Invoice & Business Glossary
Clear, simple definitions for invoicing and business terms. Perfect for UK freelancers, sole traders, and small business owners. 35 terms and counting.
A
Accounts Payable
Accounts payable (AP) is the money a business owes to its suppliers for goods or services received but not yet paid for.
Accounts Receivable
Accounts receivable (AR) is the money owed to a business by its customers for goods or services delivered but not yet paid for.
Aged Debtor Report
An aged debtor report (aged receivables report) categorises outstanding invoices by how long they have been overdue, helping businesses prioritise collections.
B
C
Cash Flow
Cash flow is the movement of money into and out of a business over a given period, determining whether the business has enough cash to meet its obligations.
CIS (Construction Industry Scheme)
CIS is a UK tax scheme where contractors deduct money from subcontractor payments and pass it to HMRC as advance tax payments.
County Court Judgment (CCJ)
A County Court Judgment is a court order confirming that a person or business owes a debt, which severely impacts their credit rating for up to 6 years.
Credit Note
A credit note is a document issued by a seller to reduce the amount a buyer owes, typically for returned goods, overcharges, or discounts.
D
Debt Recovery
Debt recovery is the process of pursuing payment of overdue invoices, ranging from informal chasing through to formal legal action.
Digital Records for Tax
Digital records are electronically stored business and financial records that meet HMRC requirements under Making Tax Digital.
Direct Debit
A direct debit is an instruction from a customer authorising a business to collect varying amounts from their bank account on agreed dates.
Disbursement
A disbursement is a cost you pay on behalf of your client that you then recover through your invoice, passed on at cost without markup.
F
G
I
L
M
Making Tax Digital (MTD)
Making Tax Digital is HMRC's initiative requiring businesses to keep digital records and submit tax returns using compatible software.
Margin vs Markup
Margin is profit expressed as a percentage of the selling price, while markup is profit expressed as a percentage of the cost price.
Mediation
Mediation is a voluntary process where an independent third party helps two disputing parties reach an agreement without going to court.
Money Claims Online (MCOL)
Money Claims Online (MCOL) is the UK government's digital service for making court claims to recover money owed, typically for unpaid invoices under £100,000.
N
P
Payment on Account
A payment on account is an advance payment made towards a future or existing liability, commonly referring to HMRC's system of collecting Self Assessment tax in two instalments.
Pre-Action Protocol
Pre-Action Protocols are steps the court expects parties to take before starting legal proceedings, including sending a Letter Before Action and considering mediation.
Pro Forma
Pro forma refers to a method of presenting financial information based on assumptions or projections, most commonly seen in pro forma invoices and pro forma financial statements.
Proforma Invoice
A proforma invoice is a preliminary bill sent before goods are delivered or services are completed, showing the estimated costs and terms.
Purchase Ledger
A purchase ledger (also called a bought ledger or creditors ledger) is the accounting record of all purchases made on credit and payments made to suppliers.
Purchase Order
A purchase order (PO) is a commercial document issued by a buyer to a seller, authorizing a purchase and specifying the items, quantities, and agreed prices.
R
Remittance Advice
A remittance advice is a document sent by a payer to inform the recipient which invoices are being paid by a specific payment.
Retention
Retention is a percentage of a construction payment withheld by the client until the project is satisfactorily completed and defects are rectified.
S
Self-Billing
Self-billing is an arrangement where the buyer creates the invoice on behalf of the seller, based on goods received or services rendered.
Standing Order
A standing order is a fixed, regular payment set up by the payer through their bank to automatically transfer a set amount to another account on a specified schedule.
Statement of Account
A statement of account is a document summarising all invoices, payments, and credits between a supplier and customer over a period, showing the outstanding balance.
Statutory Late Payment Interest
Statutory interest is the legal right of UK businesses to charge interest on overdue commercial invoices under the Late Payment of Commercial Debts Act 1998.
T
V
Ready to Create Professional Invoices?
Now you know the terms - put them into practice. Create your first invoice in under 60 seconds with Experi.