Accounts Payable – The amount of money a company owes to its suppliers or vendors for goods or services received but not yet paid for.
Accounts Receivable – The outstanding payments owed to a company by its customers for goods or services provided on credit.
Amortisation – The process of spreading out the cost of an intangible asset or a loan over a specific period.
Balance sheet – A snapshot of a business on a particular date, listing assets, liabilities, and net assets.
Balloon payment – A final lump sum payment due on a loan agreement, often with lower regular repayments.
Bank reconciliation – A cross-check ensuring cashbook amounts match bank statements.
Bill of sale – Legal document for asset purchases detailing price and location.
Borrowing Capacity – The maximum amount of money a lender is willing to loan to an individual or entity based on various factors such as income, expenses, and credit history.
Bottom line – Another term for Net profit.
Capital gain – Profit when an asset sells above its purchase price.
Capital growth – Increase in asset value.
Cash Rate – The interest rate at which banks borrow and lend funds to each other on an overnight basis, set by the Reserve Bank of Australia (RBA).
Chart of accounts – Index of accounts used to classify transactions.
Chattel mortgage – Similar to hire-purchase, where a business owns assets from the start.
Commercial bill – A form of commercial loan for short-term funding needs.
Conditional Approval – An initial approval granted by a lender subject to certain conditions being met by the borrower, such as providing additional documentation or meeting specific criteria.
Contingent liability – Liability dependent on specific events.
Credit History and Credit Report – A record of an individual’s borrowing and repayment behaviour, including details of past loans, providing lenders with information about their creditworthiness.
Credit rating – Ranking based on credit history.
Crowdfunding – Financing business ideas through public donations.
Current asset – Asset convertible into cash within 12 months.
Current liability – Liability due for payment within 12 months.
Default – When a borrower fails to fulfil their obligation to pay back a loan or debt.
Depreciation – The process of allocating the cost of an asset over its useful life to reflect its gradual reduction in value.
Earnings Before Tax and Depreciation (EBTDA) – A financial measure that represents a company’s earnings before deducting taxes and depreciation expenses. It provides insight into a company’s operational profitability and financial performance.
Employee share schemes – Employee share schemes allow employees to purchase shares in their company, often as part of their remuneration package.
Encumbered – An encumbered asset is one that is pledged as collateral for a loan.
Equity – The ownership interest in a business, calculated by subtracting liabilities from assets.
Equity finance – Raising funds for a business by selling ownership shares or equity.
Facility – An arrangement provided by a financial institution, such as a bank account, loan, or overdraft.
Financial year – The financial year is a 12-month period used for accounting and reporting purposes, typically from July 1st to June 30th.
Fixed asset – A tangible asset used in the operation of a business, such as property, plant, or equipment.
Fixed cost – Expenses that remain constant regardless of the level of production or sales.
Fixed interest rate – A fixed interest rate remains unchanged for the duration of a loan or an agreed-upon period.
Float – The process of offering shares of a private company to the public for the first time through an initial public offering (IPO).
Forecast – An estimate of future financial transactions used for budgeting and planning purposes.
Fringe benefits – Non-monetary perks, such as company cars or mobile phones, are provided to employees in addition to their salary.
Fully drawn advance – A long-term loan with a fixed interest rate that is fully funded upfront.
Goodwill – An intangible asset representing the value of a business’s reputation and customer relationships.
Guarantor – A person who agrees to pay a borrower’s debt in the event that the borrower defaults on the loan.
Hire-purchase – A type of financing agreement where the purchaser pays for goods in instalments and gains ownership after the final payment.
Insolvent – A business is insolvent when it is unable to pay its debts as they become due.
Intangible assets – Non-physical assets with no fixed value, such as intellectual property rights or brand reputation.
Interest Rate – The amount charged by a lender to a borrower for the use of funds and is a key factor in determining the cost of credit.
Inventory – Goods or materials held by a business for sale.
Invoice – An invoice is a document sent to a customer requesting payment for goods or services provided.
Invoice finance – Invoice finance involves obtaining financing based on the value of a business’s outstanding invoices.
Lenders Mortgage Insurance (LMI) – Insurance that lenders take out to protect themselves against potential losses if a borrower defaults on their mortgage and the proceeds from the sale of the property are not sufficient to cover the outstanding loan balance.
Liability – A liability is a financial obligation or debt owed by a business.
Line of credit – A line of credit is an arrangement that allows a borrower to withdraw funds up to a predetermined limit.
Liquidation – Liquidation is the process of winding up a company’s affairs by selling off its assets to pay creditors.
Liquidity – Liquidity refers to the ease with which an asset can be converted into cash without affecting its market price.
Loan-to-value ratio (LVR) – The loan-to-value ratio is the ratio of the loan amount to the value of the asset purchased with the loan.
Mandate Fee – A charge levied by a financial institution for setting up and managing a direct debit or standing order arrangement.
Margin – Margin is the difference between the selling price and the cost of goods sold, often expressed as a percentage.
Maturity Date – The date on which a loan or financial instrument becomes due for repayment. It represents the end of the loan term or investment period and is when the borrower or investor is required to repay the principal amount borrowed or invested.
Net Assets – The total value of a business’s assets after deducting its total liabilities.
Net Income – The total earnings of a business after accounting for taxes and other deductions.
Offset and Redraw – Usually associated with mortgage loans, offset allows borrowers to use savings held in a linked account to reduce the interest payable on the mortgage, while redraw enables borrowers to withdraw any additional payments made on the loan.
Owner’s Equity – The portion of a business’s assets that belong to the owner after deducting liabilities.
Personal Property – All property individuals can own, excluding land, buildings, and fixtures, such as vehicles, equipment, and goods.
Personal Property Security Register (PPSR) – A national registry for security interests in personal property.
Principal – The original amount of a loan borrowed or the remaining amount owed, excluding interest.
Profit – Also known as net income or earnings, profit is the financial gain or benefit realised by a company after deducting all expenses.
Refinance – When a new loan is used to pay off an existing loan, often to secure better terms or lower interest rates.
Rent to Buy – A financing arrangement where an initial deposit is made to purchase an item, which is then leased with the option to buy after completing payments.
Retention of Title – A contractual clause where the buyer gains possession of property but does not own it until the full purchase price is paid.
Return on Investment (ROI) – The efficiency of an investment by calculating the return relative to the investment cost.
Security – An asset or collateral pledged by a borrower to a lender as a guarantee for a loan or debt obligation.
Self-Managed Super Fund (SMSF) – A superannuation fund managed by individuals for their retirement savings, providing greater control over investment decisions compared to traditional super funds.
Self-Managed Super Fund Lending – Lending products specifically designed for SMSFs to borrow money to invest in assets such as property or shares within the regulatory framework of superannuation laws.
Shareholder’s Equity – The portion of a company’s assets owned by shareholders after liabilities are deducted.
SMSF (Self-Managed Superannuation Fund) – A retirement savings vehicle managed by individuals, providing greater control over investment decisions within the framework of superannuation and tax laws.
Stamp Duty – A tax levied by governments on certain financial transactions, including property purchases, share transfers, and legal documents.
Superannuation – Funds set aside for retirement, typically contributed to a complying superannuation fund, as regulated by government laws.
Variable Interest Rate – An interest rate that fluctuates with market conditions during the loan term.
Venture Capital – Investment in high-growth potential startups, typically provided by private investors or venture capital firms.
Working Capital – The funds available for a business’s day-to-day operations, calculated by deducting current liabilities from current assets.