Financial & invoicing terms explained
Quick definitions for AR/AP teams, founders, and operators - aligned with how modern invoicing software works.
01
Accounts receivable (AR)
Money customers owe you from issued invoices.
Read definition02
Accounts payable (AP)
Money your business owes suppliers from their bills.
Read definition03
Balance due
Remaining unpaid amount after partial payments.
Read definition04
Cash flow
Cash in and out over time - not the same as profit.
Read definition05
Credit memo
Negative invoice that reduces what a customer owes.
Read definition06
Dunning
Structured process for overdue invoice follow-up.
Read definition07
Invoice aging
Buckets of receivables by days past due.
Read definition08
Late fee
Charge or interest for paying after the due date.
Read definition09
Payment processor
Service that moves card/ACH money to your bank.
Read definition10
Payment terms
When and how invoice amounts must be paid.
Read definition11
Purchase order (PO)
Buyer authorization that caps what you can bill.
Read definition12
Quote vs invoice
Estimate vs request for payment after delivery.
Read definition13
Remittance advice
Note that explains which invoices a payment covers.
Read definition14
Retainage
Held-back percentage until construction work closes.
Read definition15
Sales tax
Transaction tax on taxable sales in a jurisdiction.
Read definition16
VAT
Value-added tax common outside the US.
Read definition17
Withholding tax
Tax withheld from a payment and remitted for you.
Read definition18
Write-off
Remove uncollectible AR from books per policy.
Read definition19
Early payment discount
Reduced price for paying before the due date.
Read definition20
Chargeback
Card payment reversal after a customer dispute.
Read definitionApply what you learn
Send invoices, collect online, and automate reminders with Invoice My Clients.