Plain-English reference
Invoicing terms, without the fog.
Clear, jargon-free definitions for invoicing, accounting, tax, and payment terms. Whether you're sending your first invoice or automating thousands, this glossary has you covered.
A
Accounts Payable
Money your business owes suppliers for goods or services received.
Accounts Receivable
Money customers owe you for invoiced sales not yet collected.
Accrual Basis Accounting
Recognize revenue and expenses when earned or incurred, not only when cash moves.
Aging Report
A list of open receivables or payables grouped by how overdue they are.
AP Automation
Software that digitizes and streamlines the accounts payable workflow from invoice capture to payment.
B
C
Cash Basis Accounting
Record income and expenses when cash is received or paid.
Commercial Invoice
The exporter's invoice for goods shipped across a border, which customs uses to identify and value them.
Cost of Goods Sold (COGS)
The direct costs attributable to producing goods or delivering services that were sold.
Credit Note
A document that reduces amounts owed after returns, errors, or discounts.
D
F
I
Independent Contractor
A non-employee worker engaged under contract, responsible for their own taxes and tools.
Intercompany Invoice
An invoice from one company to another company in the same group, for goods, services or shared costs.
Invoice Factoring
Selling receivables to a third party for immediate cash at a discount.
Invoice Number
An invoice number is the unique reference given to each invoice, usually from a sequence such as INV-0042, so it can be identified, paid and audited.
M
P
Prebilling
Prebilling is reviewing a draft bill (a prebill) before the final invoice goes out, or, more loosely, invoicing a client before the work is done.
Proforma Invoice
A preliminary bill showing estimated costs before goods ship or work completes.
Purchase Order
A buyer’s authorized request specifying items, quantities, and prices.
R
Reconciliation
The process of comparing two sets of records to ensure they agree and are accurate.
Recurring Invoice
Invoices sent on a fixed schedule for subscriptions or retainers.
Revenue Recognition
The accounting principle that determines when earned income is recorded on the books.
Reverse Charge
Under a reverse charge, the business customer, not the supplier, accounts for the VAT, so the supplier's invoice charges no VAT and says “Reverse charge”.
S
Sales Tax
Tax collected on retail sales, common in US states and localities.
Statement of Work
A detailed addendum describing timeline, milestones, and acceptance for a deal.
Subtotal
The subtotal is the sum of an invoice's line amounts (quantity × unit price) before invoice-level discounts, extra charges, tax and payments.
T
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