F

FACE VALUE

The amount printed on a security, such as the amount printed on paper currency, a stock certificate, bond or a mortgage. It is the nominal value. In some situations, face value is also called PAR VALUE.

FACSIMILE

See the abbreviated common usage term FAX.

FACTOR

A firm that purchases accounts receivable in exchange for cash in a factoring transaction. See FACTORING. In estimating, a standard or accepted common numerical value or relationship that is used to develop an ESTIMATE.

FACTORING

A method of obtaining cash through the sale of accounts receivable or transfer of title of accounts receivable. The amount of cash received is usually less than the value of the accounts receivable on the company books, allowing for payment to the FACTOR. In this method of financing, the purchaser, often a FACTORING COMPANY, becomes the principal (not an agent) for collection of the amounts due. The receivables are sold without recourse, meaning if the receivables are not collectible, the FACTOR cannot go back to the seller for reimbursement or file suit. In NOTIFICATION BASIS FACTORING, the seller’s customers remit directly to the factor. In NON-NOTIFICATION BASIS FACTORING, the seller handles the collections and remits the funds to the factor. See also DISCOUNT FACTORING; MATURITY FACTORING.

FACTORING COMPANY

A firm that specializes in financing of accounts receivable for other companies for a fee. See FACTORING; ACCEPTANCE COMPANY.

FACTORING HOUSE

See FACTORING COMPANY.

FACTORS OF PRODUCTION

An economist’s term for the key elements contributing to production; namely, land, labor, capital and management. Also called economic resources.

FACTORY

A manufacturing plant; a place where goods (products) are produced or manufactured. At a factory, raw materials or parts are purchased and converted into a new product (finished goods) through the application of labor (work).

FACTORY PRICE

The price charged for items on the first sale after producing them at the manufacturing plant.

FAILURE

For a business, failure is the same as BANKRUPTCY; a business that ceases to operate.

FAILURE RATIO

Of a given total of small businesses that begin operations, the percent that cannot survive; the percent that out of business because they could not make a profit. Opposite of SUCCESS RATIO.

FAIR MARKET VALUE

The most probable selling price of an item if offered for a reasonable period of time in a competitive market under average conditions.

FAIR RETURN

In small business management or when investing in a small business, a RETURN ON INVESTMENT comparable and competitive with other investments. For instance, if more can be earned by depositing an investment into a savings account, a person shouldn’t waste his or her time struggling with the problems of owning a small business. In product pricing, the price of an article as determined by the intersection of the AVERAGE TOTAL COST CURVE with the DEMAND CURVE.

FALSE ADVERTISING

Advertising that contains blatantly false or misleading information.

FAMILY BUSINESS

A business owned and controlled by the members of a single family.

FASB

See FINANCIAL ACCOUNTING STANDARDS BOARD; a private organization that sets the public accounting rules and practices for American businesses.

FAX

A means of transmitting written information by telephone. At the origin (sender), the written paper is electronically copied, then transmitted by wire and decoded onto a piece of paper at the receiving end. Thus the received copy is an exact reproduction of the original. Short for FACSIMILE.

FDIC

See FEDERAL DEPOSIT INSURANCE CORPORATION.

FEASIBILITY STUDY

An analysis of a potential business opportunity with emphasis on attainable income, probable expenses and recommendations for the most advantageous marketing approach.

FEATHERBEDDING

A practice of requiring an employer to hire more workers than are necessary for the work to be done; continuing to employ workers for jobs that are obsolete.

FED

See FEDERAL RESERVE SYSTEM.

FEDERAL

Relating to the government of the United States of America. As opposed to STATE, LOCAL or foreign government.

FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC)

A federal agency that guarantees (with limits) funds on deposit by member banks and the banks’ depositors and assists with banking regulation enforcement for monetary stability.

FEDERAL INSURANCE CONTRIBUTIONS ACT (FICA)

A federal government program (law) wherein mandatory contributions are made by employees for old age and survivor financial assistance. Also know as SOCIAL SECURITY.

FEDERAL RESERVE SYSTEM

An agency established in 1913 to regulate the monetary and banking system of the United States that regulates money supply, supervises the printing of money at the mint, acts as a clearing-house for transactions among banks, sets reserve requirements for member banks and examines member banks’ financial records to ensure they meet reserve requirements. Common nickname is “the Fed.”

FEDERAL SAVINGS AND LOAN ASSOCIATION

A federally chartered institution with a primary responsibility to accept people’s savings deposits and provide mortgage loans for residential housing.

FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION (FSLIC)

A federal agency established in 1934 to insure deposits in member savings institutions.

FEDERAL TAXES

Any of the many types of taxes paid to the U.S. government.

FEDERAL TAX IDENTIFICATION NUMBER

The number assigned by the Internal Revenue Service to a corporation or a partnership and used for recordkeeping purposes.

FEDERAL TAX I.D. NUMBER

The number assigned by the Internal Revenue Service to a corporation or a partnership and used for recordkeeping purposes.

FEDERAL TRADE COMMISSION (FTC)

A federal agency established in 1914 to foster free and fair business competition and prevent monopolies and activities in restraint of trade. The FTC administers both antitrust and consumer protection legislation.

FEEDER INDUSTRIES

Small industrial companies that provide parts or services to a major manufacturer.

FICA

See FEDERAL INSURANCE CONTRIBUTIONS ACT.

FICTITIOUS NAME

In business, a name other than the name of the person under which the business is registered. Most state laws require obtaining a fictitious name certificate or a trade name registration. Mandatory for a sole proprietorship if doing business in a name other than that of the owner. The certificate does not give exclusive use of the name to the certificate holder. A fictitious name is registered with the Secretary of State in the state in which business will be transacted and includes the address of the business as well as the names and addresses of the owners.

FIDELITY BOND

Insurance that covers employees who handle money, are entrusted with negotiable securities or are responsible for valuable assets. Such bonded persons are required by the bonding insurance company to carry out their duties and responsibilities effectively and honestly. Also called a SURETY BOND.

FIDUCIARY

A relationship that implies a position of trust or confidence wherein one person is usually entrusted to hold or manage property or money for another.

FIFO

See FIRST-IN, FIRST-OUT.

FILE

To store a document in an orderly manner to permit ease of retrieval at a future time; a cabinet for document storage. To place an original document on public record, such as a legal document. To submit a tax return for payment of taxes.

FILE 13

The waste basket; the trash can.

FINANCE

To obtain money, credit or capital for a business; also to supply money, credit or capital for a business; the money resources of a business; the managing of money. Also, a field of study at a University concerning the science of money management, credit, cash flow and similar subjects.

FINANCE CHARGE

The total of all costs in making a loan as imposed by a creditor and payable by the borrower; the cost of credit.

FINANCE COMPANY

A company engaged in making loans to individuals or businesses. Unlike a bank, a finance company does not receive deposits; it obtains financing from banks and other sources. Three general categories are: 1) CONSUMER FINANCE COMPANIES that make small loans directly to individuals; 2) sales finance companies (also an ACCEPTANCE COMPANY) that purchase consumer loans (PAPER) from others; 3) commercial finance companies (a COMMERCIAL CREDIT COMPANY) that make loans to other businesses. Businesses that do not qualify for bank credit often can obtain a loan from a COMMERCIAL FINANCE COMPANY. Businesses can make loans to customers and sell the loans to an ACCEPTANCE COMPANY.

FINANCE FEE

When making a loan, the amount charged by the lender for costs incurred in making the loan; a loan origination fee; a mortgage service charge.

FINANCIAL

Those matters of a company that relate to money. Transactions of the business affecting the FINANCIAL CONDITION of the business.

FINANCIAL ACCOUNTING

The process of financial record-keeping, data collection, financial statement preparation and analysis for use by business owners, managers, creditors and the government.

FINANCIAL ACCOUNTING STANDARDS BOARD (FASB)

An independent self-regulatory organization responsible for establishing and interpreting GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.

FINANCIAL ANALYSIS

The evaluation of accounting (financial) data and interpretation of the results to determine the company’s financial condition and performance.

FINANCIAL CONDITION

The stated financial solvency of a person or business; a personal NET WORTH statement; the value of money and property owed compared to the value of money and property owned.

FINANCIAL DATA

Information relating to the financial affairs of a business.

FINANCIAL INSTITUTION

Organizations that obtain money through deposits then lend the money to earn an income, such as a bank.

FINANCIAL LIABILITY

Being responsible for paying debts or obligations of a business, even under severe adverse financial circumstances. See also LIABILITY; FINANCIAL.

FINANCIAL PLAN

A document that describes a business owner’s expectations about money income and outgo for a period in the future and the expected future financial results.

FINANCIAL RATIOS

Measures developed for planning and control that focus on key relationships between different classifications of accounting data such as liquidity, profitability and performance. Small businesses use these ratios to compare different time periods, projects or their business to similar businesses in the same industry.

FINANCIAL STATEMENT

A written document describing the NET WORTH, EARNINGS or other monetary relationship of a person, or business; a record of financial information and financial status. The most common of the many types of financial statements are the BALANCE SHEET, the INCOME STATEMENT and the CASH FLOW STATEMENT.

FINANCIAL STRUCTURE

The composition of the right side of a BALANCE SHEET, including CURRENT LIABILITIES, LONG-TERM DEBT AND EQUITY. It is distinguished from CAPITAL STRUCTURE, which includes only long-term debt and equity.

FINANCING

The process of obtaining equity or borrowing money for a start-up business. Also refers to the money to be borrowed; a loan; a note.

FINANCING STATEMENT

A document filed to establish a creditor’s security interest in personal property (required by the Universal Commercial Code, form UCC-1); evidence of personal property as security for a debt.

FINISHED GOODS

In a manufacturing company, those products that have completed the production process and are available for delivery (sale).

FINISHED GOODS INVENTORY

An accounting of FINISHED GOODS.

FIRE

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

FIRE INSURANCE

INSURANCE coverage for risk of loss due to a fire, usually for real property and personal property.

FIRM

A general business noun describing a COMPANY and applies to all forms of business organization (corporation, partnership or proprietorship). See also COMPANY. Also means steady or unyielding; solidity with which an agreement is made or understanding has been achieved; assurance of completion of the agreement or understanding; not subject to negotiation, as in a FIRM AGREEMENT. Used as a verb in business means an agreement that is solid and not subject to negotiation; a legally binding commitment.

FIRM COMMITMENT

In lending, a written confirmation of a loan, whereby a lender will make a loan to a borrower with specific conditions such as loan amount, time period, interest rate and collateral. The firm commitment provides information to the borrower to allow processing of other activities while awaiting preparation and execution of the loan document.

FIRM ORDER

A confirmed written or verbal ORDER not subject to cancellation.

FIRM PRICE

An amount specified in an offer to sell that is not negotiable. As opposed to ASKING PRICE that is subject to negotiation before reaching final agreement on the price at which the transaction occurs.

FIRM QUOTE

An offer to sell products or services at a stated price. The seller will not negotiate a lower price; the seller will not sell for less than the quoted price or later ask a higher price. The final price of an offer that the seller is not willing to change.

FIRST-IN, FIRST-OUT (FIFO)

A method of accounting for inventory whereby the material is assumed to be sold in the chronological order in which it was received. Items purchased first are assumed to be sold before items purchased at a later date. See also LAST-IN, FIRST-OUT.

FIRST MORTGAGE

The senior loan on real estate; the mortgage recorded first. In case of default, the first mortgage holder would be paid before payment to any other creditor secured on the property, such as a SECOND MORTGAGE.

FIRST STAGE

In VENTURE CAPITAL, the initial financing of a start-up business or a new venture. See SEED MONEY.

FIRST STOP SHOP

An office established by many state governments and other agencies that provide a complete package of information for the start-up business person, including counseling, handout literature and important contacts needed for establishing a business.

FISCAL YEAR (FY)

A 12-month accounting period of business operations beginning at any date, usually starting and ending on a different day from a calendar year (January 1st). Fiscal year is used for accounting, corporate management and taxing purposes. As an example, the fiscal year of the U.S. government begins October 1st. Sometimes a fiscal year contains 13 periods of four weeks’ duration or other subdivision of a year.

FIXED ASSET

An accounting term that describes tangible property, used in the operation of a business such as buildings, machinery, fixtures, furniture and equipment. But fixed assets do not include items normally consumed in the course of business operation or production.

FIXED COST

Any cost that occurs as time passes regardless of the volume of production or sales, such as rent, real estate taxes, insurance, office staff or interest. Such an expense does not vary with volume of sales or production. As opposed to VARIABLE COST.

FIXED EXPENSES

See FIXED COST.

FIXED INCOME

An income that is received on a regular periodic basis and is in a constant amount, such as a retainer which is paid on an open account. As opposed to VARIABLE INCOME, which depends on the amount of products or services sold during the period.

FIXTURE

An article used in business to facilitate the buying or selling process, such as counters or racks.

FLEXTIME

Variable working hours that can be chosen by an employee to fit his or her personal preference.

FLOAT

In banking, the time between the issuing of a check and payment of the check by the bank. In general, the farther away the paying bank is from the deposit bank, the longer it will take for the check to clear. During this period the writer collects interest or has access to the funds. In lending, to make a loan; to extend credit to a borrower.

FLOOR PLAN

A loan using merchandise that is on display as collateral, such as automobiles on the display room floor.

FLOOR PLAN INSURANCE

Coverage by an insurance company for the merchandise that is on display (the display room floor). Usually, coverage is for the lender in the amount of the loan. Example, insurance coverage for automobiles in the dealer’s showroom.

FLOOR SPACE

Within a building, the area available to the business for operation of the business.

FLOW

A quantity per unit of time, such as a production rate per day. Also, the general trend of cash movement.

FLOWCHART

A process planning tool used to symbolically represent the steps involved in a program, process or production.

FOOT

An accounting term meaning to add a column of numbers downward on a page; thus the answer is at the foot of the page.

FORECAST

To estimate or calculate expected business results in advance. To plan the business course for the future. A document that sets down the plan. See BUSINESS PLAN; BUDGET.

FORECASTING

The process of making (beforehand) a FORECAST, plan, estimate or prediction of future events.

FOREIGN TRADE ZONE (FTZ)

A location where imported goods may be kept for a limited period of time, free of duty, until shipped to an American destination.

FORFEITURE

The loss of a right to something as a result of nonperformance of an obligation or condition.

FORGERY

The illegal act of making a false signature or counterfeiting documents.

FORM

A printed document with blank spaces to be filled in.

FORM OF BUSINESS

See BUSINESS STRUCTURE.

FORM 720

The federal government document used to report manufacturer’s and retailer’s excise taxes.

FORM 1040

The federal government document used to report income tax due for a person. See INDIVIDUAL INCOME TAX RETURN.

FORM 1099

The federal government document used to report income paid (more than $600) to a person or an independent contractor for work done, as opposed to FORM W-2 for reporting wages of employees. See INFORMATIONAL RETURN.

FORM 1120

The federal government document used to report income tax that must be paid by a corporation. Several variations of the form exist for the various corporate structures. See CORPORATE INCOME TAX RETURN.

FORM 1165

The federal government document used to report earnings (INCOME) for a partnership. See INFORMATIONAL RETURN.

FORM K-1

The federal government document used to report the proportionate share of partnership earnings to each person who participates in the partnership. See INFORMATIONAL RETURN.

FORM SE

The federal government document used to report earnings from a sole proprietorship (a self-employed person).

FORM UCC-1

A FINANCING STATEMENT document required by the Uniform Commercial Code.

FORM W-2

The federal government document used to report the amount of wages paid to an employee during a calendar year.

FOUR A

The American Association of Advertising Agencies; a trade association for advertisers that advises its members on topics such as ethics, fairness in advertising and other matters.

FRANCHISE

The right under which a person or company (FRANCHISEE) may market a product or provide a service, as granted by the proprietary owner (FRANCHISOR). The contract, defining the terms and conditions, between franchisor and franchisee is called a FRANCHISE AGREEMENT. Often a franchise is exclusive for a specified area.

FRANCHISE AGREEMENT

See FRANCHISE.

FRANCHISEE

See FRANCHISE.

FRANCHISE OPERATION

Conducting business as a franchisee or the total overall sense of being identified with doing business as a franchisee, as opposed to independent. See FRANCHISE.

FRANCHISOR

See FRANCHISE.

FRANCHISE TAX

By state law, amounts paid to a state for operation of a business under a FRANCHISE AGREEMENT.

FRAUD

Any form of deceit, trickery, breach of condition or misrepresentation by which one party attempts to gain some unfair or dishonest advantage over another. Unlike negligence, fraud is a deceitful practice or a misstatement of a material fact.

FREEBIE

Something given free of charge by a business to attract or retain customers, such as a trinket or knick-knack.

FREE ENTERPRISE

See CAPITALISM.

FREE ENTERPRISE SYSTEM

See CAPITALISM.

FREE ENTERPRISE ECONOMY

See CAPITALISM.

FREE ON BOARD (F.O.B.)

See F.O.B.

FREE TRADE

An agreement between two or more countries that promotes business by removing tax barriers; thus stimulating companies to conduct business in each other’s country.

FREE TRADE ZONE

A designated and secured area, legally outside of a country’s customs territory, where a trader may store, repack, manufacture or sell goods without paying customs duties or internal revenue taxes unless the product is moved to a customs territory.

FREIGHT BILL

See BILL OF LADING. Also, the document specifying the cost of transporting goods and requesting payment.

FREIGHT FORWARDER

A service company that handles, for a manufacturer, all the transactions and documents needed for shipment of goods.

FREIGHT OUT

Shipping expenses for delivery of merchandise to the customer. Freight out is usually included in the price of the merchandise and is therefore passed on to the customer.

FREQUENCY

The average number of times an event occurs or an activity is repeated. In advertising, the average number of times an audience is exposed to an advertisement during a given period of time. FRINGE BENEFITS See EMPLOYEE BENEFITS.

FRINGES

See EMPLOYEE BENEFITS.

FRONT END

The beginning of an activity, such as marketing in a business, as opposed to product manufacture and delivery.

FRONT-END LOADED

Better terms at the outset of a deal than in a later phase, used as an inducement to buy; an up-front charge.

FRONT MONEY

The initial payment on a deal, usually a large purchase; in venture capitalism it is called SEED MONEY.

FSLIC

See FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION.

FTC

See FEDERAL TRADE COMMISSION.

FTZ

See FOREIGN TRADE ZONE.

FULFILLMENT OF CONTRACT

See CONTRACT COMPLETION.

FULL POWER OF ATTORNEY

A POWER OF ATTORNEY that bestows total power of the signer to another person.

FUTURE VALUE

The worth, at some later date, of an investment made today, including the amount of interest that could be earned at an appropriate COMPOUND INTEREST RATE. That is, the future worth (FUTURE VALUE) is equal to the present worth (PRESENT VALUE) plus the amount of accumulated interest that would be earned. Also applies to a stream of future payments with the interest amount calculated for each payment. See also PRESENT VALUE; INTERNAL RATE OF RETURN; TIME VALUE OF MONEY; INWOOD TABLE.

FV

See FUTURE VALUE.

FY

See FISCAL YEAR.

 

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