Encryption

A process by which readable text is translated into unreadable code during Internet transmission from one trading partner to another and then retranslated into readable text according to an encryption key.

Enterprise Resource Plan (ERP)

Software that integrates departments and functions across a company into one computer system. ERP runs on a single database, enabling various departments to share information and communicate with each other.

Entity List

A list published by the Department of Commerce’s Bureau of Industry and Security. It contains the names of foreign nationals, businesses and organizations subject to special licensing requirements or policies for the export, re-export or transfer of selected items. 

Equity

The ownership interest in the assets of a company or entity; funds from owners or creditors provided for acquiring assets; or the difference between the amount owned (Asset) and the amount owed (Liability) by a company or entity.

ERM

Electronic Records Management. A company's strategy for maintaining digital copies of important documents and information. An ERM might include scanning and indexing invoices, receipts and purchase orders into a computer system.

ERP

Enterprise Resource Plan is software that integrates departments and functions across a company into one computer system. ERP runs on a single database, enabling various departments to share information and communicate with each other. ERP systems comprise function-specific modules designed to interact with other modules, e.g. Accounts Receivable, Accounts Payable, Purchasing, etc.

ERS

Evaluated Receipt Settlement eliminates the supplier invoice from the procurement and disbursement process. It determines disbursement based on Purchase Orders and Receiving information. Price information is found in the and quantity information in the Receipt.

Escheatment

Remittance of unclaimed property to the state in compliance with unclaimed property law. Abandoned or unclaimed property (of all kinds) becomes the property of the state, which protects the property on behalf of the owner. For AP departments, this would be, for instance, a check never cashed. Unclaimed property laws in each state set dormancy periods, requirements for due diligence in seeking the owner, and reporting and escheat requirements for the state. Owners can claim escheated property held by the state, though only a small percentage ultimately do.

Escheatment priority rules

Rules that determine which state is entitled to abandoned property in the event of disputes. First priority is given to the state of the last known address of the owner, i.e., the customer to whom the credit belongs; if the customer's address is unknown, the state of incorporation of the holder of the credit takes precedence.

Ethics Resource Center

America's oldest nonprofit organization devoted to independent research and the advancement of high ethical standards.

Evergreen

An automatic renewal/extension clause in a contract that keeps it in force until either party formally cancels it.

Exchange Rate

The price of the currency of one nation in terms of that of another nation; the rate at which one currency is traded for another.

Excise Tax

A tax levied on the manufacture, sale, or consumption of certain non-essential goods or services, e.g., airline tickets, gasoline, alcohol, tobacco, etc. An excise tax is levied on a particular product in contrast to sales and use taxes, which are levied because sales occurred rather than on the product purchased.

Exercise

A term often referred to when a person decides to purchase their company's stock through the contractual right granted to them in a stock option. A person exercises their right to purchase company stock from the right granted in a stock option.

Exercise Price

Generally refers to the fixed price documented in a stock option from which a person can exercise their right to purchase a company's stock.

Expenses

Decreases in economic resources or assets resulting from activities undertaken to generate revenue. Expenses decrease equity.

Extensible Language (XML)

A flexible language standard administered by the World Wide Web Consortium (W3C) that provides a set of grammatical rules for exchanging information and eliminates rigid format standards.

Extranet

A private system that is part of an organization's internal computer network and made available to outside users such as suppliers, vendors, partners or other businesses. The system allows the organization to share information through various levels of accessibility.

Eyeball Test

A clear, readily perceived indication that a payee is exempt from Form 1099 reporting. Such indications can be an incorporated entity ("Corp." "Inc.") as seen on an invoice, a signed W-9 stating the company is a domestic corporation, or the payee is a government organization.

FATCA

The Foreign Account Tax Compliance Act is a U.S. federal law enacted in 2010 requiring foreign financial institutions and certain non-financial foreign entities to report information about financial accounts held by U.S. taxpayers to the IRS. For accounts payable purposes, FATCA affects payments made to foreign vendors and financial institutions, requiring withholding of 30% on certain U.S.-source payments to non-compliant foreign entities. FATCA works in conjunction with Form W-8 series certifications to document foreign vendor tax status and determine withholding obligations.

F.O.B.

"Free on Board," a term of sale which, in general, means the seller provides for loading goods onto the shipment vessel (shipping point), at which ownership transfers to the buyer; not cover of shipment unless otherwise specified (see below).

F.O.B. Delivered/ Freight Collect

A term of sale in which the buyer takes ownership of the goods on delivery and pays the freight, and the seller files any claims.

F.O.B. Delivered/ Freight Collect and Allowed

A term of sale in which the buyer takes ownership of the goods on delivery and pays the freight charges but then deducts them from the seller's, and the seller files any claims.

F.O.B. Delivered/ Freight Prepaid

A term of sale in which the seller retains ownership of the goods until they are delivered to the buyer's specified location. The seller pays all freight charges and is responsible for filing any damage or loss claims with the carrier during transit.

F.O.B. Origin/ Freight Collect

A term of sale in which the buyer takes ownership of the goods at the shipping point, pays the freight charges, and files any claims.

F.O.B. Origin/ Freight Prepaid

A term of sale in which the buyer takes ownership of the goods at the shipping point, and the seller pays the freight charges and files any claims.

F.O.B. Origin/ Freight Prepaid and Add

A term of sale in which the buyer takes ownership of the goods at the shipping point. The seller pays the freight charges upfront but is reimbursed by the buyer, who is also responsible for filing any damage or loss claims with the carrier.

Factor

A factor is one who acts or transacts business for another. Typically, a factor buys a company's accounts receivable at a percentage of face value. Recourse factoring means the bad debt risk remains with the company. Non-recourse factoring is when the bad debt risk is transferred to the factor, protecting you from companies that don't pay. Non-recourse factoring fees are therefore higher than recourse factoring.

Factoring

A financial transaction whereby a business sells its accounts receivable at a discount. The purchasing organization assumes the responsibility of collecting the invoices

Factoring Rate

Percentage of invoice amount a factor charges for advancing on an invoice.

Fair and Accurate Credit Transactions Act (FACTA)

A federal law enacted in December 2003 to reduce identity theft and help victim recovery by providing ways for consumers to obtain their credit report and credit score. For more information on this act, click here.

Fair Credit Billing Act of 1974 (FCBA)

An act that helped amend the 1968 Truth in Lending Act and applies to open-end credit accounts.

Fair Credit Reporting Act (FCRA)

A federal consumer protection law that ensures credit reporting agencies act fairly and establishes procedures on how to correct mistakes that appear on credit reports. To read the full act, click here.

Fair Debt Collection Practices Act (FDCPA)

A federal consumer protection law that ensures that collection agencies do not use abusive or deceptive debt collection practices. To read the full act, click here.

FASB

Financial Accounting Standards Board. A private, non-profit organization responsible for establishing and maintaining Generally Accepted Accounting Principles (GAAP) in the United States. FASB develops accounting standards intended to ensure financial reporting is relevant, reliable, and comparable for investors, creditors, auditors, and other users of financial information.

Federal Financial Institutions Examination Council (FFIEC)

An interagency body established in March 1979 to prescribe uniform principles, standards, and report forms to promote uniformity in the supervision of financial institutions.

Federal Reserve

The central banking system in the United States. Twelve banks belong to the Federal Reserve and serve 12 districts. The functions of the Federal Reserve include enforcing good banking practices, ensuring compliance with federal regulations, providing loans and money to banks and determining interest rates.

FIFO

"First-in, first-out." A method of inventory costing in which the oldest inventory items are considered to be sold first. Generally used when selling perishable items, but may also figure into tax liability. See "LIFO."

Financial Electronic Data Interchange (FEDI)

The electronic exchange of payment and related information from one computer application to another in a standardized, structured format.

Fixed Asset

An asset, usually tangible, that is not intended to be consumed or sold within a normal operating period (typically one year or longer) and is needed to conduct business operations. Examples include land, buildings, machinery and equipment, vehicles, and furniture.

Fixed Costs

Sometimes known as overhead costs, these are operating expenses of a business that remain constant regardless of the volume of goods or services produced. Examples include rent, salaries, insurance, and utilities.

Float

A period of time in which the same funds appear on the books of two different financial institutions due to inefficiencies in the clearing system, e.g., "check float." Also refers to the time between issuance of a check and the time that the check clears the bank account on which it is drawn.

Flowchart

A diagram that illustrates the flow of data, processes, and operations within an organization or business management system 

FLSA

Fair Labor Standards Act. Enacted by Congress in 1938, the FLSA is a federal law establishing baseline workplace standards in the United States, including a national minimum wage, overtime pay (time-and-a-half) for non-exempt employees working over 40 hours per week, and restrictions on child labor. The act covers most hourly workers and provides protections against retaliation for certain complaints.

Force Majeure

A clause that appears in many supplier contracts that excuses non-performance for forces beyond the suppliers' control, such as natural disasters, pandemics, government actions, wars, riots, etc.

Foreclosure

A legal process in which a lender forces the sale of a mortgaged property due to the borrower's failure to comply with the terms and conditions of the mortgage agreement. The property is sold to recover the outstanding debt owed by the defaulting borrower.

Foreign Corrupt Practices Act of 1977 (FPCA)

A federal law with key provisions that address anti-bribery and accounting transparency.

Forgery

The act of deliberately altering or creating a fraudulent document or financial instrument, such as a check, to falsely authorize or change it.

Forms Processing

The ability for software to automatically "read" a scanned document and extract data into a structured digital format, eliminating the need for manual data entry.

Fraud

Any dishonest and illegal activity perpetrated in the course of business to give an advantage to an individual or company.

Freight All Kinds (FAK)

A freight classification that allows shipments containing various mixed commodities to be classified under a single freight class rather than individual classifications. 

Front-End Imaging

Imaging invoices once they arrive in accounts payable and using an automated workflow solution to process. It eliminates the need for paper documents at the start of the process.

Full Cost Accounting

 An accounting method that identifies, quantifies, and allocates all costs associated with producing a product or service, including direct costs (materials, labor), hidden costs (waste management), contingent liabilities (potential future expenses), and externalities (environmental and social impacts).

Full-Service Collections

A third-party collection service that employs multiple collection tactics throughout the collection cycle to recover outstanding debts. Tactics typically include written correspondence to debtors, phone calls from professional collectors, skip tracing, and negotiation to resolve delinquent accounts.

Functional Group

A collection of EDI transaction sets of the same type transmitted together (e.g., a group of invoices).

Fungible Goods

Goods, like nails, where each unit is the equivalent of any other like unit.

GAAP

The standardized framework of rules and guidelines governing how financial information is prepared and reported in the United States. GAAP ensures consistency and comparability across companies and industries, making financial statements more reliable for analysis and decision-making. Two additional bodies contribute to the accounting standards framework: APB Opinions guidelines issued by the AICPA Accounting Principles Board, and EITF Abstracts, guidance issued by the FASB Emerging Issues Task Force on new or emerging accounting topics

Gains (GL)

An increase in equity resulting from a peripheral or incidental business activity — one outside of normal operations (e.g., a cruise company selling dining room chairs). Gains are reported on a net basis.

General Ledger (GL)

The master record of all numbered accounts within an organization, used to prepare financial statements. The GL captures every financial transaction as both a debit and a credit, a methodology known as double-entry accounting, ensuring the books remain balanced at all times.

Ghost Card or Supplier Card

The ghost card refers to a single account number that is assigned to an entity and typically resides with the entity's vendor for high-volume purchases. The ghost "card" can be used by multiple users, typically for a single vendor or number of specific vendors. Responsibility for monitoring and reconciliation of the account usually rests with the department using the account, rather than with AP or the P-Card administrator. A ghost card account resembles a charge account.

Goods and Services Tax (GST)

A value-added tax (VAT) imposed in some countries for goods and services. The items taxed and the amounts vary by type and nation.

GR or Goods Receipt

Confirmation documentation by receiving department or requisitioner that ordered goods were received. Used along with a purchase order (PO) in the "three-way match" to authorize invoice payment.

Gross Profit

Total revenue minus cost of goods sold.

Hash Total

A number calculated or arbitrarily assigned to verify records or documents; for example, the check numbers of a batch may be added together to produce a value that may be used later to ensure that all were deposited. It is not a significant number in and of itself, but rather a verification method.

Hazardous Material (HazMat)

Any substance that represents a health or safety risk to people, property or the environment as determined by the U.S. Department of Transportation; a HazMat shipment requires special handling and documentation.

Hell or high water clause

A clause in a contract, usually a lease, that says the lessee must make payments during the contract's life "come hell or high water."

Heuristic Credit Score

A method of evaluating a customer's creditworthiness using informal judgment rather than formal scoring models, including intuition, educated guesses, common sense, and industry trends.

HIPAA

Health Insurance Portability and Accountability Act. Enacted by Congress in 1996, the act protects health insurance coverage for workers and their families when they change or lose their jobs and creates standards for health care transactions. The law also protects patient privacy records.

Household Goods Carriers Bureau (HGCB or HGB)

Part of the American Moving and Storage Association and the authority behind tariffs and the Official Transportation Mileage Guide (published by Rand McNally).

IBAN

International Bank Account Number is a standardized alphanumeric code that uniquely identifies a bank account for international payments, widely used in Europe and beyond.

ICR

Intelligent Character Recognition Software is technology that recognizes and digitizes handwritten or hand-printed characters from scanned documents or images, extending traditional OCR capabilities to handle varied handwriting styles.

IFX (Interactive Financial Exchange)

An open financial industry standard that defines a common framework for exchanging financial data and transaction instructions between institutions and systems.

Image Cash Letter (ICL)

An electronic file that is the standard for formatting and transmitting remotely deposited checks. ICLs contain check images and MICR data. Also known as an X file.

Imaging

Turning human-readable images — documents, invoices, photos, etc. — into computer-readable images such as TIFF, JPG or MPEG files.

Imaging system

An integrated combination of hardware and software used to capture, store, manage, and retrieve digital images — typically comprising a scanner, document management software, and a storage medium.

Inbound Freight

Goods or materials shipped to an organization from a supplier or vendor, along with the associated transportation costs.

Income

The net result of a company's revenue, gains, expenses, and losses over a given period. When the combined total is positive, the company has generated income; when negative, it has incurred a net loss.

Income Statement

Also Statement of Earnings or Statement of Operations - Listing of sources and monetary amounts of a company's revenues and expenses, gains and losses for a particular period, e.g. quarter or year. A company's profitability is calculated from revenues and gains  expenses and losses.

Incoterms

Internationally recognized commercial terms published by the International Chamber of Commerce (ICC) that define the responsibilities, costs, and risks of buyers and sellers in global trade transactions.

Indemnification

A clause contained within a legal contract in which one party agrees to assume liability and compensate the other for issues related to the contract. For example, if a manufacturing company supplied faulty products to its customer and the customer was sued, the manufacturer might contractually indemnify its customer by assuming costs arising from the lawsuit.

Index

A descriptive piece of data associated with an image for retrieving that specific image from storage.

Insolvency

A situation in which an organization can no longer meet its financial obligations.

Institute of Internal Auditors (IIA)

The globally recognized professional association for internal auditors, serving as the leading authority, advocate, and educator for the internal audit profession.

Intangible Asset

A non-physical asset with measurable value, such as intellectual property, patents, trademarks, copyrights, or brand recognition, that appears on a company's balance sheet.

Intangible Property

Property that has no physical substance but holds legal or financial value, such as stocks, bonds, intellectual property rights, or contractual agreements.

Intelligent Optical Character Recognition (ICR)

Software technology that recognizes and digitizes handwritten or hand-printed characters from scanned documents or images, extending traditional OCR capabilities to handle varied handwriting styles.

Interactive Voice Response (IVR)

A system to automatically manage incoming calls, IVR can link phone callers (voice and/or touchtone) with a computer database. It can accept a question, access the company's database, and provide a caller with the information they are seeking. It can also take information from the caller, convert it to data, and input that data into the database. 

Interactive Web Response (IWR)

Similar to IVR, IWR is a web-based system that allows customers or vendors to find information online, such as invoice status or scheduled payment date. It can also allow data input to a database or send e-mail via the site.

Interest

A fee paid for the privilege of borrowing money, usually a percentage of the loaned amount (principal).

Intermediate-term liabilities

Debts and obligations due after the current year but within the next one to five years, classified as non-current liabilities on the balance sheet.

International Association of Commercial Administrators (IACA)

A professional association for government administrators of business organizations and secured transaction record systems at the state, provincial, territorial, and national levels.

International Standby Practices 1998 (ISP98)

Rules that incorporate generally accepted practices, customs and uses of standby letters of credit maintained and published by the International Chamber of Commerce.

Interval measure

A financial metric that estimates the number of days a company could fund its operations using only its current liquid assets, without relying on additional revenue or financing.

Inventory

Finished goods, works-in-progress and raw materials that comprise a sizeable portion of a business's assets.

Investment-to-Value Ratio

A measurement of a creditor's position and the likelihood that a foreclosure would occur.

Invoice

A formal document issued to a customer or client requesting payment for goods or services delivered, including applicable taxes. Also referred to as a bill; while sometimes called a statement, a statement does not constitute a formal request for payment.

IRD

Image Replacement Document. A paper reproduction of a digitally scanned check, also known as a substitute check, used when a party in a transaction requires physical documentation. The IRD is smaller than the original check and may contain slightly different information, but is legally equivalent for processing purposes.

IRS

Internal Revenue Service. The United States government agency that collects taxes and enforces internal revenue laws. The IRS is a bureau of the Department of Treasury.

ITIN

Individual Taxpayer Identification Number. A  taxpayer identification number given to nonresident aliens who are not eligible for a Social Security number. This includes nonresident spouses and dependents listed on a U.S. tax return.

Journal

A chronological record of daily transactions of a business. For each transaction, the journal shows the debits and credits to be entered in specific ledger accounts and a description of the transaction.

Kaizen

Japanese for continuous improvement. A business methodology that developed in Japan after World War II. Every employee is encouraged to regularly offer improvement suggestions. Ideas are shared, discussed and frequently implemented.

Key Performance Indicators (KPI)

A short list of important financial or operational metrics that provide a measurement.

Knocked Down (KD)

Indicates a disassembled article, which facilitates packing and shipping.

Landed Cost

The cost of goods including freight charges, taxes all other applicable fees.

Lapping Scheme

A form of payment fraud facilitated by inadequate separation of duties. An employee steals a payment, then diverts payment to cover up the theft of the first, then a third to cover the misapplication of the second, and so on, often continuing until the perpetrator is caught.

Ledger

A collection of related financial information such as revenues, expenses, accounts receivable and accounts payable.

Less-than-Truckload(LTL)

A shipment that does not qualify for full (lower) truckload rate because it does not require the full use of a trailer; a shipment that weighs less than the full truckload weight, typically 10,000 lbs.

Letter of Credit (LOC)

A document issued by a bank or financial institution on behalf of a client (the "applicant"), guaranteeing payment to a designated recipient (the "beneficiary") upon fulfillment of specified terms and conditions.

Letter of Credit, Standby

A financial guarantee issued by a bank assuring payment if a party fails to fulfill a contractual obligation, such as completing a project or repaying a debt. Unlike commercial letters of credit, standby letters of credit are not tied to the sale of goods but serve as a backstop against non-performance or default.

Leverage

The ability to control property of greater value than the amount of capital invested, in an effort to increase return on equity.

Liability

A financial obligation of a company or entity arising from a past transaction, requiring future settlement through the transfer of assets, provision of services, or other economic benefit.

Lien

A legal claim by one person on the real or personal property of another as security for a debt. This action blocks the sale of the property until the lien is paid.

LIFO

"Last-in, first-out." A method of inventory valuation where the last goods purchased are assumed to be the first sold or used. The choice of whether to use this method or FIFO is a decision generally made to control tax liability, since the cost of the inventory may vary over time and thus may be higher or lower relative to the selling price, affecting taxable income.

Limited Liability Company (LLC)

A form of structure designed to combine the best of corporate and partnership attributes into one entity. Members of an LLC have limited liability and are taxed as a partnership, avoiding double taxation. Rules vary by state.

Limited Partnership

A business structure consisting of at least one general partner who manages operations and assumes full liability and one or more limited partners whose liability is restricted to their investment and who have no management role. Like a general partnership, it is not a separate legal entity and serves as a pass-through vehicle for tax purposes.

Linear Foot Rule

If an LTL shipment exceeds a designated number of floor feet in a trailer, it triggers a rate increase.

Liquidation

When a company becomes insolvent and its assets are divided among creditors and shareholders, per Chapter 7 of the U.S. Bankruptcy Code.

Liquidity

The ability of assets to meet liabilities. Also refers to an organization's ability to quickly access cash.

Liquidity Ratio

The relationship of cash and marketable assets to outstanding debt. A high ratio indicates a company unlikely to default on its obligations.

Loan-to-Value Ratio

The ratio of the money borrowed on a property to the property's fair market value.

Lockbox

A payment collection service, typically provided by a bank, in which a company directs customers to send payments directly to a designated address managed by the bank. This accelerates deposit processing and improves cash flow management.

Long-term liabilities

Mortgages and other liabilities that are expected to be held on the books for more than 10 years.

Loss

A decrease in equity resulting from peripheral or incidental business activities outside of normal operations, reported on a net basis.

M-commerce

A business transaction conducted by using a mobile electronic device, such as a cell phone.

Manifest Bill of Lading

A summary list of the bills of lading for goods being transported by  or parcel services carrier.

Master Bill of Lading

A summary list of bills of lading aggregated for a multiple- truckload carrier.

Matched Payment

When the amount paid matches or equals the amount owed. Also called a full payment.

MCC

Merchant Category Code. A universal four-digit classification code describing whether a particular business predominantly provides goods or predominantly provides services. P-card providers furnish these codes to businesses as a way to distinguish which P-card purchases should be reported on. Purchases made to vendors with MCCs labeling them as service providers are reportable, while purchases made to goods providers are not.

MICR

Magnetic Ink Character Recognition. A technology developed in the late 1950s by the American Bankers Association to automate check processing. Characters printed at the bottom of checks using magnetic ink can be rapidly scanned and read by machines, encoding key data such as the routing number, account number, and check number. MICR also helps reduce the risk of check fraud, as the magnetic ink is difficult to replicate.

MICR Number Method

A procedure that authorizes a check using the bank routing number, the account number and the check number located at the bottom of the check.

MICR Reader

An instrument used to read the encoded information in the magnetic ink on the check.

Mode

Method of transportation, e.g., rail, highway, air, or water.

Nacha

A nonprofit organization that governs the ACH Network, establishing the rules, standards, and procedures that enable the exchange of electronic payments across the United States. 

NAICS

A standardized numerical classification system used by the United States, Canada, and Mexico to categorize and measure economic activity across industries. For accounts payable departments, a vendor's NAICS code can help verify business legitimacy within the vendor master file. 

National Association of Unclaimed Property Administrators (NAUPA)

A non-profit organization whose members administer state unclaimed property and compliance laws.

National Motor Freight Classification (NMFC)

A standardized system that categorizes commodities into freight classes, which carriers use along with shipment weight and distance to calculate shipping charges.

Net (income, loss, profit, sales, worth)

The amount that remains after related items have been deducted. For example, net income is revenue minus the costs of doing business.

Nexus

Sales tax term describing a seller’s physical connection to a particular state. If a seller has nexus in a particular state, they must collect sales taxes from all purchases made from buyers in that state. Examples of common activities creating sufficient nexus are established bank accounts, collection activities, trade show attendance, certain drop shipment arrangements, consigned inventory, and contracted service agents. In fact, having a single salesperson located in a state constitutes nexus.

Non-exempt

Under the Fair Labor Standards Act (FLSA), employees who are not exempt from earning overtime pay.

Non-PO Accrual

A liability recorded for goods or services already received but not yet paid for, where the purchase was made outside the formal purchase order process.

Non-Recourse Factoring

A factoring arrangement in which the factor assumes full credit risk for purchased receivables, including the right to pursue collection from the customer. If the debt goes unpaid, the client is not obligated to refund the advance.

NSF (Non-Sufficient Funds)

A designation indicating that a check or payment cannot be processed because the account holder has insufficient funds to cover the amount.

OCR

Optical Character Recognition (OCR) refers to the ability of software to recognize machine-printed (or typed) alphanumeric characters from a scanned document and turn them into computer-readable data.

OFAC

The Treasury Department's Office of Foreign Assets Control (OFAC) publishes the Specially Designated Nationals and Blocked Persons List (SDN). U.S. businesses are prohibited from doing business with individuals and countries on the list.

OFX

Open Financial Exchange (OFX) is a specification for the electronic exchange of financial data between financial institutions, businesses, and consumers over the internet. Originally developed in 1997 by CheckFree, Intuit, and Microsoft, OFX supports a broad range of financial activities, including banking, bill payment and presentment, and investment tracking across stocks, bonds, mutual funds, and retirement accounts. Since version 2.0, OFX has been XML-compliant and supports the download of tax forms including 1098, 1099, and W-2.

On-time payment percentage

A metric tracking how frequently a company pays its vendors within the agreed-upon payment terms.

One Card

A single corporate credit card that consolidates purchasing and travel and entertainment expenses, eliminating the need for multiple cards. The company, rather than the individual cardholder, bears liability for all charges.

Operating Expense

Costs incurred in the normal course of running a business, including cost of goods sold (COGS) and selling, general, and administrative (SG&A) expenses.

Order to Cash (OTC or O2C)

The cycle steps in a process that starts with credit extension and receipt of the sales order and ends when payment (cash) is received.

Originator

Any individual, corporation or financial institution that initiates an ACH transfer.

Other Receivables

Amounts owed to a company from sources other than customers, most commonly employee advances or expense reimbursements.

Outbound Freight

Goods shipped from a company to a consignee, along with the associated transportation costs. In carrier contracts, outbound freight typically means the shipper is responsible for paying the shipping charges.

Outsource

The practice of contracting an external service provider to perform functions previously handled in-house, such as freight bill auditing or payment processing. Primary objectives typically include cost reduction, improved efficiency, and access to specialized expertise.

Overdraft

A debit or check for an amount that exceeds the of funds available in the bank account. Financial institutions often will charge a fee for each overdraft made to the account.

Packing Slip

A document accompanying a shipment that lists quantities shipped versus quantities ordered. Receiving departments use it to verify actual goods received, and it serves as one of three documents in a three-way match along with the purchase order and invoice.

Paperhanging

A form of check fraud in which a perpetrator intentionally writes checks against a closed account. The checks appear unaltered but the account information is no longer valid. Because perpetrators have access to only a limited number of remaining checks, the scheme is typically short-lived but often involves large-dollar transactions.

Par Value

The nominal value assigned to shares of common stock at the time of incorporation, used to allocate contributed capital between the Common Stock and Additional Paid-In Capital (APIC) classifications on the balance sheet. Par value typically bears no relationship to the stock's actual market value.

Parcel

A single shippable item weighing less than 75 pounds.

Parent Company Guarantee

An agreement in which a customer's parent company guarantees repayment of the customer's financial obligation in the event of default.

Payee

The individual or organization to whom a payment is made. Also referred to as the receiver of payment.

Payment

The transfer of funds between parties to settle a financial obligation, executed through bank depositories or debt instruments.

Payment Card Industry Data Security Standards (PCI DSS)

A set of security standards developed by the Payment Card Industry Security Standards Council to help organizations that process credit card payments prevent fraud and protect cardholder data. Originally established in 2004 by Visa, Mastercard, American Express, and Discover.

Payment terms

Provisions, typically set by the vendor, that define when and how payment for a transaction is due. Terms may be negotiated as part of a contract. For example, "2/10 net 30" means the buyer may deduct 2% if payment is made within 10 days of the invoice date; otherwise, the full amount is due within 30 days. Late payment interest charges may apply depending on the vendor relationship.

Payor or Payer

The individual or organization that makes a payment.

PCI DSS

Payment Card Industry Data Security Standard. Created in 2004 by major card brands Visa, MasterCard, American Express and Discover, the PCI DSS is a set of widely accepted standards for card transactions of all types.

Personal Guarantee

An agreement in which a borrower or third party pledges personal assets to secure a loan. If the borrower defaults, the lender may seek repayment from the guarantor's personal assets.

Personal Property Security Act (PPSA)

Canadian provincial legislation governing the creation, registration, and enforcement of security interests in personal property.

Portfolio

A collection of financial assets — such as stocks, bonds, and other investment securities — held by an individual or entity.

Positive Pay

A fraud prevention practice in which a company submits a daily file of issued checks to its bank, including check number, amount, date, and account information. When checks are presented for payment, the bank compares them against the file and flags any that do not match for the company's review and approval.

Power Dialer

An automated telephone system that rapidly dials numbers in succession to maximize call volume and efficiency.

Practical Highway Miles

The actual road miles a carrier must travel between origin and destination, as opposed to the shortest possible route. Carriers may base freight charges on either practical miles or shortest miles depending on their pricing structure.

Pre-Arranged Payment and Deposit

An ACH transaction type (Standard Entry Class code PPD) that authorizes the electronic transfer of funds to or from a consumer's checking or savings account, such as direct payroll deposits or consumer bill payments.

Predictive Dialer

An automated telephone system that dials multiple numbers simultaneously, connects answered calls to available agents, and uses call-length data to optimize dialing pace and agent availability.

Preference Payment

A payment made to a creditor during the preference period — typically the 90 days prior to a bankruptcy filing — which may be subject to recovery by a bankruptcy trustee.

Preferred Stock

A class of equity that holds priority over common stock in the payment of dividends and the distribution of assets upon liquidation, while generally not carrying voting rights.

Prepaid

A freight billing arrangement in which the shipper is responsible for transportation charges and pays them prior to shipment.

Prepaid Expense

An asset representing a payment made for a benefit to be received over a future period. For example, an annual insurance premium is recorded as a prepaid asset and expensed ratably over the 12-month policy period.

Prepaid Liability

A liability recognized when payment is received before the related goods or services have been fully delivered. A common example is a customer deposit, recorded until the obligation is fulfilled.

Price-to-Earnings Ratio

A valuation metric calculated by dividing a company's market value per share by its earnings per share, used by investors to assess the relative value of a stock.

PRO Number

A carrier-assigned tracking number used to identify a freight shipment for billing, tracing, and operational purposes.

Procurement

The organizational function responsible for sourcing, purchasing, and managing the acquisition of goods and services. Procurement activities include placing and documenting orders, developing purchasing policies, and negotiating supplier contracts.

Profit

The positive result when a company's revenues and gains exceed its expenses and losses. Profits increase retained earnings and, generally, owner's equity.

Proforma Invoice

A preliminary invoice issued prior to shipment representing an estimated price. It is not a demand for payment; a final commercial invoice with the confirmed price follows upon delivery.

Profit and Loss Statement (P&L)

A financial statement summarizing a company's revenues, expenses, and net income or loss over a specified period, such as a quarter or fiscal year. Also referred to as an income statement or statement of earnings.

Promissory Note

A legally binding document in which a borrower commits to repaying a loan to a lender by a specified date, along with any agreed-upon interest and terms.

Prox (proximo)

A payment term derived from the Latin "proximo mense," meaning "next month." Prox terms specify that payment is due on a designated day of the month following the invoice date or receipt of goods. For example, "Net 10th Prox" means payment is due on the 10th of the following month.

Purchase Card (P-Card)

A corporate payment card designed to streamline the purchasing and payment process for lower-dollar transactions, typically under $5,000. Also referred to as a purchasing card.

Purchase Money Security Interest (PMSI)

A security interest that gives a seller or lender priority over other creditors with respect to specific goods or equipment sold on credit, in the event the buyer defaults.

Purchase Order (PO)

A formal document issued to a vendor to authorize the purchase of goods or services, typically specifying item descriptions, quantities, prices, discounts, vendor details, and shipping information.

Purchasing

The activities associated with sourcing, ordering, and obtaining goods and services from suppliers, as well as the department responsible for those functions.

Quick Ratio

A liquidity metric that measures a company's ability to meet its short-term obligations using its most liquid assets — cash, cash equivalents, marketable securities, and accounts receivable — without relying on the sale of inventory. Also known as the acid-test ratio.

Quote

A formal offer submitted to a prospective buyer specifying the price and terms for a product or service.

Rate

The charge assessed by a carrier for transporting goods, based on factors such as weight, volume, or commodity type.

Real Property

Land, real estate, and structures permanently attached to the land. Also referred to as immovable property.

Receipt

A written or electronic acknowledgment confirming that a payment or transaction has been completed.

Receiving

The physical location where a company accepts incoming shipments from suppliers, as well as the associated processes for verifying, documenting, and accepting delivery of goods.

Reconsignment

A change made to a bill of lading while a shipment is still in transit, typically modifying the consignee's name or the delivery destination.

Record Retention Schedule

A policy that specifies how long particular business records must be kept, organized by record type, the rationale for retention, and the prescribed final disposition — whether archival or destruction. Also referred to as a record retention period.

Recourse Factoring

A factoring arrangement in which the factor retains the right to recover its advance from the client if the customer fails to pay the underlying debt.

Remittance Information

The information needed by the biller to accurately post customer bill payments.

Remittance Method

The channel or mechanism used to transmit remittance information to the payee, such as email, EDI, or a payment portal.

Remotely Created Check (RCC)

A check  on a bank account that is created by a person other than the account holder and does not bear the physical signature of the person on whose account the check is drawn. An RCC may contain a statement of customer authorization, the account holder's printed or typed name on the check, or the statement "No signature required" or "Signature on file." Also called a "telecheck", "demand draft", or "preauthorized draft."

Replevin

A legal action to recover possession of personal property that has been wrongfully taken or unlawfully withheld. In a financial context, creditors commonly use replevin to repossess collateral — such as equipment or vehicles — when a debtor defaults on a secured loan. Replevin seeks return of the specific property itself, distinguishing it from remedies that seek monetary damages.

Requisition

A formal internal request for goods or services initiated by a department or end user, typically the first step in the purchasing process.

Retained Earnings

The cumulative net income of a company from inception, less any dividends declared. Retained earnings are reported in the owners' equity section of the balance sheet alongside contributed capital.

Retained Earnings Statement

A financial statement that explains changes in a company's retained earnings over a given period, reflecting the impact of profits, losses, and dividends declared.

Return on Investment (ROI)

A financial metric used to evaluate the efficiency or profitability of an investment, expressed as a ratio of net gain to the cost of the investment.

Revenue

Income generated from a company's normal business operations before any costs or expenses are deducted. Also referred to as the "top line." Revenue increases equity and is typically received in the form of cash or accounts receivable.

RosettaNet

A nonprofit consortium that develops and promotes standardized electronic interfaces for supply chain transactions conducted over the internet. Founded in 1998, RosettaNet works to establish common data standards — such as product descriptions, part numbers, pricing, and inventory status — primarily through XML-based frameworks.

Route

The path and mode of transportation by which a shipment moves from origin to destination.

Routing Instructions

Directions provided by the shipper specifying the carrier, mode of transport, or delivery path to be used for a shipment.

Routing Transit Number (RTN)

A nine-digit number assigned to a specific financial institution, used to identify the bank on which a check is drawn or through which a transaction is processed. The RTN appears at the bottom of checks alongside the account and check numbers.

SaaS

A software delivery model in which applications are hosted in the cloud and accessed via the internet on a subscription basis, eliminating the need for local installation, maintenance, or updates.

Sales Tax

A government-imposed tax on the retail sale of goods and services, calculated as a percentage of the sale price and collected by the seller at the point of transaction.

Sarbanes-Oxley Act of 2002 (SOX)

A U.S. federal law enacted in response to major corporate accounting scandals, including Enron, WorldCom, and Tyco International. SOX requires CEOs and CFOs of publicly traded companies to certify the accuracy of financial statements and the effectiveness of internal controls, and establishes significant penalties for accounting fraud and corporate misconduct.

SDN (Specially Designated Nationals and Blocked Persons List)

A list maintained by the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) identifying individuals, entities, and countries with whom U.S. businesses are prohibited from conducting transactions. The list includes terrorists, narcotics traffickers, weapons dealers, and other sanctioned parties.

Section 7

The provision of a bill of lading under which the shipper assigns responsibility for collecting freight charges to the carrier, directing it to collect payment from the consignee. When Section 7 is signed, the carrier assumes the risk of non-payment by the consignee.

Secured Transaction

A financing arrangement in which a borrower grants a lender a security interest in specific property — such as real estate, equipment, or inventory — as collateral for repayment of a debt.

Securities and Exchange Commission (SEC)

The U.S. federal agency responsible for regulating securities markets, enforcing securities laws, and protecting investors from fraud in securities and mutual fund transactions.

Segment

In EDI, a defined grouping of related data elements within a transaction set, such as name and address information.

Segment Identifier

The code that introduces a new segment in an EDI transaction set.

Segment Separator

The code that marks the end of a segment within an EDI transaction set.

SEPA

Single Euro Payment Area (SEPA) is a European payment integration initiative that standardizes electronic euro transactions across 36 participating countries. SEPA establishes uniform business, legal, and technical requirements for cross-border payments within the eurozone, simplifying transfers for businesses and consumers alike.

Service Level Agreements (SLAs)

A formal contract between a service provider and a client that defines the expected scope, quality, and measurable standards of service delivery.

Set Up

The complete assembly of an item.

Settlement

The resolution of a legal or financial dispute through mutual agreement, without proceeding to trial or formal adjudication.

Shared Services

The centralization and standardization of common administrative or operational functions — such as accounts payable, HR, or IT — into a single internal organization serving multiple business units, typically with the goals of reducing costs and improving efficiency.

Shares

Units representing an ownership interest in a company, issued to holders of common or preferred stock.

Shipper

The party whose goods are being transported by a carrier under a contractual agreement.

Short pay

A payment from a customer that is less than the invoiced amount, typically reflecting a disputed charge, perceived billing error, or damage claim.

Six Sigma

A data-driven methodology for business process improvement, originally developed by Motorola, that aims to reduce defects and process variation to fewer than 3.4 occurrences per million. Widely adopted in finance operations to improve accuracy, reduce errors, and streamline workflows.

Skimming

1) The theft of cash receipts before they are recorded or deposited. 2) The unauthorized capture of payment card data for use in fraudulent transactions.

Skip Tracing

The process of locating individuals — typically debtors — who have become unreachable or have relocated without notice.

Sole Proprietorship

A business structure owned and operated by a single individual who bears full personal liability for all financial and legal obligations of the business.

Sourcing

The strategic process of identifying, evaluating, and contracting with suppliers of goods and services to meet organizational needs at optimal cost and quality.

Spend Analysis

The systematic review and categorization of an organization's purchasing data to identify what is being spent, with which vendors, and through which channels — used to inform cost reduction, supplier consolidation, and procurement strategy.

Split Payment

A payment divided across multiple invoices or accounts. Also refers to a payment applied to an incorrect account.

Spot Rate Quotation

A one-time price offer from a carrier to a shipper for a specific shipment, negotiated outside of standard contract rates.

SPUD (Short-Paid Unreconciled Deduction)

A payment received from a customer that is less than the invoiced amount and has not yet been matched to a valid reason or credit, requiring further research and resolution.

SCAC (Standard Carrier Alpha Code)

A unique identifier assigned by the National Motor Freight Traffic Association (NMFTA) to transportation companies for use in freight billing, tracking, and EDI transactions.

Statement

A periodic summary of account activity or outstanding invoices provided to a customer. Unlike an invoice, a statement is not a formal request for payment but serves as a reminder of amounts owed.

Stem Time

The time required for a truck or semi-trailer to travel between its origin and destination, excluding loading and unloading time.

Stock

Units of ownership interest in a company, often used interchangeably with the terms shares, common stock, or contributed capital.

Stock Certificate

document evidencing an individual's or organization's ownership interest in a company through holdings of common or preferred stock.

Stock Keeping Unit (SKU)

A unique identifier assigned to a product for the purposes of inventory tracking and management.

Stock Option

A contractual right granted to an individual to purchase a company's stock at a predetermined price within a specified timeframe. If not exercised before expiration, the right lapses.

Stockholder

An individual or entity that holds an ownership interest in a company through the purchase of common or preferred stock. Also referred to as a shareholder.

Stockholders' Equity

The section of the balance sheet representing the owners' residual interest in a company, consisting of contributed capital (common stock and additional paid-in capital) and retained earnings.

Stop-off

A pickup or delivery made between the initial origin and the final destination of a shipment.

Straight Through Processing (STP)

An electronic payment method in which transactions are initiated, processed, and settled automatically without manual data re-entry, improving speed and reducing errors.

Streamlined Sales Tax (SST)

A multistate cooperative agreement designed to simplify and standardize sales tax rules and administration across participating U.S. states, with the goal of creating consistent compliance requirements for both physical and online retailers.

Strike Price

The fixed price at which a stock option holder may purchase shares, as specified in the option agreement. Also referred to as the exercise price.

Subordination

A legal arrangement in which one creditor's claim against a debtor is ranked below that of another creditor, affecting the order of repayment in the event of default or bankruptcy.

Successful Efforts Accounting

An accounting method used primarily in extractive industries such as oil, gas, and mining, in which only the costs associated with successful exploration and production activities are capitalized; costs from unsuccessful efforts are expensed as incurred.

Supply and Demand

A foundational economic principle stating that prices are determined by the relationship between the availability of a good or service (supply) and the desire for it (demand). When supply exceeds demand, prices fall; when demand exceeds supply, prices rise, with markets trending toward equilibrium over time.

Surface Transportation Board

An independent federal agency within the U.S. Department of Transportation that regulates the economic aspects of surface transportation, including freight rail and certain trucking and pipeline activities. It assumed the functions of the Interstate Commerce Commission (ICC) upon that agency's dissolution in 1995.

SWIFT

A global member-owned cooperative that operates a secure messaging network used by financial institutions to communicate standardized instructions for international money transfers. SWIFT transmits payment instructions and financial data — not the funds themselves.

Tangible Personal Property

Physical assets that can be touched and moved, such as equipment, inventory, or vehicles. Real estate is excluded, as it is immovable and classified separately as real property.

Texas v. New Jersey

The landmark U.S. Supreme Court case establishing priority rules for unclaimed property escheatment. Under these rules, the state of the owner's last known address has first claim to abandoned property; if the owner's address is unknown, the state of incorporation of the company holding the property takes precedence.

Three-way match

A standard accounts payable control process that validates an invoice by comparing it against the corresponding purchase order and receiving document. Payment is approved only when all three documents are in agreement.

Time Value of Money

A foundational financial principle stating that a dollar received today is worth more than a dollar received in the future, due to its potential to earn a return in the intervening period.

TIN (Taxpayer Identification Number)

A number assigned by the IRS to identify taxpayers for reporting purposes. Types include the Social Security Number (SSN) for individuals, the Employer Identification Number (EIN) for businesses, and the Individual Taxpayer Identification Number (ITIN) for nonresident aliens.

TIN Matching Program

An IRS online tool that allows payers to verify that a payee's name and Taxpayer Identification Number on file match IRS records, helping to ensure accurate 1099 reporting and avoid backup withholding issues.

Trading Partners

Companies or institutions that exchange business documents and transaction data with one another electronically, typically via EDI.

Transaction

An exchange of value or information between two parties, which may be financial — such as a payment — or commercial, such as the placement of an order.

Transaction Set

In ANSI X12 EDI, a structured electronic document that is the equivalent of a specific paper form, such as an invoice (810) or purchase order (850).

Transportation policy

A company's internal guidelines governing the shipment of goods, including carrier selection, routing instructions, and freight payment responsibilities.

Travel and Entertainment (T&E) Expenses

Costs incurred by employees for business-related travel, meals, and entertainment. T&E expenses are subject to company expense policies and may be partially or fully tax-deductible under IRS guidelines.

Trial Balance

An internal accounting report that lists all general ledger account balances in debit and credit columns for a given period, used to verify that total debits equal total credits before financial statements are prepared.

Truckload

A shipment that fills an entire trailer, typically exceeding 10,000 pounds, priced under truckload carrier rates rather than less-than-truckload (LTL) rates.

Truncation

The process of removing a physical check from the payment processing flow and substituting a digital image or electronic record for further processing, as facilitated by Check 21 legislation.

TWIST

A nonprofit international industry group focused on developing and promoting open standards for straight-through processing (STP) of wholesale financial transactions, including trade finance, working capital management, and corporate payments. TWIST collaborates with other standards bodies, including ISO, SWIFT, IFX, FpML, and RosettaNet, to advance end-to-end automation of financial processes.

UB-04

The standard claim form used by hospitals and institutional providers to submit billing to Medicare, Medicaid, and commercial insurers, developed by the National Uniform Billing Committee (NUBC) of the American Hospital Association. The UB-04 replaced the earlier UB-92 format.

UCC

Uniform Commercial Code is a comprehensive set of statutes governing commercial transactions in the United States, including the sale of goods, secured transactions, negotiable instruments, and letters of credit. The UCC has been adopted, with some variations, by all 50 states.

UN/EDIFACT

The international EDI standard developed by the United Nations Joint European and North American Working Party (UN-JEDI). EDIFACT — Electronic Data Interchange for Administration, Commerce and Transport — provides a standardized framework for the electronic exchange of business documents across international borders.

Unbilled Receivables

Revenue that has been earned and recognized for goods delivered or services rendered, but for which an invoice has not yet been issued. Monitoring unbilled receivables is important in finance operations, as delays in billing directly impact cash flow.

Unclaimed Property

Tangible or intangible assets that have been abandoned or whose rightful owner cannot be located after a statutory dormancy period. Intangible unclaimed property commonly includes uncashed checks, credit balances, customer overpayments, refunds, unidentified remittances, gift certificates, security deposits, and unpaid wages. After the applicable dormancy period and a good-faith due diligence effort to locate the owner, the property must be reported and escheated to the appropriate state. See also: Escheatment.

Unclaimed Property Professionals Organization (UPPO)

A professional association dedicated to helping organizations manage unclaimed property compliance, reduce reporting burdens, and navigate state escheatment requirements. UPPO works closely with the National Association of Unclaimed Property Administrators (NAUPA).

Uncollected Funds

Checks that have been deposited into a bank account but have not yet cleared the paying bank and therefore are not yet available for use.

Uniform Customs and Practice for Documentary Credits (UCP 600)

A globally recognized set of rules governing the issuance and use of letters of credit, published by the International Chamber of Commerce (ICC). The current version, UCP 600, has been in effect since July 1, 2007, and is used by banks and trading partners in more than 175 countries.

Uniform Law Commission

Also known as the National Conference of Commissioners on Uniform State Laws, the ULC is a nonpartisan organization established in 1892 that drafts model legislation for adoption by U.S. states, promoting consistency and clarity in state commercial and civil law.

Unmatched Payment

Payment that does not correspond to an outstanding invoice or expected amount, requiring research and reconciliation before it can be properly applied.

Unprocessed Non-PO Invoice

An invoice for goods or services purchased outside the purchase order process that has not yet been reviewed, approved, or entered into the accounting system.

Unseasoned Debt

A debt obligation on which few or no payments have yet been made, typically viewed as higher risk due to the lack of payment history.

Unverified List

A list published by the U.S. Department of Commerce's Bureau of Industry and Security (BIS) identifying foreign individuals and entities whose involvement in export transactions could not be verified through pre-license checks or post-shipment reviews. U.S. exporters should exercise caution when transacting with parties on this list.

U.S. Source Income

Income earned by a nonresident alien for services performed within the United States. For accounts payable purposes, U.S. source income paid to foreign persons must be reported to the IRS on Form 1042-S and is generally subject to withholding tax under Chapter 3 of the Internal Revenue Code.

Use Tax

A tax imposed on the use, storage, or consumption of taxable goods or services purchased without payment of sales tax — typically in transactions involving out-of-state or online purchases. Use tax is designed to complement the sales tax and prevent revenue loss from untaxed purchases.

Value Added Tax (VAT)

A consumption tax applied to goods and services at each stage of the production and distribution chain. VAT is collected by manufacturers, distributors, and retailers but can be recovered through tax credits at each stage, with the ultimate cost borne by the end consumer. VAT is used in more than 160 countries worldwide, including members of the European Union, Canada, Australia, New Zealand, and Japan. Rates vary widely by country and product category, generally ranging from 5% to 27%.

Value-Added Network (VAN)

A third-party communications network that facilitates the secure exchange of EDI transactions between trading partners, handling transmission, translation, and routing of electronic business documents.

Vendor Master File

A centrally maintained database, typically managed by the accounts payable department, containing key information about each approved vendor, including legal name, address, payment terms, banking details, tax identification number, and transaction history. Maintaining an accurate and current vendor master file is critical to payment accuracy, fraud prevention, and regulatory compliance.

Vendor-bridging

A procurement practice in which a company transitions to an alternate supplier when an existing vendor relationship is terminated or disrupted, ensuring continuity of goods or services.

VNX

"Value not to exceed" is a cost cap specified in a purchase order or contract, establishing the maximum amount authorized for a particular purchase or project.

Voucher

An internal document that authorizes payment of a vendor invoice and records how the associated cost should be coded in the general ledger. Vouchers serve as the formal entry point for invoices into the accounts payable system.

Waybill

A shipping document used for air freight that contains much of the same information as a bill of lading — including shipper, consignee, and cargo details — but unlike a bill of lading, is not a document of title and cannot be used to transfer ownership of the goods.

Weight Break

The shipment weight at which the less-than-truckload (LTL) rate equals the rate applied at the next higher weight minimum, making it cost-effective to declare or ship at the higher weight tier.

Weight Group

A classification based on shipment weight used to determine the applicable freight rate or mode of transportation.

Wholesale Lockbox

A third-party payment collection service dedicated to processing business-to-business payments. Wholesale lockboxes typically handle high-dollar, low-volume transactions and are commonly used for commercial invoice payments.

Wire Transfer

An electronic funds transfer (EFT) that moves money directly between financial institutions, typically settling the same day. Wire transfers are faster and more certain than ACH payments but carry higher transaction fees, generally ranging from $15 to $50 depending on the institution and whether the transfer is domestic or international.

WNX

"Weight not to exceed" is a shipping or contractual term specifying the maximum allowable weight for a shipment or load.

Workflow

Technology-enabled automation that manages, routes, and tracks the movement of work and documents through defined business processes. In accounts payable and source-to-pay environments, workflow tools route invoices for approval, enforce business rules, and provide visibility into processing status and bottlenecks.

Working Capital

A measure of short-term financial health calculated by subtracting current liabilities from current assets. Working capital reflects the funds available to meet day-to-day operational needs and is a key indicator of liquidity and operational efficiency.

World Wide Web Consortium (W3C)

The international standards organization responsible for developing and maintaining open web standards, including HTML, CSS, and XML, to ensure the long-term growth and interoperability of the internet.

XBRL

eXtensible Business Reporting Language is an open, royalty-free XML-based standard for tagging and exchanging financial and business reporting data. XBRL is required by the SEC for financial filings by public companies and enables automated consumption and analysis of financial information across systems and platforms.

Z-Scores

A family of statistical models used to estimate the probability that a company will file for bankruptcy. The original Z-score model applied to publicly traded manufacturers; Z' (Z-Prime) extended the model to privately held firms; and Z'' (Z-Double Prime) broadened the scope further to include non-manufacturing companies and organizations outside the United States.

Zombie Debt

A debt that is significantly past due — often beyond the statute of limitations — and may have been written off by the original creditor. Zombie debt can resurface when purchased by a third-party debt collector seeking recovery, potentially creating compliance and legal considerations for accounts payable and receivable teams.