Accounting Glossary

Accounting jargon can be a minefield. If you’re new to account software or simply want to brush up on some of the key terms, we’ve put together this easy-to-understand glossary of everything you need to know.

What are accounts payable?

Accounts payable refers to the money a company owes its suppliers or vendors for goods and services received but not yet paid for, listed as liabilities on the balance sheet.

What are accounts receivable?

Accounts receivable denotes the money owed to a company by its customers or clients for goods or services provided on credit, recorded as assets on the balance sheet.

What is an approval workflow?

An approval workflow is the process of authorising and reviewing financial transactions or documents, ensuring compliance with company policies and regulations before final approval.

What is automation?

In the context of a company’s accounting, automation involves using technology and software to streamline operations and perform repetitive financial tasks efficiently, reducing manual effort, errors and costs, while enhancing accuracy and productivity within the company.

What is bank reconciliation?

Bank reconciliation is the process of matching the transactions recorded in a company's accounting records with those in its bank statement to ensure accuracy and identify discrepancies.

What is a bank reconciliation statement?

A bank reconciliation statement summarises the adjustments made to reconcile the differences between the bank balance shown in the company's records, and the actual bank statement balance.

What is Business Intelligence?

Business intelligence refers to the process of collecting, analysing and interpreting data to identify actionable insights that inform strategic financial decisions and improve overall business performance.

What is capitalisation?

Capitalisation is the process of converting expenses, such as the cost of assets or investments, into a fixed asset on the balance sheet. This allows the company to spread the cost of an asset over time.

What is cash flow forecasting?

Cash flow forecasting is the estimation of future cash incomings and outgoings based on a variety of potential factors, including historical trends, expected new business and predicted future events. Cash flow forecasting allows companies to predict liquidity needs, and supports financial planning and decision-making.

What is a chart of accounts?

A chart of accounts is a list of all financial accounts used by a company. These accounts are categorised to enable the recording, summarising and reporting of financial transactions.

What is cloud accounting?

Cloud accounting refers to using online accounting software like iplicit to manage financial transactions and processes. Cloud accounting offers flexibility, accessibility, enhanced security and real-time data insights for businesses.

What is compliance?

Compliance refers to adhering to relevant laws, regulations and internal policies in financial operations, ensuring ethical conduct, transparency and risk mitigation.

What is consolidation?

Consolidation involves the combination of financial statements from subsidiary companies into a single comprehensive report, providing a complete view of the group's financial performance.

What is current gains and loss tracking?

Current gains and loss tracking involves monitoring and analysing short-term fluctuations in financial performance, empowering organisations to make adjustments to strategies and operations to maximise profitability and mitigate losses.

What is currency risk management?

Currency risk management is a strategy employed by companies to mitigate potential consequences of fluctuating exchange rates on financial performance. Currency risk management ensures stability and protects against currency-related losses.

What is deferred revenue?

Deferred revenue refers to income received by a company for goods or services not yet provided. This income is classified as a liability until the goods or services have been provided.

What is a deferment profile?

A deferment profile outlines the schedule for delaying payments or expenses, allowing companies to manage cash flow and financial obligations effectively.

What is depreciation?

Depreciation refers to the estimated loss in value of a fixed asset over a given fiscal time period. This depreciation may occur due to damage, wear and tear, or obsolescence.

What is expense management?

Expense management is the control and tracking of company expenditure, with the aim of optimising costs, ensuring compliance with budgets and improving overall financial efficiency.

What is fixed asset management?

Fixed asset management includes the acquisition, maintenance and disposal of tangible assets like property and equipment. The aim is to maximise the value, lifespan and contribution of assets to company operations.

What is General Ledger (GL) analysis?

General Ledger (GL) analysis involves reviewing and scrutinising the entries in a company's General Ledger to assess financial performance, identify trends and ensure accuracy in financial reporting and decision-making processes.

What is grant and fund accounting?

Grant and fund accounting involves tracking and reporting financial transactions related to specific grants or funds, ensuring compliance with donor requirements and transparent use of allocated resources.

What is inventory management?

Inventory management involves overseeing the procurement, storage, and distribution of goods to ensure optimal stock levels, minimise costs and meet customer demand efficiently.

What is a ledger?

A ledger is a physical or digital record where financial transactions are logged chronologically, forming the basis for an organisation’s financial statements.

What is multi-currency accounting?

Multi-currency accounting is the process of managing financial transactions and reporting in more than one currency. This enables companies that operate internationally to accurately record, track and report their financial activities across various currencies.

What are period end accounts?

Period end accounts are financial statements prepared at the end of an accounting period. They summarise a company's financial performance and position, including the income statement, balance sheet and cash flow statement.

What is a proforma invoice?

A proforma invoice is an initial bill issued by a company or individual seller to a buyer, detailing the estimated cost of goods or services before the actual transaction occurs.

What is purchase order processing?

Purchase order processing refers to the handling and documentation of purchase orders, from their creation to approval, issuance and reconciliation, ensuring efficient procurement and financial control within a company.

What is a purchase requisition?

A purchase requisition is a formal request submitted by an employee or department to the purchasing department, requesting approval for the procurement of goods or services.

What is revenue recognition?

Revenue recognition refers to the acknowledgement of income when it's earned and realised, irrespective of when cash is received, ensuring accurate financial reporting.

What are Special Purpose Vehicles (SPVs)?

Special Purpose Vehicles (SPVs) are legal entities created for specific financial purposes, for example to isolate financial risk, facilitate complex transactions or to help an organisation be more tax efficient.

What is a stock adjustment?

Stock adjustment is the process of altering inventory levels to reflect accurate stock quantities. This is usually carried out to resolve discrepancies identified through stocktaking or accounting reconciliation.

What is a stock transfer?

A stock transfer involves relocating inventory from one location or department to another within a company, reflecting the movement of goods in the accounting records.

What is strategic financial management?

Strategic financial management involves the planning and implementation of long-term financial plans and policies to achieve the company's goals, maximise shareholder value and effectively mitigate risks.

What is time tracking software?

Time tracking software enables companies to monitor and record the hours spent by employees on various tasks or projects, facilitating accurate payroll management, project costing and resource allocation.

iplicit integrates with a wide range of third-party platforms, including:

Built to integrate

An MRP (Material Requirements Planning) solution designed for small to medium manufacturers.

blackbaud Raiser’s Edge NXT

A constituent relationship management (CRM) solution designed for helping the fundraising efforts of nonprofits.

BrightPay

An easy-to-use solution that allows you to automate tasks and reduce the time needed when processing payroll.

Earnie

A payroll solution developed for UK organisations with over 250 employees.

Gold-Vision

A CRM and integrated sales and marketing solution.

HubSpot

An enterprise-level CRM and sales and marketing solution.

IRIS Payroll Professional

Cloud-based payroll software used by over 280,000 organisations.

Lightyear

Consolidates your purchasing, bookkeeping and bill approval within one intuitive cloud platform

Magento

An open-source content management system designed specifically for e-commerce retailers.

Power BI

An interactive data visualisation software product with a primary focus on business intelligence.

Salesforce

A CRM platform focused on sales, customer service, marketing automation, e-commerce, analytics and application development.

SUMS

The Student Union Management System is designed to understand, organise and utilise student membership data.

RCS TRAXX

A comprehensive procurement, fixed asset management, and ticketing software

Unleashed

Cloud-based software that gives companies more control over their inventory, production and sales.

XE

A specialist currency exchange & global payment solutions for the accounting industry.

Yapily

An open banking platform that enables businesses to share data and access payment infrastructure.

Yodlee

Online and mobile personal finance management (PFM) and payments solutions.