Account Reconciliation
The month-end or quarter-end process of proving account balances are accurate and supported.
Finance and accounting glossary
113 finance and accounting terms, grouped by the software category where they come up most. Plain definitions for the jargon in vendor materials, demos and pricing calls. Read it next to our buyer guides and software category pages when you are scoping a purchase. When you are ready to evaluate, grab the free templates, then move on to head-to-head comparisons and software profiles.
Category cluster
Accounting Software
Reconciliations, close calendars, review workflows and the controls accounting teams run every day.
Useful for telling what belongs in the core accounting system and what a separate close or reconciliation tool should handle.
Accrual Accounting
An accounting method that records revenue when earned and expenses when incurred, regardless of when cash actually changes hands.
Audit Trail
A chronological record of every change made to financial data (who made it, when, and what changed), used for compliance, fraud prevention, and audit readiness.
Bank Reconciliation
The process of matching transactions in the company's accounting records against the bank statement to identify discrepancies and confirm cash balances are accurate.
Chart of Accounts
The organized list of all financial accounts used to categorize transactions in the general ledger, and the backbone of how a company structures its financial data.
Close Calendar
The shared timetable of tasks, owners, approvals, and deadlines used to manage the financial close.
Deferred Revenue
Money received from customers for goods or services not yet delivered. It is recorded as a liability on the balance sheet until the revenue is earned.
Double-Entry Bookkeeping
An accounting system where every transaction is recorded as equal and opposite entries in at least two accounts (one debit and one credit), keeping the books in balance.
Financial Statements
The three core reports (income statement, balance sheet, and cash flow statement) that summarize a company's financial performance and position for a given period.
Fixed Asset Depreciation
The systematic allocation of a tangible asset's cost over its useful life, recorded as an expense each period to reflect the asset's declining value.
General Ledger
The master record of all financial transactions in an organization, organized by account, that produces the trial balance and financial statements.
Intercompany Eliminations
Adjusting entries that remove transactions between related entities within the same parent company so that consolidated financial statements reflect only external activity.
Journal Entry
A manual or automated record of a financial transaction posted to the general ledger, containing at least one debit and one credit entry with a description and date.
Month-End Close
The recurring process of finalizing all accounting transactions, reconciling accounts, posting adjustments, and producing financial statements for the completed month.
Revenue Recognition (ASC 606)
The GAAP standard that sets when and how revenue is recorded, requiring companies to recognize revenue as they satisfy performance obligations to customers.
Statement of Operations
A financial statement, also called an income statement or profit and loss (P&L) statement, that summarizes a company's revenues, expenses, and net income or loss over a specific reporting period, showing whether the business made or lost money during that time.
Subledger
A detailed subsidiary ledger, such as the accounts receivable, accounts payable, or fixed asset subledger, that feeds summary totals into the general ledger.
Trial Balance
A report listing every general ledger account and its balance at a point in time, used to verify that total debits equal total credits before financial statements are prepared.
Category cluster
Accounts Payable Automation Software
Invoice capture, PO matching, approvals, vendor records and payment runs.
Useful when comparing how much manual AP work each platform can realistically remove.
ACH Payment
An electronic bank-to-bank transfer processed through the Automated Clearing House network, and the most common, lowest-cost way to pay US-based vendors in accounts payable.
AP Aging Report
A report that groups outstanding payables by how long they have been unpaid, typically in 30-day buckets (current, 31-60, 61-90, 90+), showing the company's unpaid obligations to vendors.
Approval Workflow
The automated routing of documents such as invoices, purchase orders, and expense reports through authorization chains based on configurable rules like amount thresholds, department, or vendor type.
Duplicate Invoice Detection
The automated process of identifying and preventing double payment of the same vendor invoice, one of the most common and most preventable sources of AP loss.
Early Payment Discount
A vendor-offered discount, such as 2/10 net 30, that reduces the invoice amount if the buyer pays before the standard due date, turning AP speed into a direct financial return.
Invoice OCR and Capture
The technology layer that uses optical character recognition and AI to extract structured data (vendor name, invoice number, line items, amounts, and dates) from paper or PDF invoices.
Invoice Processing
The end-to-end workflow of receiving, validating, coding, approving, and paying vendor invoices. It is the core operational loop that AP automation is built to speed up.
Payment Run
The batch process of selecting, reviewing, and releasing approved payments to many vendors at once, usually on a weekly or biweekly schedule to manage cash flow and processing effort.
Purchase Order Matching
The process of verifying a vendor invoice against the purchase order and goods receipt, using 2-way or 3-way matching, to confirm the company pays only for what was ordered and received.
Three-Way Match
An accounts payable control that compares the purchase order, invoice, and receipt before payment approval.
Vendor Management
The process of onboarding new vendors, maintaining accurate master records (W-9, banking details, contacts), and managing ongoing supplier relationships within the AP system.
Category cluster
AR Automation Software
Collections, cash application, dunning, aging and payment matching.
Useful when comparing how AR tools speed up collections and match payments to invoices.
Accounts Receivable
Money customers owe a company for goods or services already delivered. It is a current asset on the balance sheet and a direct driver of cash flow.
AR Aging Report
A report that groups outstanding customer receivables by how many days they are past due. It is the main tool for prioritizing collections and measuring AR health.
Bad Debt Write-Off
The accounting action of recognizing that a customer receivable is uncollectible and removing it from the books, converting an asset (AR) into an expense (bad debt).
Cash Application
The process of matching incoming customer payments to open invoices and receivables balances.
Collections Management
The process of following up on past-due customer payments, from first reminder through escalation, to recover outstanding receivables while keeping the customer relationship intact.
Credit Memo
A document issued to reduce a customer's outstanding balance, used for returns, billing errors, pricing adjustments, or any other case where the original invoice amount needs to come down.
Days Sales Outstanding
A receivables metric that shows how quickly a company collects cash after making a sale.
Dunning
The practice of sending structured, escalating payment reminders to customers with overdue invoices, moving from friendly nudges to formal demands as the balance gets further past due.
Lockbox Processing
A bank service where customers mail payments to a dedicated PO box, the bank opens and deposits them, and the company receives the payment data for cash application. It speeds up check processing and cuts AR handling time.
Payment Terms (Net 30/60/90)
The contractual conditions that set when a customer's invoice payment is due, such as Net 30 (due in 30 days), Net 60, or Net 90. They directly drive the company's cash conversion cycle.
Category cluster
Billing Software
Subscription and usage-based billing, proration, metering and revenue leakage.
Useful when complex pricing is causing billing errors and you need to judge how much a billing tool automates.
Billing Mediation
The data processing layer that collects, validates, deduplicates, and transforms raw usage events into normalized billable records before they reach the billing engine for pricing and invoicing.
Dunning Management
The automated process of retrying failed recurring payments and contacting customers to recover the charge before the subscription is canceled. It is the main defense against involuntary churn.
Proration
Calculating a partial-period charge or credit when a customer upgrades, downgrades, or changes their subscription plan in the middle of a billing cycle.
Recurring Billing
Automatically charging customers on a fixed schedule (weekly, monthly, quarterly, or annually) for ongoing subscription services, without creating an invoice manually each cycle.
Revenue Leakage
Revenue that a company has earned but fails to collect, caused by unbilled services, pricing errors, missed renewals, uncollected fees, or failed payment recovery.
Subscription Management
The system and processes for handling the full lifecycle of customer subscriptions: creation, plan changes, upgrades, downgrades, pauses, renewals, and cancellations.
Usage-Based Billing
A billing model that charges customers for how much of a service they actually consume, measured by API calls, storage, compute hours, transactions, or other quantifiable metrics, instead of a flat subscription fee.
Category cluster
ERP Software
ERP concepts: master data, multi-entity setup, implementation approach and system architecture.
Useful for separating real implementation requirements from scope a vendor or partner adds to the project.
Chart of Accounts Mapping
The process of translating every account in the old system's chart of accounts to its corresponding account in the new system during a financial software migration.
Cloud ERP vs On-Premise ERP
Cloud ERP is hosted by the vendor and accessed via browser with automatic updates; on-premise ERP runs on the organization's own servers with full infrastructure control but self-managed maintenance.
Enterprise Resource Planning (ERP)
A unified software platform that connects finance, operations, supply chain, HR, and other core business functions into a single system of record with shared data.
ERP Customization vs Configuration
Configuration adapts an ERP using built-in settings and options without writing code; customization extends the system through custom code, scripts, or modifications that alter its default behavior.
ERP Implementation
The multi-phase project of deploying an ERP system, covering requirements gathering, system design, configuration, data migration, testing, training, and go-live.
ERP Integration
The technical connections between an ERP system and other business applications (CRM, payroll, ecommerce, banking, and more) that let data flow without manual re-entry.
ERP Total Cost of Ownership
The complete financial commitment of an ERP system over its lifecycle, including license fees, implementation, customization, integrations, internal administration, training, and ongoing support.
Go-Live Readiness
The structured assessment conducted before an ERP cutover to confirm that data migration, system configuration, user training, integrations, and rollback plans are complete and validated.
Master Data Management
The discipline of creating, maintaining, and governing a single authoritative source for core business records (customers, vendors, items, employees, and accounts) across all systems.
Multi-Entity Consolidation
The process of combining financial results from multiple legal entities, subsidiaries, or business units into a single set of consolidated financial statements.
Category cluster
Expense Management Software
Expense reports, reimbursements, spend policies and corporate card reconciliation.
Useful when comparing policy enforcement and how much expense admin each tool removes.
Corporate Card Reconciliation
The process of matching every corporate credit card transaction to the correct general ledger expense account, verifying receipts and business purpose, and resolving discrepancies before the statement closes.
Expense Policy Compliance
The enforcement of company spending rules through pre-approval requirements, spending limits, automated policy checks, and post-submission audit, so that employee expenses stay within defined guidelines.
Expense Report
A formal document submitted by an employee to request reimbursement for business-related spending, including itemized expenses, receipts, dates, and business justification.
Mileage Reimbursement
Paying employees for business use of their personal vehicles at a per-mile rate, typically the IRS standard mileage rate, based on documented trip distance and business purpose.
Out-of-Pocket Expense
A business cost that an employee pays from their own personal funds and then submits for reimbursement through the company's expense management process.
Per Diem
A fixed daily allowance paid to employees for meals, lodging, or incidental expenses during business travel, in place of individual receipts for each covered expense.
Spend Visibility
Real-time, consolidated insight into where company money is being spent across all channels: corporate cards, expense reports, purchase orders, vendor payments, and subscription renewals.
Category cluster
Finance Consolidation Software
Multi-entity consolidation, eliminations, currency translation and group financial statements.
Useful when comparing how tools handle entity rollups, partial ownership and consolidation rules.
Consolidation Adjustments
Post-close corrections, reclassifications, and accounting entries made at the group level during consolidation that do not appear on any individual entity's books.
Currency Translation
The process of converting a foreign subsidiary's financial statements from its functional currency into the parent company's reporting currency, using prescribed exchange rate methods under ASC 830 or IAS 21.
Elimination Entries
Journal entries posted during consolidation that remove the financial effect of transactions between related entities, ensuring consolidated statements reflect only activity with external third parties.
Financial Consolidation
The process of combining the financial results of multiple legal entities within a corporate group into a single set of consolidated financial statements that represent the group as one economic unit.
Management Reporting
Internal financial and operational reports designed for leadership decision-making, structured around how the business is managed rather than how it is required to report externally.
Minority Interest
The portion of a subsidiary's equity and net income that is not owned by the parent company, presented separately on consolidated financial statements as non-controlling interest (NCI).
SOX Control Testing
The process of checking whether key internal controls are designed and operating effectively.
Statutory Reporting
Country-specific financial reports prepared according to local accounting standards and regulations, filed with government authorities in each jurisdiction where a company operates.
Category cluster
Forecasting Software
Budgeting, forecasting, driver-based models and management reporting.
Useful when comparing how planning tools build models, run scenarios and track forecast accuracy.
Budget vs Actual Variance
The measured difference between what a company planned to spend or earn and what actually happened, expressed in dollars and percentages to surface operational deviations.
Capital Expenditure (CapEx)
Spending on long-term assets (equipment, buildings, vehicles, or internally developed software) that is recorded on the balance sheet and depreciated or amortized over the asset's useful life.
Cash Flow Forecasting
The process of projecting when cash will be received and disbursed over a future period, providing visibility into whether the company can meet its obligations without running out of money.
Driver-Based Planning
A planning approach that ties forecasts to measurable business drivers instead of only static line-item assumptions.
Financial Modeling
The practice of building quantitative representations of a company's financial performance, usually in spreadsheets or specialized software, to support forecasting, valuation, and strategic decisions.
Headcount Planning
The process of forecasting workforce costs (salaries, benefits, taxes, equity, and hire timing), which are typically the largest expense category for knowledge-economy companies.
Operating Expense (OpEx)
The recurring costs of running a business that are expensed in the period incurred, such as salaries, rent, marketing, and software. Opex is reported separately from cost of goods sold and capital expenditures.
Revenue Forecasting
The practice of predicting future revenue using pipeline data, contract information, historical trends, and leading indicators to guide resource allocation and strategic planning.
Rolling Forecast
A continuously updated financial projection that adds new periods as completed ones drop off, keeping the forecast horizon constant instead of shrinking toward year-end.
Scenario Planning
The practice of building multiple financial models, usually a best case, worst case, and base case, to see how different assumptions about the future affect business outcomes.
Top-Down vs Bottom-Up Budgeting
Two opposing approaches to building a budget: leadership sets financial targets that cascade down, or department owners build detailed plans that roll up to an organizational total.
Variance Analysis
A systematic method of investigating differences between expected and actual financial results by decomposing them into component causes (price, volume, mix, and efficiency) to find the root issues.
Zero-Based Budgeting
A budgeting method that requires every expense to be justified from scratch each period, rather than simply adjusting last year's numbers up or down by a percentage.
Category cluster
Invoicing Software
Invoice creation, e-invoicing, payment terms and invoice financing.
Useful when slow or manual invoicing is delaying cash collection.
Credit Terms
The payment conditions on an invoice that set when payment is due, what early-payment discounts apply, and what penalties apply for late payment, such as Net 30, 2/10 Net 30, or Net 60.
Electronic Invoicing (e-Invoicing)
The exchange of invoice data in a structured, machine-readable format directly between the seller's and buyer's financial systems, replacing PDF or paper invoices with automated data transmission.
Invoice Factoring
Selling outstanding invoices to a third-party factor at a discount, typically 1-5% of the invoice value, in exchange for immediate cash instead of waiting 30-90 days for the customer to pay.
Invoice Factoring Rates
The fees factoring companies charge for advancing cash against unpaid invoices, usually a percentage of invoice value (1–5%) that varies with invoice volume, customer creditworthiness, payment terms, and industry risk.
Invoice Template
A standardized, reusable invoice format with consistent branding, required legal and tax fields, payment terms, and a line-item structure, so every invoice the business sends is professional and compliant.
Self-Billing
An invoicing arrangement where the buyer creates the invoice on the supplier's behalf, based on goods received, services consumed, or contract terms, reversing the normal invoicing flow.
Category cluster
Payroll Software
Payroll processing, tax withholding, filings and employee payments.
Useful when comparing payroll accuracy, compliance coverage and how much manual prep each platform removes.
Direct Deposit
The electronic transfer of an employee's net pay directly into their bank account via the ACH network, eliminating the need for paper checks.
Gross Pay vs Net Pay
Gross pay is the total compensation earned before any deductions; net pay is the amount the employee actually receives after taxes, insurance premiums, retirement contributions, and other withholdings are subtracted.
Overtime Calculation
Computing premium pay owed to non-exempt employees for hours worked beyond the standard threshold, typically 1.5 times the regular rate under the Fair Labor Standards Act.
Pay Period
The recurring time interval for which employee compensation is calculated and paid, such as weekly, bi-weekly, semi-monthly, or monthly.
Payroll Compliance
Adhering to the federal, state, and local labor laws, tax regulations, and reporting requirements that govern how employees are paid, classified, and documented.
Payroll Processing
The end-to-end workflow of calculating employee compensation, from gross wages through deductions and withholdings to net pay disbursement and tax remittance.
Payroll Tax Withholding
The taxes that employers are legally required to calculate, deduct from employee wages, and remit to federal, state, and local tax authorities on each payroll cycle.
W-2 and 1099 Filing
The annual process of preparing and filing IRS Forms W-2 (for employees) and 1099-NEC (for independent contractors), reporting compensation paid and taxes withheld during the tax year.
Category cluster
Point of Sale Software
Transaction processing, payment gateways and inventory sync for in-store sales.
Useful when checkout speed, transaction accuracy and inventory sync drive the software decision.
Inventory Sync
The real-time or near-real-time updating of stock levels across all sales channels (POS, e-commerce, marketplace, and warehouse) whenever a transaction, return, transfer, or adjustment occurs.
Payment Gateway
The technology layer that securely transmits payment data between the customer's card (or digital wallet), the merchant's POS or checkout system, and the acquiring bank, authorizing, encrypting, and routing each transaction for settlement.
POS Transaction
The complete exchange recorded when a customer pays at a point of sale terminal, capturing the items purchased, payment method, tax calculated, discounts applied, and the merchant's receipt of funds.
Category cluster
Purchase Order Software
Requisitions, PO approvals, goods receipt and procurement controls.
Useful when slow PO approvals and PO mismatches are causing invoice exceptions in AP.
Blanket Purchase Order
A pre-negotiated purchase agreement that authorizes recurring purchases of specified goods or services from a vendor at agreed terms and pricing over a defined period, so you don't need a new PO for each order.
Goods Received Note (GRN)
A formal document created when ordered goods are physically received and inspected at the delivery point, confirming the quantity, condition, and specification of items against the purchase order.
Purchase Requisition
A formal internal request from an employee or department to buy goods or services, which must be approved before a purchase order can be created and sent to a vendor.
Category cluster
Tax Software
Nexus, indirect tax, exemption certificates, tax provision and filing workflows.
Useful when comparing how much of calculation, filing and audit documentation a tax tool actually automates.
Indirect Tax
Consumption-based taxes, including sales tax, VAT, GST, and excise duties, that are levied on goods and services and collected from end consumers through the supply chain.
Sales Tax Compliance
The end-to-end obligation of registering with tax authorities, collecting the correct sales tax from customers, and remitting the collected amounts on schedule in every jurisdiction where the seller has nexus.
Sales Tax Nexus
The connection between a business and a jurisdiction that creates tax registration and collection obligations.
Tax Automation
Using software to calculate, file, and remit taxes with minimal manual intervention, covering income tax, sales tax, payroll tax, and other obligations across jurisdictions.
Tax Exemption Certificate
A legal document provided by a buyer to a seller that removes the obligation to collect sales tax on qualifying transactions, based on the buyer's exempt status or the intended use of the purchased goods.
Tax Provision (ASC 740)
The accounting process of estimating a company's current and deferred income tax expense for the financial statements, governed by ASC 740 under US GAAP.
Tax Rate Engine
Software that determines the correct tax rate and taxability rules for a transaction in real time based on product type, customer location, and exemption status.
Transfer Pricing
The pricing methodology applied to transactions between related entities in different tax jurisdictions, designed to ensure profits are allocated at arm's length and comply with international tax rules.
Use Tax
A tax imposed on the use, storage, or consumption of tangible personal property or taxable services purchased from a seller that did not collect the applicable sales tax.