B

BACKLOG

The sum of unfilled orders, expressed as a dollar value as of the date prepared; the amount of work that must be performed by the business without counting additional orders received after the date of preparation.

BACK-ORDER

Items that are not immediately available for shipment to a customer but will be shipped at a later date. Often occurs when several items are ordered simultaneously but only part of the order is delivered; the remaining items are said to be on back-order.

BACK-TO-BACK LEASE

An agreement made by a landlord as a concession to a prospective tenant, in which the landlord agrees to take over the tenant’s existing lease in return for the tenant’s agreement to lease existing space in the landlord’s commercial building.

BAD CHECK

A check that is uncollectible.

BAD CREDIT RATING

Inability to get credit because of a poor record of paying loans, notes, accounts payable, or other obligations; cause for distrust by a lender for extending credit. See CREDIT RATING.

BAD DEBT

An open account balance or loan that is proved to be uncollectible and is written off.

BAIT AND SWITCH

In retail, an unethical practice (illegal in some locations) of advertising that lures customers into a store to buy a product that is not available and then urges them to buy other products that may be more profitable to the store.

BALANCE

Whatever money amount is left over as a remainder amount, such as the amount still due to be paid. In accounting, the equality of debits and credits in an account or an expression of the difference between the debits and credits. When used as a verb, “to balance” means to bring both sides into equality, that is, to make debits and credits equal. A common expression is “to balance the checkbook,” meaning to verify that your record reconciles with the statement received from the bank.

BALANCED BUDGET

A budget in which total expenditures equal total revenues, no more and no less.

BALANCE SHEET

A FINANCIAL STATEMENT of an individual or firm showing assets, liabilities and net worth on a given date, usually the close of a month. One way of looking at a business is the value of things owned (ASSETS) listed beside the debts owed to others (LIABILITIES), along with the amount owed to the owners (NET WORTH or OWNER’S EQUITY). Assets are equal to the sum of liabilities and equity. Therefore, a balance sheet is a listing of the items making up the two sides of the equation. A balance sheet shows the state of affairs at one point in time. Whereas, an INCOME STATEMENT shows financial progress over a period of time.

BANK

An official government-chartered establishment for receiving, keeping and lending money. A bank makes it easier to exchange money, for instance, by a check. Also the building that houses the offices of the establishment; to deposit money in or do business with a bank.

BANK ACCEPTANCE

A bill of exchange (DRAFT) drawn by a bank and accepted by it.

BANK ACCOUNT

Money deposited in a bank and subject to withdrawal by the depositor.

BANK CARD

A document issued to a customer of a bank that allows the customer to perform some banking transactions with automated tellers rather than with a human attendant (teller). Not to be confused with a CREDIT CARD.

BANK CHARGE

A fee for services performed by a bank; a BANK SERVICE FEE. Also, to purchase an item charged to a credit card issued by a bank.

BANK CHECK

Any of several checks issued by a bank, such as a CASHIER’S CHECK, CERTIFIED CHECK or BANK DRAFT.

BANK CREDIT

The approval by a bank that a customer can borrow from the bank; a good credit standing with a bank.

BANK DRAFT

A bill of exchange (DRAFT) drawn by a bank on another bank. See DRAFT.

BANKER

A person who owns or manages a BANK. See BANK.

BANKER’S ACCEPTANCE

See BANK ACCEPTANCE.

BANK HOLDING COMPANY

A company that owns other banks; a bank for another bank.

BANKING RELATIONS

The mutual respect and cooperative trust between a bank and its customers.

BANK LINE

See LINE OF CREDIT by a bank.

BANK LOAN

Money borrowed from a bank. See also LOAN; DEBT.

BANK LOAN APPLICATION

The form used by a bank to evaluate the credit worthiness of a potential borrower. When completing a loan application, provide the maximum amount of detail to permit the loan officer to make a fair evaluation of the need for the money, including equity, collateral and ability to repay the loan.

BANK NOTE

Paper money issued by a commercial bank.

BANK PARTITIONS

Floor fastened short walls of about five feet in height that are used to divide a large office area into smaller spaces, commonly called cubicles.

BANKRUPTCY

A condition of insolvency by a person or business in which liabilities exceed assets and the debtor is unable to repay amounts owed. Bankruptcy is voluntary when the debtor brings the petition to a court; or the bankruptcy is involuntary when a creditor petitions the court to force insolvency. In both cases, the objective is an orderly and equitable settlement of obligations.

BANK SERVICE FEE

An amount of money paid to a bank in exchange for the bank performing transactions or service functions.

BANK STATEMENT

A document provided by a bank showing the increases in amounts (DEPOSITS) and decreases in amounts (CHECKS and WITHDRAWALS) on the account held for a business during a given period.

BAR CODE

Identification (in the form of stripes or bars) on a product that identifies the manufacturer and the specific product. Of the many types of bar code systems, UNIVERSAL PRODUCT CODE (UPC) and STOCKKEEPING UNIT (SKU) are used for specific types of products in retail trade.

BARGAIN

As a noun, sale of a product for less than its fair market value. When used as a verb, bargain means to negotiate.

BARGAIN SALE

A sale for less than the usual price. See BARGAIN.

BARRIER TO COMPETITION

Any circumstance that makes it difficult for a new business to enter an industry. Examples are the exclusive ownership of a unique resource, economies of scale, patents, licenses and copyrights.

BARTER

Merchandise or services exchanged directly for other merchandise or services without the use of money. Barter is particularly important in international trade when the currency of the foreign country is not readily convertible.

BASE PERIOD

A starting point or time interval for calculating business and economic data.

BASIS

In taxing analysis, the purchase price of an ASSET, plus the value of CAPITAL IMPROVEMENTS, reduced by ACCUMULATED DEPRECIATION. All property has a basis for taxing by the IRS.

BASIS POINT

One one-hundredth of one percent when describing changes in interest percentages. Used to describe the amount of change in the market price of bonds and many debt instruments.

BDC

See BUSINESS DEVELOPMENT CORPORATION.

BEGINNING BALANCE

The amount on hand at the start of a period.

BELLY-UP

The state of a company when it becomes illiquid or unprofitable and ceases operation.

BETTER BUSINESS BUREAU

An association of businesses (including many types of businesses) in a given locality that have joined together to promote the improvement, advancement, professionalism and credibility of the businesses in the area.

BIANNUAL

Occurring twice a year; semiannual.

BID

An offer to purchase for a specified amount. As opposed to a willingness to sell at an ASKING PRICE. A PROPOSAL by a business to perform work at a price by a date. Often, bids contain very detailed written descriptions of the work to be performed, the methods to be used, etc.

BID AND ASKED

The amount buyers are willing to pay (BID) and the amount sellers expect to receive (ASKED); expressed as two different numbers.

BIDDER’S MAILING LIST

A list complied by a government agency or a business showing firms that wish to receive information on invitations for bids.

BID INVITATION

See INVITATION TO BID.

BID PRICE

The amount of an offer to purchase. As opposed to an ASKING PRICE to sell.

BIENNIAL

Occurring every two years. Sometimes a duration of two years.

BIG BOARD

The New York Stock Exchange.

BIG EIGHT

The eight largest accounting/CPA firms.

BILATERAL AGREEMENT

A formal or informal understanding between two parties.

BILATERAL CONTRACT

A contract in which each party promises to perform an act in exchange for the other party’s promise to perform. In other words, a contract cooperatively performed.

BILL

In small business, bill most often means INVOICE; a notification of an amount to be paid for goods or services performed. Also a DUE BILL; a document stating a debtor’s obligation to a creditor. Other definitions include: 1) paper currency such as a $20 bill; 2) short for a BILL OF SALE, a document used to transfer assets from seller to buyer; 3) short for DUE BILL; 4) short for TREASURY BILL; 5) short for BILL OF EXCHANGE.

BILL OF EXCHANGE

An order by one person directing a second person to pay a third person. In international transactions, a DRAFT. Also called, simply a BILL.

BILL OF LADING

A contract issued to a transportation company (a SHIPPER), listing the goods shipped, acknowledging their receipt and promising delivery to the person or business named. Sometimes called a MANIFEST; WAYBILL.

 BILL OF SALE

A written agreement by which one person sells, assigns or transfers to another his or her right or interest in personal property. The document is used to legally sell, assign or transfer title of personal property from a seller to a buyer.

BINDER

An agreement formed by the exchange of EARNEST MONEY, showing good faith to complete the purchase of real property or to show good faith in the execution of a contract. A written document giving immediate insurance coverage until the regular complete policy can be issued. Also, temporary insurance coverage until consideration of other items is completed.

BINDING

A formal agreement that has been consummated by both parties and is legally enforceable, such as a contract.

BLACKLIST

Any list that is published to restrict the activities of the items or the persons listed. As an example, a list of names circulated among employers of persons who are unacceptable because of prejudicial allegations, such as union-organizers.

BLACK MARKET

A market in which goods are traded (illegally) at prices often above a government-imposed ceiling, import quota or other control.

BLANK CHECK

A check that has not yet been written or one without a payee’s name, amount and payor’s signature. Blank check also commonly refers to freedom inadvertently given to someone else who could spend money without authorization.

BLUE COLLAR

Shop, construction or factory workers; generally people who work in skilled labor jobs, but also includes unskilled labor jobs. As opposed to WHITE COLLAR, i.e., office workers.

 BLUE-COLLAR WORKERS

Shop, construction or factory workers; generally people who work in skilled labor jobs, but also includes unskilled labor jobs. As opposed to WHITE COLLAR, i.e., office workers.

BLUE-SKY

An anticipation or projection of future business that is not realistic-in fact, so imaginary that it is unattainable.

BOARD

In business, short for the BOARD OF DIRECTORS of a corporation. May also refer to other governing bodies of other types of organizations. See BOARD OF DIRECTORS.

BOARD OF DIRECTORS

The governing body of a corporation, authorized and empowered to carry on and control the business affairs in accordance with the CHARTER. Members of the board of directors, termed DIRECTORS, are elected by the shareholders. Powers include appointing senior management, naming committee heads, issuing additional shares, and declaring dividends. Members may include top executives, termed INSIDE DIRECTORS, and members chosen from the business community at large, termed OUTSIDE DIRECTORS. Directors may own shares of stock in the corporation, but it is not mandatory unless directed by the BYLAWS. Directors meet several times a year to consider important issues concerning guidance of the corporation and to preside over the ANNUAL MEETING.

BOILERPLATE

The standard, repetitive language in a contract or document. The wording can be repeated from one contract or document to the next.

BOILERPLATE LANGUAGE

The standard, repetitive language in a contract or document. The wording can be repeated from one contract or document to the next.

BOILER ROOM

A questionable promotional technique whereby multiple “cold pitch” phone calls are made to sell products.

 BONA FIDE

Real; actual; in good faith. Without malice or deceit.

BOND

Any interest bearing or discounted security that obligates the issuer to pay the holder a specified sum of money, usually at specific intervals, and to repay the principal amount at maturity; a LONG-TERM DEBT. In finance, a bond is the obligation of a person to repay a debt of another person if that person defaults, as in a PAYMENT BOND. In insurance, a SURETY or PERFORMANCE BOND is an agreement that the insurance company will become liable (financially responsible) for performance of work or services of a contractor if the contractor fails to perform.

BONUS

An extra payment of money or privilege in excess of the customary salary as an incentive (reward) for performance. Also, in insurance, a dividend to policyholders.

BOOKKEEPER

One who works at keeping a systematic record of business transactions, more specifically, financial transactions. See also ACCOUNTANT and CERTIFIED PUBLIC ACCOUNTANT. An accountant and a certified public accountant have more education and are regarded with higher standing in the accounting profession than is a bookkeeper.

BOOKKEEPING

The act of maintaining written documentation of the financial information in a business. The work of keeping a systematic record of business transactions.

BOOKKEEPING SYSTEM

The particular method of recording transactions (DEBITS and CREDITS) in a company; the accounting techniques applied within a company.

BOOKS

Same as BOOKS OF ACCOUNT.

BOOKS OF ACCOUNT

The financial records of a business. Usually refers to the lowest level of recorded data, before summaries are made.

BOOK-TO-BILL RATIO

A comparison (ratio) of orders received to the invoices mailed.

BOOK VALUE

The value of anything as recorded in the BOOKS OF ACCOUNT of a company. An asset recorded at original cost less accumulated depreciation; the amount recorded on the balance sheet as the value of an asset. The value of the stock in a company at the original par purchase price; the par value of stocks and bonds issued by the company. Book value is contrasted with current MARKET VALUE.

BOOTSTRAP FINANCING

Obtaining money for a proposed use that is from internal sources such as tighter management control, collection of accounts receivable, delayed payments to suppliers, and advanced payments for future sales.

BORDER TAX ADJUSTMENTS

In exporting, the remission of taxes that have been paid on exported goods to ensure that the taxing system within the country does not impede exports. Reduced taxes include indirect taxes, such as sales taxes and value added taxes, but does not include direct taxes, such as income taxes for the company.

BORROW

To take or use something that belongs to another with the understanding it will be returned; especially in finance, to obtain a loan of money from another with the promise to repay.

 BORROWED CAPITAL

Money loaned to a business from another. Same as a loan. See LOAN; CAPITAL. As opposed to money invested in the business (EQUITY CAPITAL).

BORROWER

A person or business who owes money to another; a DEBTOR; one who owes money to a LENDER.

BOTTOM LINE

The net income; the last line on an INCOME STATEMENT. The end result of a financial transaction, as a PROFIT or LOSS. See NET INCOME.

BOUND RATE

In international trade, fixed tariff rates for a country that have resulted from negotiations between countries.

BOYCOTT

A refusal to transact business with a person, business or country

BRAINSTORM

An original idea that apparently arises from no organized thought process; a flood of creative ideas. Also, the structured process of BRAINSTORMING for new ideas.

BRAINSTORMING

A structured or formalized process by which participants offer original ideas to solve an existing problem. Often, participants are invited from different disciplines or businesses to stimulate originality and creativity.

BRANCH OFFICE

Any secondary place of business apart from the main office of the business.

BRAND

See BRAND NAME.

BRAND NAME

The name of a single product, a line of products or a company that produces many products. Usually, brand name is highly recognizable by consumers as having high quality and distinctive packaging.

BREACH OF CONTRACT

Violation of any of the terms or conditions of a contract without legal excuse; default; nonperformance.

BREAKEVEN

See BREAKEVEN POINT; BREAKEVEN ANALYSIS.

BREAKEVEN ANALYSIS

An evaluation of the profitability of a product, service or an entire business to determine the level of sales at which income just equals the cost. Income greater than the BREAKEVEN POINT results in a profit; whereas income below the breakeven point results in a loss. See BREAKEVEN POINT.

BREAKEVEN POINT

The amount (volume) of sales needed to cover all expenses (fixed and variable) before any profit is earned. The number of units that must be sold at a specified price to cover all contributing costs. Zero profit; a lower volume causes losses; a higher volume causes profits. Also called a BREAKEVEN.

BREAKEVEN REVENUE

The level of sales dollars required to cover all costs during an accounting period.

BREAKEVEN UNITS

The number of units that must be produced and sold in an accounting period to generate revenues sufficient to exactly cover all production costs.

BROKER

One who acts as an intermediary between parties in a transaction. A broker, for a fee or other consideration, arranges a transaction (a sale) by a seller to the buyer. A license is often required for businesses engaged in brokerage transactions.

BROKERAGE

The aspect of business concerned with bringing parties together for the transaction of business and the execution of contracts. Brokerage involves sales, exchanges and rentals.

BUDGET

A document that lists planned income and expense items along with the dollar value for each. A budget is most useful when, at a later date, actual transactions are compared to the budget for analysis and control of future decisions. Of the many kinds of budgets, a CASH BUDGET shows CASH FLOW, an EXPENSE BUDGET lists expected payments of money, and a CAPITAL BUDGET shows the anticipated payments for CAPITAL ASSETS.

BUILDING

A structure erected on land and used for the conduct of business.

BUILDING CODE

A local law specifying techniques of construction to improve safety, structural integrity or appearance.

 BUILDING PERMIT

A written government permission for the construction or improvement of building structures. Also called, simply a PERMIT.

BUILDING RESTRICTIONS

Limitations on the size or types of improvements established by public or private ZONING acts. Also may place limitations on the types of business that may be conducted.

BUILD INVENTORY

To purchase or manufacture more products than the amount sold; add a quantity to INVENTORY; a larger ending inventory than the beginning inventory.

BUILD-TO-SUIT

An understanding or contract in which an owner agrees to develop a property in return for a commitment by the lessee.

BULK TRANSFER

Any large quantity transfer of materials, supplies or inventory by a business.

BURDEN

See OVERHEAD.

BUSINESS

The line of work engaged in; the type of product or service provided; the buying or selling of products or services; commercial trade for a profit. A commercial or industrial establishment such as a store or factory that is engaged in a profit making venture.

BUSINESS ACCOUNT

A commercial credit relationship established by a business in which customers may buy now, take delivery and pay at a later date.

BUSINESS BROKER

A person or firm that arranges, for a fee, the sale of a business from a seller to a buyer; an intermediary who facilitates the transaction of selling a business. See BROKER.

BUSINESS CYCLE

Regularly recurring periods of good and bad times of profitability and cash flow in a business; fluctuations in economic activity, often as a result of seasonal variations or holiday periods. On a national scale, the recurrence of periods of expansion and contraction as measured by the GROSS DOMESTIC PROFIT (GDP).

BUSINESS DAY

The hours when most businesses in a given locality are in operation or open for business. The conventional business day is from 8 A.M. until 5 P.M. Yet individual businesses may have hours that differ from others or a business may choose staggered schedules.

BUSINESS DEVELOPMENT CORPORATION (BDC)

A financing agency or corporation composed of private and public members that pool their resources toward economic growth of a single geographic locality. The objective is to provide financing assistance for companies that cannot obtain financing through normal channels.

BUSINESS ENTITY

Same as a BUSINESS.

BUSINESS EXPANSION

Business growth into new product areas or into new territories. Also the creation of more floor space for operations.

BUSINESS FIRM

Same as FIRM or BUSINESS.

BUSINESS INTERRUPTION INSURANCE

Insurance coverage allowing financial compensation for the loss of income resulting from an act; the obligation to pay lost income that occurs from a forced stoppage of business activity.

BUSINESS LAW

That portion of the LAW that deals exclusively with legal maters of business conduct.

BUSINESS LEAD

See LEAD.

BUSINESS LIABILITY INSURANCE

Insurance coverage for risks wherein the business is legally obligated to pay the damages resulting from an event causing a loss.

BUSINESS LICENSE

A certificate issued under law by a governmental body to a business authorizing the company to engage in a specific business activity; the document for such authorization. Examples include a medical license, license to operate a truck for business and export license.

BUSINESS LIFE INSURANCE

An insurance policy purchased by a business on a PRINCIPAL of the business to protect the business from the loss incurred from the untimely death of a most important person in the business.

BUSINESS LOAN

See COMMERCIAL LOAN.

BUSINESS LOCATION

The geographical vicinity where a business is established. Often, location is an important ingredient in the success of a business, especially a small or new business.

BUSINESS MEETING

See MEETING.

BUSINESS NAME

The name or title given to a company, product or service. The intent is to create an easily recognizable identity for promotion and publicity.

BUSINESS OPPORTUNITY

The vision of an individual or firm that foresees profiting from engaging in a venture. Often this can involve the purchase of an existing business, yet it can also be the start-up of a new small business. New products and changing current operating methods of an existing business often result in a profitable venture for the entrepreneur.

BUSINESS ORGANIZATION

The way the people in a business are structured to work together; the relationship of the various functional parts of a business, such as manufacturing, engineering, marketing and accounting. See also BUSINESS STRUCTURE. The legal form of a business consisting of Sole Proprietorship, Partnership and Corporation.

BUSINESS OVERHEAD EXPENSES

See OVERHEAD.

BUSINESS PLAN

A documented expression of the facts concerning a business with a forecast of the desired future direction. It is like a roadmap or guidebook concerning where the business wants to go. A business plan usually covers one to five years of historical facts and one to five years of projections into the future. The two main uses are for guidance in decision making by the owner-manager and for presentation to a financial institution when applying for a loan. A business plan is especially important for a start-up business because it sets the course of actions necessary for survival of the business. The main elements to include in a business plan are an executive summary with a description of the firm and its future; profiles of the owner and managers; product description; a description of the industry; marketing plans; and a financial plan. See Self-Help Guide B on “How to Write a Business Plan.” See also MARKETING PLAN; FINANCIAL PLAN, LONG-RANGE PLAN; STRATEGIC BUSINESS PLAN.

BUSINESS POLICY

The general practice established within a single company or within a single business environment. Often business policy may be unwritten and therefore subject to a wide latitude of interpretation. Written policy is preferred.

BUSINESS RECORD

Any RECORD that provides information on the operation of the business, especially financial information; the written documentation of the happenings in the firm.

 BUSINESS STRATEGY

See STRATEGY.

BUSINESS STRUCTURE

In business, the legal form of a business entity, i.e., sole proprietorship, partnership or corporation. Less common business structures also exist, such as, Ltd., Limited Liability Company (LLC) and Professional Corporation (PC).

BUSINESS USE

In accounting, expenditure of money or use of property by a business. As opposed to PRIVATE USE. Do not commingle business use and private use because they are taxed differently. Particular care must be exercised in a situation where the use may be subject to interpretation.

BUSINESS VENTURE

A vision of a new product or a new service as a viable business entity; a start-up business requiring an entrepreneurial spirit.

BUY AMERICAN

A generally accepted practice of purchasing goods that are produced in the United States as opposed to purchasing imported goods. Also, a U.S. government law (and that of some states) requiring certain government procurement contracts to buy only goods produced in the United States.

BUY-BACK AGREEMENT

A provision in a sales contract whereby the seller will reacquire property within a specified period upon the happening of a specified event, usually at the original price.

BUY-DOWN

Money offered by a lender as an inducement that reduces monthly interest in a loan or mortgage payments.

BUYER’S MARKET

A market situation characterized by supply that exceeds demand. Lower prices are often found in order to attract customers. Competition and a large supply of products or services abound, allowing the buyer more control over purchases. Also called SOFT MARKET.

BUYOUT

Purchase of at least a controlling percentage of a company’s stock so as to take control of its assets and operations, often the purchase of an entire small company.

BUY-SELL AGREEMENT

An agreement among partners or shareholders in which one party will sell and another party will buy a business interest at a stated price upon occurrence of a stated event, i.e., the death or disability of one participant.

BYLAWS

Rules governing the internal management of an organization, as in a business corporation. Bylaws are drawn up by the founders under the authority of the CHARTER at the time of incorporation. Bylaws cover such points as the election of directors, the appointment of an executive committee, duties of the officers, and how share transfers are made. Bylaws cannot countermand laws of government. Bylaws can usually be amended by the directors themselves.

BE FIRED

The situation of an employee who is discharged for poor performance or an infraction of company rules. As compared with LAID OFF.

 

All definitions were taken from www.small-business-dictionary.org.