Plain-English definitions of 120+ terms every trade and small business should know — invoicing, payments, tax, accounting, and legal.
A document a business sends a customer requesting payment for goods or services.
A non-binding written quote of the cost of a job, sent before work begins.
A fixed-price offer to perform a job that, once accepted, is binding.
Proof that a customer has paid for goods or services.
A preliminary invoice sent before work or shipment to confirm terms.
A document issued by a seller that reduces the amount a buyer owes.
A document that increases the amount a buyer owes after the original invoice.
A unique, sequential identifier assigned to each invoice.
A formal request from a buyer authorizing a seller to perform work or ship goods.
Time spent on work the customer can be charged for.
An individual charge on an invoice — one part, service, or fee per row.
The sum of all line items before tax, discounts, or fees.
An upfront payment that reserves the job or covers materials.
A portion of a contract amount withheld until the project is complete.
Invoicing a long job in installments tied to completion milestones.
Billing tied to specific project milestones rather than time elapsed.
An invoice automatically generated and sent on a schedule.
An invoice cancelled by zeroing its total while keeping its record.
An invoice still unpaid after its due date.
A summary of unpaid invoices grouped by how overdue they are.
Money customers owe you for invoiced but unpaid work.
Money you owe suppliers for goods or services received but not yet paid.
The interval between recurring invoices for an ongoing service.
The written description of exactly what work is included in a job.
A signed addendum modifying the price, scope, or schedule of an existing job.
A flat charge to cover the cost of driving to the job site.
A flat fee charged just for showing up and diagnosing the problem.
A charge for the time spent identifying the problem before quoting a repair.
The smallest amount a business will bill for a job regardless of actual time spent.
Charging a fixed price for a job regardless of how long it actually takes.
Billing actual hours worked plus actual cost of materials with markup.
The percentage added to your cost to determine the customer-facing sell price.
Profit as a percentage of the sell price (price − cost) ÷ price.
An invoice issued specifically to collect an upfront deposit.
The closing invoice that nets out all deposits, progress payments, and change orders.
Payment terms requiring full payment within 30 days of the invoice date.
The rules a customer agrees to about how and when they'll pay.
Payment terms requiring the customer to pay as soon as they get the invoice.
A penalty added to past-due invoices to encourage on-time payment.
An electronic bank-to-bank transfer over the US Automated Clearing House network.
A same-day bank transfer of funds, typically used for large or international payments.
A payment made by credit or debit card, processed online or in person.
Accepting contactless card and wallet payments using just a phone.
A payment processor that lets businesses accept cards, ACH, and wallets online.
A web link the customer clicks to pay an invoice online.
A surcharge added when a customer chooses a more expensive payment method.
Returning money to a customer for a paid invoice or a portion of it.
A forced refund initiated by the customer's card issuer disputing the charge.
The business bank account where payment processors deposit your funds.
The process of transferring funds from a payment processor to your bank.
The fee a card network charges your processor for moving the transaction.
Know-Your-Customer / Know-Your-Business identity verification required by processors.
The transfer of collected funds from a processor to your bank account.
A payment that covers part of an invoice but not the full balance.
An agreed schedule for paying off an invoice in installments.
A tax on the sale of goods (and sometimes services) collected from the customer at checkout.
A tax owed on items bought tax-free and used in a state that would normally tax them.
A connection to a state that obligates you to collect that state's sales tax.
A document a buyer provides proving they're exempt from sales tax on a purchase.
US tax forms reporting payments to independent contractors and other non-employees.
A US tax form independent contractors complete so payers can issue them a 1099.
A federal tax ID issued to US businesses by the IRS.
A generic term for any government-issued number that identifies a taxpayer.
A consumption tax used outside the US, levied at each stage of production.
A broad consumption tax used in Canada, Australia, India, and other countries.
Tax withheld from a payment by the payer and remitted directly to the government.
A business expense that reduces taxable income.
Deducting the cost of business driving from taxable income.
Quarterly tax payments self-employed people make to cover income and self-employment tax.
The Social Security + Medicare tax (15.3%) paid by self-employed people.
Recording income when cash is received and expenses when cash is paid.
Recording income when earned and expenses when incurred, regardless of cash timing.
The net movement of cash into and out of a business over a period.
A statement summarizing revenue minus expenses over a period.
A snapshot of what a business owns, owes, and is worth at a point in time.
Total money earned from sales before any expenses are subtracted.
Net profit as a percentage of revenue.
Direct costs of producing the goods or services you sold.
Indirect costs of running the business — rent, insurance, software, admin pay.
Spreading the cost of a long-lived asset over its useful life for tax purposes.
A complete chronological record of every change made to a financial document.
Matching your books against your bank statement to confirm every transaction.
An invoice unlikely to ever be collected and written off the books.
Removing an asset, expense, or uncollectible debt from the books.
The list of categories a business uses to classify every transaction.
A legal claim against a property by a contractor who hasn't been paid for work performed.
A notice sent early in a job preserving the right to file a mechanic's lien later.
A written agreement defining the work, price, and terms between two parties.
A promise that work or parts will perform as described for a defined period.
A contract term shifting financial responsibility for certain risks to the other party.
Insurance covering claims for bodily injury and property damage you cause to others.
Insurance covering employee medical bills and lost wages from work-related injuries.
A self-employed person hired to perform specific work under contract.
The written rules governing use of a product or service.
A contract clause excusing performance when an unforeseeable event prevents it.
The price a contractor charges per hour of work.
The hourly rate billed for skilled labor — distinct from a tech's actual wage.
The fully loaded cost of an employee — wage plus taxes, insurance, and benefits.
The percentage of paid hours that are billable to customers.
A fee charged for an unscheduled or after-hours visit.
A list of small items remaining at the end of a construction job.
Gradual expansion of project work beyond the original scope without compensation.
A specialist hired by a general contractor to perform a portion of the work.
The lead contractor responsible for coordinating a construction project.
Skilled trades that build, remodel, or repair structures.
Government authorization required before performing certain types of work.
A required visit by a code official to verify work meets local building standards.
Assigning jobs to specific technicians and managing the daily schedule.
Coordinating multiple technicians across jobs, schedules, and skill sets.
A potential customer who has shown interest but hasn't booked yet.
The percentage of leads (or quotes) that become paying jobs.
A person or business that has paid for goods or services.
Total profit expected from a customer over the entire relationship.
The total marketing and sales cost to land one new customer.
How a business sets the prices it charges for goods and services.
A reduction in price offered to a customer.
Recommending a higher-priced version of the product or service a customer is buying.
Recommending related products or services alongside what the customer is already buying.
A public rating and comment left by a customer about a business.
A new customer who came in via recommendation from an existing one.