A
Accounts Payable
The amount of money a company owes to its suppliers for goods and services purchased on credit
Accounts Receivable
The amount of money owed to a company by its customers for goods or services sold on credit.
Accrual Accounting
An accounting method that records revenue and expenses when they are earned or incurred, regardless of when cash is exchanged.
Amortization
The process of spreading out the cost of an intangible asset over its useful life.
Approval Workflow
An approval workflow is a structured process for obtaining authorization on documents or requests within an organization. It involves submitting items for review, routing them to appropriate approvers, collecting decisions, and notifying stakeholders. This systematic approach ensures accountability, compliance, and efficient decision-making.
Asset
Resources owned by a company, such as cash, inventory, property, and equipment.
Asset Classes
Asset classes refer to categories of investments with similar characteristics and behaviors that investors use to diversify their portfolios and manage risk. Common asset classes include equities (stocks), fixed-income securities (bonds), cash equivalents, real estate, and alternative investments like commodities and private equity. Each asset class has unique risk and return characteristics, and investors allocate their assets across different classes based on their investment goals, time horizon, and risk tolerance.
Auditing
The independent examination of a company’s financial statements and accounting records by a certified public accountant (CPA) or external auditor to assure their accuracy and compliance with accounting standards and regulations.
Automation
The use of technology to perform repetitive tasks or processes with minimal human intervention, improving efficiency and reducing errors.
B
Balance Sheet
A financial statement that shows a company’s financial position at a specific point in time, including its assets, liabilities, and equity.
Bulk Payout
Bulk payout involves processing a large volume of payments to multiple recipients simultaneously. It is commonly used by businesses, financial institutions, and government agencies to streamline payment processes and disburse funds efficiently. Bulk payouts can be executed through electronic funds transfer (EFT), batch processing, or specialized payment platforms, enabling organizations to save time, reduce administrative costs, and improve cash flow management.
BVN (Bank Verification Number)
BVN is a unique identification number issued by banks in Nigeria to individual bank account holders. It is a biometric-based identification system that links all accounts of an individual across different banks, providing a centralized means of identity verification. BVN helps to prevent fraud, identity theft, and unauthorized access to bank accounts by verifying the identity of account holders through their biometric data, such as fingerprints and facial recognition.
C
Capital
Financial resources available for use in the production of goods or the provision of services, including funds invested in a business.
Cash Basis Accounting
An accounting method that records revenue and expenses when cash is received or paid.
Cash Flow
The movement of money into or out of a business, including incoming and outgoing payments.
Cash Flow Statement
A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, categorized into operating, investing, and financing activities.
Chart of Accounts
A list of all the accounts used by a company to record financial transactions, typically organized systematically for easy reference and reporting.
Collections
The process of obtaining payment from customers who have outstanding invoices or accounts receivable.
Cost of Goods Sold (COGS)
The direct costs attributable to the production of goods sold by a company.
Cybersecurity
Practices and measures taken to protect computer systems, networks, and data from unauthorized access, cyberattacks, and data breaches.
D
Day Payables Outstanding (DPO)
How long, on average, it takes a company to pay its suppliers or vendors for goods or services received. It is calculated by dividing the average accounts payable by the cost of goods sold (COGS) per day.
Day Sales Outstanding (DSO)
The average number of days it takes for a company to collect payment from its customers for goods or services sold.
Debt-to-Equity Ratio
A financial ratio indicating the proportion of debt relative to equity used to finance a company’s assets.
Depreciation
The allocation of the cost of a tangible asset over its useful life for accounting and tax purposes.
Dividend
A distribution of a portion of a company’s earnings to its shareholders.
Double-Entry Accounting
A system of accounting in which every transaction is recorded with at least one debit and one credit entry to ensure that the accounting equation (Assets = Liabilities + Equity) remains balanced.
E
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization)
A measure of a company’s operating performance, excluding non-operating expenses.
Equity
The residual interest in the assets of an entity after deducting liabilities; represents an ownership interest in a company.
Expenses
Costs incurred in the process of generating revenue, such as salaries, utilities, and rent.
Expense Management
Expense management involves the systematic tracking, control, and optimization of an organization’s expenses. It encompasses processes such as budgeting, reimbursement, approval workflows, and reporting to ensure efficiency, compliance, and cost savings.
The goal is to effectively monitor and manage expenses across all departments and activities, ultimately contributing to improved financial health and performance.
F
Financial Ratio
A quantitative analysis tool used to evaluate various aspects of a company’s financial performance, liquidity, solvency, and profitability
Financial Statement
A formal record of the financial activities and position of a business, organization, or individual, typically presented in a structured format. It includes key information such as income, expenses, assets, liabilities, and equity, providing insights into the entity’s financial performance and condition over a specific period. Common types of financial statements include the balance sheet, income statement, cash flow statement, and statement of changes in equity.
Financial Statement Analysis
The process of analyzing a company’s financial statements to evaluate its performance, financial health, and future prospects.
Fraud
Fraud refers to the intentional deception or misrepresentation of financial information or activities with the purpose of gaining an unlawful financial benefit. This can involve falsifying financial statements, embezzling funds, misreporting expenses, or manipulating transactions to deceive stakeholders such as investors, creditors, or regulatory authorities. Financial fraud typically leads to financial loss for victims and legal consequences for perpetrators.
G
GAAP (Generally Accepted Accounting Principles)
A set of accounting standards, principles, and procedures used to prepare and standardize financial statements in the United States.
Gross Profit
Revenue minus the cost of goods sold (COGS); represents the profit before deducting operating expenses.
H
Hedge Fund
An investment fund that pools capital from accredited individuals or institutional investors and invests in a variety of assets using different strategies.
I
Institute of Chartered Accountants of Nigeria (ICAN)
A professional accounting body in Nigeria established by an Act of Parliament, the ICAN Act of 1965. It is the sole organization in Nigeria with the authority to train and certify chartered accountants.
Income Statement
Also known as a profit and loss statement, it shows a company’s revenues, expenses, and net income over a specific period.
International Financial Reporting Standards (IFRS)
A set of accounting standards developed by the International Accounting Standards Board (IASB) for global use.
Instant Settlement
Instant settlement refers to the real-time transfer of funds between parties, providing immediate access to the transferred amount. It eliminates the delays associated with traditional payment methods, such as bank transfers or checks, and enables instantaneous transactions, particularly in digital payment systems and peer-to-peer (P2P) transfers. Instant settlement enhances liquidity, improves financial flexibility, and enhances the overall efficiency of payment processing.
Internal Controls
Policies, procedures, and systems implemented by a company to ensure the accuracy, reliability, and integrity of its financial reporting and safeguard its assets.
Inventory
The goods or materials that a company holds for resale or production. It represents an asset on the company’s balance sheet and includes raw materials, work-in-progress, and finished goods.
Invoice
A document issued by a seller to a buyer, indicating the products, quantities, and agreed prices for products or services provided.
Invoice Financing
A form of short-term borrowing that allows businesses to obtain cash advances based on their outstanding invoices.
J
Journal Entry
The recording of a financial transaction into the accounting system of a company, typically consisting of a date, accounts debited and credited, and a brief description of the transaction. It serves as the primary record-keeping mechanism for tracking and documenting financial activities, ensuring accuracy in financial reporting and compliance with accounting standards.
K
Key Performance Indicators (KPIs)
A measurable metric used to evaluate the financial performance and effectiveness of a company in achieving its financial goals and objectives. These metrics can include profitability ratios, liquidity ratios, efficiency ratios, and other financial indicators that provide insights into the company’s financial health and performance.
L
Ledger
A book or electronic system used to record and organize all the financial transactions of a business, typically categorized by accounts such as assets, liabilities, equity, revenue, and expenses.
Liabilities
Financial obligations or debts that a company or individual owes to external parties, which may include loans, accounts payable, or accrued expenses.
Liquidity
The ability of a company to meet its short-term obligations with its current assets.
M
Managerial Accounting
The use of financial information and analysis to aid internal decision-making processes within a company, focusing on planning, controlling, and optimizing business operations.
N
Net Income
The total amount of revenue minus total expenses, also known as the bottom line or profit.
NIN (National Identification Number)
NIN is a unique identification number issued by the National Identity Management Commission (NIMC) in Nigeria to all citizens and legal residents. It serves as the primary means of identification for individuals in various transactions and interactions with government agencies and private organizations. NIN is mandatory for accessing government services, obtaining passports, driver’s licenses, voter registration, and opening bank accounts. It provides a centralized database of citizens and residents, facilitating efficient service delivery and enhancing security measures.
NUBAN (Nigeria Uniform Bank Account Number)
NUBAN is a banking system introduced by the Central Bank of Nigeria (CBN) to standardize bank account numbers in Nigeria. It assigns a unique 10-digit number to each bank account, ensuring accuracy and efficiency in electronic transactions. NUBAN facilitates interbank transfers, direct debits, and other electronic payments by providing a consistent format for identifying bank accounts across all financial institutions in Nigeria.
O
Operating Expenses
The ongoing costs incurred by a business to maintain its day-to-day operations, such as rent, utilities, wages, and supplies.
P
Payment Gateway
A service that facilitates online payments by transferring information between a payment portal (such as a website or mobile app) and the acquiring bank.
Payout
Payout refers to the distribution of funds or payments to recipients or beneficiaries. It encompasses various methods such as bank transfers, cash payments, checks, or digital wallets, depending on the nature of the transaction and the preferences of the payee. Payouts can occur in different contexts, including salary disbursement, supplier payments, dividend distribution, or insurance claims settlement
Payroll
The process of calculating and disbursing compensation to employees for their work within a company or organization.
Profit
The amount of money a business earns after deducting all expenses from its revenue.
Profit Margin
The ratio of net income to revenue, indicating the percentage of revenue that translates into profit.
Payment Solution Service Provider (PSSP) License
A PSSP (Payment Solution Service Provider) license, issued by the Central Bank of Nigeria (CBN), authorizes companies to offer payment processing services in Nigeria. This includes facilitating the electronic transmission of payment instructions between buyers, sellers, and financial institutions. PSSP license holders are responsible for providing secure, efficient payment gateways and platforms for online, mobile, and other forms of digital transactions. The license ensures that PSSP providers adhere to regulatory standards, promoting safe and reliable financial services in the country.
Q
Quick Ratio
A financial metric used to assess a company’s ability to meet its short-term liabilities with its most liquid assets, excluding inventory. It provides insights into a company’s liquidity and short-term financial health. Also known as the acid-test ratio.
R
Reconciliation
The process of comparing financial records or accounts to ensure they are accurate and in agreement.
Reimbursement
Reimbursement refers to the process of compensating an individual or entity for expenses they have incurred on behalf of a company or organization. This typically involves repaying employees, contractors, or stakeholders for business-related expenses, such as travel, meals, supplies, or other approved costs, in accordance with the organization’s expense policies. Reimbursement ensures that the individual is not financially disadvantaged for covering costs related to business operations.
Return on Investment (ROI)
A measure of the profitability of an investment, calculated as the ratio of net profit to the initial investment.
Revenue Recognition
The accounting principle that determines the timing and conditions under which revenue is recognized or recorded in the financial statements of a company.
S
Settlement
Settlement is the process of finalizing a financial transaction, where funds are transferred from one party to another to fulfill an obligation or complete a trade. It involves the exchange of payment instructions, verification of funds availability, and confirmation of transaction details. Settlement can occur through various channels, including banks, clearing houses, payment processors, or digital payment platforms, depending on the nature of the transaction and the parties involved. It is a crucial step in completing financial transactions and ensuring the integrity of the payment system.
Supply Chain
The sequence of processes involved in the production and distribution of goods, from the raw materials to the end consumer.
Stock
A type of security that represents ownership in a corporation, providing shareholders with a claim on assets and earnings.
Switch Code
A switch code, also known as a sort code or routing number in other countries, is a unique identifier assigned to each bank branch within a banking system. In Nigeria, the switch code is used for routing interbank transactions and identifying the specific bank branch involved in a transaction. It typically consists of a six-digit numerical code and is essential for ensuring the smooth processing of electronic payments and transfers between different banks.
T
Trial Balance
A list of all the ledger account balances of a company at a specific point in time, used to verify that the total debits equal the total credits.
Two-Factor Authentication (2FA)
A security process in which users provide two different authentication factors to verify their identity, typically involving something they know (e.g., a password) and something they have (e.g., a smartphone).
U
Unearned Revenue
Money received by a company in advance for goods or services that have not yet been provided to the customer.
V
Vendor Management Software (VMS)
This is a digital solution that centralizes vendor information, streamlines contract management, monitors performance and facilitates communication. It automates processes like vendor onboarding, compliance tracking, and invoice management to optimize vendor relationships and mitigate risks.
Y
Yield
The return on an investment, typically expressed as a percentage, representing the income generated relative to the initial investment.
Z
Zero-Based Budgeting
A budgeting method where expenses must be justified for each new period, starting from a base of zero, rather than using historical budgets as a reference point.