Financial & invoicing terms explained
Quick definitions for AR/AP teams, founders, and operators—aligned with how modern invoicing software works.
Accounts receivable (AR)
Money customers owe you from issued invoices.
Read definitionAccounts payable (AP)
Money your business owes suppliers from their bills.
Read definitionBalance due
Remaining unpaid amount after partial payments.
Read definitionCash flow
Cash in and out over time—not the same as profit.
Read definitionCredit memo
Negative invoice that reduces what a customer owes.
Read definitionDunning
Structured process for overdue invoice follow-up.
Read definitionInvoice aging
Buckets of receivables by days past due.
Read definitionLate fee
Charge or interest for paying after the due date.
Read definitionPayment processor
Service that moves card/ACH money to your bank.
Read definitionPayment terms
When and how invoice amounts must be paid.
Read definitionPurchase order (PO)
Buyer authorization that caps what you can bill.
Read definitionQuote vs invoice
Estimate vs request for payment after delivery.
Read definitionRemittance advice
Note that explains which invoices a payment covers.
Read definitionRetainage
Held-back percentage until construction work closes.
Read definitionSales tax
Transaction tax on taxable sales in a jurisdiction.
Read definitionVAT
Value-added tax common outside the US.
Read definitionWithholding tax
Tax withheld from a payment and remitted for you.
Read definitionWrite-off
Remove uncollectible AR from books per policy.
Read definitionEarly payment discount
Reduced price for paying before the due date.
Read definitionChargeback
Card payment reversal after a customer dispute.
Read definitionApply what you learn
Send invoices, collect online, and automate reminders with Invoice My Clients.