Glossary
E-commerce finance terms, explained plainly
Clear definitions, the formulas, and real examples from the businesses we work with.
Showing 196 of 196 terms
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1099-K
The IRS form payment platforms and marketplaces, like Amazon, Shopify Payments, Stripe and PayPal, send to report the gross payments they processed for you. The federal threshold is $20,000 and more than 200 transactions per platform, though some states require lower amounts.
Read definition →Tax & Compliance1099-NEC
The IRS form you send to independent contractors you paid for services during the year. For payments made in 2026 and later, the filing threshold is $2,000 per contractor (it was $600), indexed for inflation from 2027.
Read definition →Cash Flow13-Week Cash Flow Forecast
A week-by-week projection of cash in and cash out for the next quarter. It is the most practical tool for timing inventory purchases, tax payments and payroll without surprises.
Read definition →Importing & Logistics3PL (Third-Party Logistics)
An outside company that stores your inventory and picks, packs and ships your orders for you. You pay for storage, receiving, each order shipped and often a monthly minimum.
Read definition →A
Accounts Payable (AP)
Money your business owes to suppliers and vendors for goods or services you have already received but not yet paid for. It shows up as a liability on the balance sheet.
Read definition →Financial StatementsAccounts Receivable (AR)
Money customers owe your business for goods or services you have already delivered. It is an asset on the balance sheet until the cash comes in.
Read definition →Accounting BasicsAccrual Accounting
Recording revenue when you earn it and expenses when you incur them, not when cash moves. For inventory businesses it is the only way to see true monthly profit.
Read definition →Accounting BasicsAccrued Expenses
Costs you have incurred in a period but have not been billed for or paid yet. Recording them puts the expense in the right month.
Read definition →Marketing MetricsACoS (Advertising Cost of Sale)
Amazon's measure of ad efficiency: ad spend as a percentage of the sales those ads produced. It is the inverse of ROAS.
Read definition →FinancingAdd-Backs
Expenses added back to profit to show what a business really earns for a new owner, such as one-time costs, owner perks or above-market owner salary. They are used to calculate SDE and adjusted EBITDA.
Read definition →MarketplacesAged Inventory Surcharge (Amazon)
An extra monthly fee Amazon charges on FBA inventory that has been sitting in its warehouses too long. In 2026 the surcharge starts at 181 days and gets steeper as inventory ages past 271 and 365 days.
Read definition →Accounting BasicsAllowance for Doubtful Accounts
A reserve that reduces accounts receivable by the amount you expect will never be collected. It records the likely bad-debt cost before a customer actually defaults.
Read definition →MarketplacesAmazon Account Reserve
Funds Amazon holds back from your payout to cover potential refunds, A-to-z claims and chargebacks. The money is still yours, but you cannot withdraw it yet.
Read definition →MarketplacesAmazon Reimbursements
Payments Amazon makes when FBA inventory is lost, damaged or a customer return is not received back. They should be tracked and recorded against inventory, not treated as extra revenue.
Read definition →MarketplacesAmazon Settlement Report
Amazon's statement for each payout period, listing every sale, fee, refund, reimbursement and reserve behind the deposit. It is the source document for booking Amazon activity correctly.
Read definition →Accounting BasicsAmortization
Spreading the cost of an intangible asset, like software development, a trademark or a purchased customer list, over its useful life. The same word also describes paying down a loan in scheduled installments.
Read definition →RevenueAOV (Average Order Value)
The average amount a customer spends per order. Raising it spreads fixed per-order costs like shipping and acquisition across more revenue.
Read definition →MarketplacesASIN (Amazon Standard Identification Number)
Amazon's 10-character product ID that identifies each item in its catalog. Every listing, variation and sale on Amazon traces back to an ASIN.
Read definition →B
Backorder
An order you accept for an item that is currently out of stock and ship once new inventory arrives. You often collect the customer's payment before you have the product.
Read definition →Accounting BasicsBad Debt
Money owed to you that you have given up on collecting. It is written off as an expense and removed from accounts receivable.
Read definition →Financial StatementsBalance Sheet
A snapshot of what your business owns (assets), what it owes (liabilities) and what is left for the owners (equity) on a specific date.
Read definition →Accounting BasicsBank Reconciliation
Matching every transaction in your books to your bank statement so the two balances agree. Differences point to missing, duplicated or wrong entries.
Read definition →Importing & LogisticsBill of Lading (BOL)
The shipping document issued by a carrier that lists the goods being shipped, serves as a receipt and, for ocean freight, often acts as the title to the cargo.
Read definition →Costs & InventoryBill of Materials (BOM)
The list of components, quantities and costs needed to make or assemble one finished product. It is the recipe your unit cost is built from.
Read definition →RevenueBNPL (Buy Now, Pay Later)
A checkout option like Affirm, Klarna, Afterpay or Shop Pay Installments that lets customers split a purchase into payments. You are paid upfront, minus a fee that is usually higher than a card fee.
Read definition →Accounting BasicsBookkeeping
The ongoing recording, categorizing and reconciling of every financial transaction in a business, so the financial statements are accurate and up to date.
Read definition →Accounting BasicsBooks Cleanup
Fixing bookkeeping that exists but is unreliable: correcting miscategorized transactions, clearing suspense accounts, reconciling past periods and fixing inventory and COGS.
Read definition →ProfitabilityBreak-Even Point
The level of sales at which total revenue exactly covers total costs, so you make neither a profit nor a loss.
Read definition →Marketing MetricsBreak-Even ROAS
The minimum ROAS you need before ad spend starts generating profit. Below it, every sale from ads loses money after product and selling costs.
Read definition →ProfitabilityBudget vs. Actual
A report that compares what you planned to earn and spend with what actually happened, line by line, so you can see where results drifted from the plan.
Read definition →Cash FlowBurn Rate
How much cash your business loses in a month after all money in and out. A business that is cash-positive has no burn.
Read definition →MarketplacesBuy Box (Featured Offer)
The "Add to Cart" spot on an Amazon product page. When several sellers offer the same item, Amazon picks one to win it, and that seller gets most of the sales.
Read definition →C
CAC (Customer Acquisition Cost)
The average cost to acquire one new customer, including ad spend and other marketing costs.
Read definition →Accounting BasicsCapital Expenditure (CapEx)
Money spent on long-term assets, like equipment, racking, vehicles or major software builds, that will benefit the business for more than a year. It goes on the balance sheet and is depreciated over time.
Read definition →Accounting BasicsCash Basis Accounting
Recording revenue when cash comes in and expenses when cash goes out, regardless of when the sale or cost actually happened.
Read definition →Cash FlowCash Conversion Cycle
The number of days between paying your supplier and collecting cash from the customer. The longer the cycle, the more cash your growth consumes.
Read definition →Financial StatementsCash Flow Statement
The financial statement that shows where cash came from and where it went over a period, split into operating, investing and financing activities.
Read definition →Cash FlowCash Runway
How many months your business can keep operating with the cash it has, at its current rate of net cash outflow.
Read definition →Accounting BasicsCatch-Up Bookkeeping
Bringing books that are months or years behind up to date, recording and reconciling every missing transaction so the business has current, reliable financials.
Read definition →RevenueChargeback
When a customer disputes a card charge with their bank and the money is pulled back from you, usually with a dispute fee. In wholesale, the word also means a retailer deducting penalties from your invoice.
Read definition →Accounting BasicsChart of Accounts
The list of categories your bookkeeping uses to organize every transaction. A well-built chart of accounts is what turns raw transactions into reports you can make decisions with.
Read definition →Marketing MetricsChurn Rate
The percentage of customers or subscribers who stop buying or cancel during a period.
Read definition →Systems & SoftwareClass Tracking
A feature in QuickBooks (and "tracking categories" in Xero) that tags transactions by segment, such as sales channel, brand or location, so you can run a P&L for each one.
Read definition →MarketplacesClearing Account
A temporary account that holds sales, fees and refunds from a platform like Amazon or Shopify until the payout lands in the bank. When reconciled, it should net to zero.
Read definition →Costs & InventoryCOGS (Cost of Goods Sold)
The direct cost of the products you actually sold in a period, including product cost, inbound freight, duties and other landed costs. It is not what you spent on inventory; it is what left the shelf.
Read definition →Marketing MetricsCohort Analysis
Grouping customers by when they first bought, such as January 2026 buyers, and tracking how much each group spends over the following months.
Read definition →Costs & InventoryConsignment Inventory
Goods placed with a retailer who pays you only after they sell. Until then, the inventory still belongs to you and stays on your balance sheet.
Read definition →RevenueContra Revenue
Accounts that reduce gross sales, such as returns, discounts, refunds and allowances, shown separately so you can see both what you sold and what you gave back.
Read definition →ProfitabilityContribution Margin
What is left from each sale after product cost and all the variable costs of selling it, such as marketplace fees, fulfillment, shipping, payment processing and ad spend. It is the money that actually covers overhead and profit.
Read definition →Accounting BasicsController
The finance leader responsible for accurate books, monthly closes, internal controls and financial reporting. The role sits between the bookkeeper and the CFO.
Read definition →Marketing MetricsConversion Rate
The percentage of website visitors or sessions that end in a purchase.
Read definition →Financial StatementsCurrent Ratio
A liquidity measure comparing what you own that turns into cash within a year with what you owe within a year.
Read definition →Importing & LogisticsCustoms Bond
A guarantee, required by U.S. Customs and Border Protection for most commercial imports, that the importer will pay all duties, taxes and fees owed. It comes as a single-entry bond or a continuous annual bond.
Read definition →Importing & LogisticsCustoms Broker
A licensed professional who files your import entries with U.S. Customs, classifies goods, calculates duties and helps your shipments clear.
Read definition →Costs & InventoryCycle Count
Counting a small portion of your inventory on a rotating schedule instead of doing one full physical count, so every item gets checked several times a year without shutting down operations.
Read definition →D
Days Inventory On Hand (DIO)
The average number of days your inventory sits before it is sold. It translates inventory turnover into time, which is easier to plan cash around.
Read definition →Cash FlowDays Payable Outstanding (DPO)
The average number of days you take to pay your suppliers. A higher DPO means you hold onto cash longer.
Read definition →Cash FlowDays Sales Outstanding (DSO)
The average number of days it takes to collect cash after a sale. For DTC brands it reflects payout timing; for wholesale it reflects how fast customers pay invoices.
Read definition →Importing & LogisticsDe Minimis (Section 321)
The U.S. rule that once let low-value shipments (under $800) enter duty-free. Duty-free de minimis treatment has been suspended for imports from all countries since August 2025, and that suspension remains in effect.
Read definition →Costs & InventoryDead Stock
Inventory that has not sold for a long period, usually 6 to 12 months, and is unlikely to sell at full price. It ties up cash and storage and often needs to be written down.
Read definition →FinancingDebt Service Coverage Ratio (DSCR)
A lender's measure of whether your business earns enough to cover its loan payments. Below 1.0 means profits do not cover the debt.
Read definition →Financial StatementsDebt-to-Equity Ratio
How much of the business is funded by borrowing compared with the owners' money. Higher means more leverage and more risk.
Read definition →RevenueDeferred Revenue
Cash collected from customers for products or services you have not delivered yet, such as pre-orders, subscriptions paid in advance or unredeemed gift cards. It is a liability until you deliver.
Read definition →Accounting BasicsDepreciation
Spreading the cost of a physical long-term asset, like equipment, vehicles or racking, over the years it will be used, instead of expensing it all at once.
Read definition →Importing & LogisticsDimensional Weight
A pricing method where carriers charge based on a package's size instead of its actual weight when the package is large and light.
Read definition →Accounting BasicsDouble-Entry Bookkeeping
The system where every transaction is recorded in at least two accounts, with equal debits and credits, so the books always balance.
Read definition →Importing & LogisticsDrop Shipping
Selling products you do not stock. When an order comes in, a supplier ships it directly to your customer, and you pay the supplier per order.
Read definition →Importing & LogisticsDuty Drawback
A refund of up to 99% of import duties paid on goods that are later exported or destroyed, or used to make products that are exported.
Read definition →E
EBITDA
Earnings before interest, taxes, depreciation and amortization. It approximates operating profit and is the number buyers and lenders most often use to value a business.
Read definition →Costs & InventoryEconomic Order Quantity (EOQ)
The order size that minimizes your total cost of ordering and holding inventory, balancing the cost of placing orders against the cost of storing stock.
Read definition →Systems & SoftwareEDI (Electronic Data Interchange)
The standard electronic format big retailers use to exchange purchase orders, shipping notices and invoices with suppliers.
Read definition →Financial StatementsEquity
The owners' stake in the business: what is left after subtracting everything the business owes from everything it owns. It includes money owners put in plus profits kept in the business.
Read definition →Systems & SoftwareERP (Enterprise Resource Planning)
Software that runs accounting, inventory, purchasing, order management and often manufacturing in one connected system, such as NetSuite, Acumatica or Microsoft Dynamics.
Read definition →Tax & ComplianceEstimated Tax Payments
Quarterly payments of income tax made during the year by business owners and self-employed people, since no employer is withholding tax for them.
Read definition →F
FBA (Fulfillment by Amazon)
Amazon's program where you send inventory to Amazon's warehouses and Amazon stores, picks, packs, ships and handles returns for your orders, in exchange for fees.
Read definition →MarketplacesFBA Fulfillment Fee
The per-unit fee Amazon charges to pick, pack and ship an FBA order, based on the product's size tier, weight and, since 2026, its price range.
Read definition →MarketplacesFBM (Fulfilled by Merchant)
Selling on Amazon while storing and shipping the orders yourself or through your own 3PL, instead of using FBA.
Read definition →Importing & LogisticsFCL vs. LCL
FCL (Full Container Load) means you rent a whole shipping container. LCL (Less than Container Load) means your goods share a container with other shippers and you pay for the space you use.
Read definition →Costs & InventoryFIFO (First In, First Out)
An inventory costing method that assumes the oldest units are sold first, so COGS uses older costs and ending inventory reflects the most recent costs.
Read definition →ProfitabilityFixed Costs
Costs that stay roughly the same no matter how much you sell in a month, like rent, salaries, software and insurance.
Read definition →Importing & LogisticsFOB (Free on Board)
An Incoterm where the seller delivers goods onto the ship at the origin port and your responsibility for cost and risk starts once they are loaded.
Read definition →Accounting BasicsFractional CFO
An experienced chief financial officer who works with your business part-time, providing planning, forecasting, cash management and strategic guidance without a full-time salary.
Read definition →Cash FlowFree Cash Flow
The cash your business produces from operations after paying for capital investments. It is the money truly available for debt payments, distributions or growth.
Read definition →Importing & LogisticsFreight Forwarder
A company that arranges the shipping of your goods from the supplier to your warehouse, booking space with carriers and coordinating paperwork, customs and delivery.
Read definition →Costs & InventoryFreight-In
The shipping cost to bring inventory into your warehouse from suppliers. It is part of inventory cost and becomes COGS when the product sells, not a shipping expense.
Read definition →Costs & InventoryFulfillment Cost per Order
The total cost to get one order out the door to a customer: pick and pack, packaging, outbound shipping and related warehouse fees.
Read definition →G
GAAP (Generally Accepted Accounting Principles)
The standard set of accounting rules used in the U.S. for preparing financial statements, covering how and when revenue, expenses, assets and liabilities are recorded.
Read definition →Accounting BasicsGeneral Ledger
The complete record of every transaction in your business, organized by account. All financial statements are built from it.
Read definition →RevenueGift Card Liability
The value of gift cards you have sold but customers have not redeemed yet. It is a liability, not revenue, until the card is used.
Read definition →Costs & InventoryGMROI (Gross Margin Return on Inventory)
How many dollars of gross margin you earn for every dollar tied up in inventory. It shows which products make your inventory investment worthwhile.
Read definition →ProfitabilityGross Margin
The percentage of net sales left after paying for the products you sold. It shows how much each sales dollar contributes before overhead and marketing.
Read definition →RevenueGross Merchandise Value (GMV)
The total value of goods sold through a platform before returns, discounts and fees are taken out. It measures volume, not revenue you keep.
Read definition →ProfitabilityGross Profit
The dollars left from sales after subtracting the cost of the products you sold. Gross margin is the same figure expressed as a percentage.
Read definition →H
Holding Cost (Inventory Carrying Cost)
The total yearly cost of keeping inventory on hand: storage, insurance, shrinkage, obsolescence and the cost of the cash tied up in it. It often runs 20% to 30% of inventory value per year.
Read definition →Importing & LogisticsHTS Code (Harmonized Tariff Schedule)
The 10-digit U.S. classification number assigned to every imported product. It determines the duty rate you pay.
Read definition →I
Importer of Record (IOR)
The party legally responsible for making sure imported goods comply with U.S. law and that all duties and fees are paid. It is usually the brand, not the factory or the broker.
Read definition →Costs & InventoryIn-Transit Inventory
Inventory you own that is on its way to your warehouse, usually on a ship, truck or plane. It belongs on your balance sheet even though you cannot see it yet.
Read definition →MarketplacesInbound Placement Fee (Amazon)
An Amazon fee for sending FBA inventory to fewer locations than Amazon would prefer. Amazon charges to redistribute it across its network, while spreading shipments across more locations lowers or removes the fee.
Read definition →Financial StatementsIncome Statement (P&L)
The financial statement that shows revenue, costs and profit over a period of time, usually a month, quarter or year.
Read definition →Importing & LogisticsIncoterms
Standard trade terms, set by the International Chamber of Commerce, that define who pays for shipping, insurance and duties, and when risk passes from seller to buyer.
Read definition →Costs & InventoryInventory Aging
A report that groups your inventory by how long it has been on hand, such as 0–90, 91–180 and 180+ days, so you can spot slow-moving stock.
Read definition →FinancingInventory Financing
A loan or credit line secured by your inventory, used to buy stock before you have the sales cash to pay for it.
Read definition →MarketplacesInventory Performance Index (IPI)
Amazon's score of how efficiently you manage FBA inventory, based on factors like excess stock, sell-through and in-stock rates. A low score can limit how much you can store.
Read definition →Costs & InventoryInventory Reconciliation
Matching the inventory value in your accounting books to what your inventory system and physical counts say you have, and correcting any differences.
Read definition →Costs & InventoryInventory Turnover
How many times you sell through your average inventory in a year. Higher turnover means cash spends less time sitting on shelves.
Read definition →Costs & InventoryInventory Valuation
The method and dollar value you assign to the inventory you have on hand, which flows directly into COGS and profit.
Read definition →Costs & InventoryInventory Write-Down
Reducing the value of inventory on your books because it is damaged, obsolete or can only be sold for less than it cost. A write-off removes it entirely.
Read definition →FinancingInvoice Factoring
Selling your unpaid customer invoices to a factoring company for an immediate cash advance, usually 70% to 90% of the invoice value, minus a fee.
Read definition →J
Journal Entry
A record of a transaction in the accounting system, showing which accounts are debited and credited and by how much. Manual journal entries are used for adjustments that do not come from a bank feed or invoice.
Read definition →Costs & InventoryJust-in-Time (JIT) Inventory
Ordering inventory so it arrives right when you need it, keeping stock levels low to free up cash and storage.
Read definition →K
Kitting (Bundling)
Combining separate items into a single sellable product or bundle, such as a gift set or multipack, with its own SKU.
Read definition →ProfitabilityKPI (Key Performance Indicator)
A small set of numbers that show whether the business is on track, tracked regularly and tied to specific goals.
Read definition →L
Landed Cost
The full cost of getting a unit into your warehouse and ready to sell: the supplier price plus freight, duties, tariffs, customs brokerage and inbound fees.
Read definition →Costs & InventoryLead Time
The total time from placing a purchase order to having inventory available to sell, including production, shipping, customs and receiving.
Read definition →Costs & InventoryLIFO (Last In, First Out)
An inventory costing method that assumes the newest units are sold first, so COGS uses the most recent costs. It is allowed under U.S. GAAP but not under international standards.
Read definition →FinancingLine of Credit
A flexible loan with a set limit that you can draw on, repay and draw again, paying interest only on what you use.
Read definition →FinancingLoan Covenant
A condition in a loan agreement that your business must meet, such as keeping a minimum DSCR, maximum leverage or delivering financial statements on time.
Read definition →Costs & InventoryLower of Cost or Net Realizable Value
The accounting rule that inventory must be valued at its cost or the amount you can realistically sell it for minus selling costs, whichever is lower.
Read definition →Marketing MetricsLTV (Customer Lifetime Value)
The total gross profit you expect from a customer over the whole relationship. Compared to CAC, it tells you how much you can afford to spend to win a customer.
Read definition →M
MAP (Minimum Advertised Price)
A brand's policy setting the lowest price at which resellers may advertise its products. It protects margins and brand value across channels.
Read definition →Tax & ComplianceMarketplace Facilitator
A platform such as Amazon, Walmart or Etsy that is required to collect and remit sales tax on sales made through it. Your own website sales are still your responsibility.
Read definition →ProfitabilityMarkup
How much you add to a product's cost to set its price, expressed as a percentage of cost. It is often confused with margin, which is a percentage of price.
Read definition →Marketing MetricsMER (Marketing Efficiency Ratio)
Total revenue divided by total marketing spend across all channels. It is a blended, platform-independent view of whether marketing is paying off.
Read definition →FinancingMerchant Cash Advance (MCA)
Upfront cash in exchange for a share of future sales, repaid automatically from daily or weekly receipts. It is fast to get but usually very expensive.
Read definition →Costs & InventoryMerchant Processing Fees
Fees charged by payment processors like Shopify Payments, Stripe or PayPal for each card or digital payment, usually a percentage plus a fixed amount per transaction.
Read definition →Accounting BasicsMonth-End Close
The monthly process of reconciling every account, recording adjustments and locking the books so the financial statements are accurate and final.
Read definition →Costs & InventoryMOQ (Minimum Order Quantity)
The smallest number of units a supplier will produce or sell in one order.
Read definition →RevenueMSRP (Manufacturer's Suggested Retail Price)
The price a brand recommends retailers charge consumers. It anchors pricing across channels but is not binding on retailers.
Read definition →MarketplacesMulti-Channel Fulfillment (MCF)
An Amazon service that uses your FBA inventory to fulfill orders from other channels, like your Shopify store or Walmart, for a per-order fee.
Read definition →N
Net 30 (Payment Terms)
Payment terms that give the buyer 30 days from the invoice date to pay. Net 60 and Net 90 work the same way with longer windows.
Read definition →ProfitabilityNet Income
Your bottom-line profit after every expense, including COGS, operating costs, interest and taxes, has been subtracted from revenue.
Read definition →ProfitabilityNet Profit Margin
The percentage of every sales dollar that ends up as profit after all expenses.
Read definition →RevenueNet Sales
Gross sales minus returns, refunds, discounts and allowances. It is the revenue you actually keep, and the number margins should be measured against.
Read definition →O
OMS (Order Management System)
Software that collects orders from all your sales channels, routes them to the right warehouse and keeps inventory in sync across channels.
Read definition →Costs & InventoryOpen-to-Buy (OTB)
A purchasing budget that tells you how much inventory you can still buy for a period without overstocking, based on planned sales and target ending inventory.
Read definition →Cash FlowOperating Cash Flow
The cash your core business produces in a period, after adjusting net income for non-cash items and changes in working capital like inventory, receivables and payables.
Read definition →ProfitabilityOperating Expenses (OpEx)
The ongoing costs of running the business that are not part of COGS, like salaries, rent, software, marketing and professional fees.
Read definition →ProfitabilityOperating Income
Profit from your core business before interest and taxes: gross profit minus operating expenses.
Read definition →Financial StatementsOwner's Draw
Money an owner takes out of the business for personal use. In sole proprietorships and partnerships it reduces equity; S corp owners usually take distributions plus a salary.
Read definition →P
Payback Period (CAC Payback)
How long it takes to earn back what you spent to acquire a customer, measured in contribution margin.
Read definition →Cash FlowPayment Processor Reserve
Money a payment processor like Shopify Payments, Stripe or PayPal holds back from payouts as protection against refunds and chargebacks.
Read definition →MarketplacesPayout Reconciliation
Matching each platform payout in the bank to the sales, fees, refunds and adjustments behind it, so revenue and fees are recorded in full rather than just the net deposit.
Read definition →Costs & InventoryPerpetual Inventory System
An inventory system that updates stock levels and costs in real time with every sale, receipt and adjustment, instead of only at periodic counts.
Read definition →Accounting BasicsPrepaid Expenses
Costs you pay in advance for benefits you receive later, like annual software, insurance or trade-show booths. They are assets until used.
Read definition →Costs & InventoryPurchase Order (PO)
A document you send a supplier specifying products, quantities, prices and terms. Once accepted, it becomes the agreement for that order.
Read definition →FinancingPurchase Order Financing
Funding that pays your supplier for a specific confirmed customer order, often a large retail order, and is repaid when the customer pays.
Read definition →Costs & InventoryPurchase Price Variance (PPV)
The difference between what you expected to pay for inventory (standard cost) and what you actually paid.
Read definition →Q
Quality of Earnings (QoE)
An in-depth review, usually done by accountants during the sale of a business, that tests whether reported earnings are accurate, sustainable and properly adjusted.
Read definition →Financial StatementsQuick Ratio
A strict liquidity test that compares your cash and receivables, leaving out inventory, with what you owe in the short term.
Read definition →Systems & SoftwareQuickBooks Online (QBO)
Intuit's cloud accounting software and the most widely used bookkeeping system for small U.S. businesses.
Read definition →R
Referral Fee (Amazon)
The commission Amazon charges on each sale, a percentage of the sale price that varies by category, often around 15%.
Read definition →Costs & InventoryReorder Point
The stock level at which you need to place a new purchase order so it arrives before you run out.
Read definition →Marketing MetricsRepeat Purchase Rate
The percentage of customers who buy more than once in a given period.
Read definition →Tax & ComplianceResale Certificate
A document that lets a business buy goods for resale without paying sales tax, because tax will be collected when the goods are sold to the end customer.
Read definition →Financial StatementsRetained Earnings
The total profits a business has earned over its life that have been kept in the business rather than paid out to owners.
Read definition →RevenueReturn Rate
The percentage of units or sales dollars that customers send back.
Read definition →RevenueRevenue Recognition
The rules for when a sale counts as revenue. In general, revenue is recorded when you fulfill your promise to the customer, not when the cash arrives.
Read definition →FinancingRevenue-Based Financing
Funding repaid as a fixed percentage of future revenue until a set total is reached, so payments rise and fall with sales.
Read definition →Marketing MetricsROAS (Return on Ad Spend)
Revenue generated for every dollar spent on a specific ad channel or campaign.
Read definition →Cash FlowRolling Forecast
A forecast that is updated regularly, usually monthly, and always looks the same distance ahead, such as the next 12 months.
Read definition →S
Safety Stock
Extra inventory held as a buffer against demand spikes or supplier delays. It protects sales and rankings, but every unit of it is cash on a shelf.
Read definition →Tax & ComplianceSales Tax
A state and local tax on retail sales that the seller collects from the customer and sends to the state. Online sellers must collect it in states where they have nexus, unless a marketplace collects it for them.
Read definition →Tax & ComplianceSales Tax Nexus
The connection to a state that requires you to register, collect and file sales tax there. For online sellers it can come from sales volume (economic nexus) or from inventory stored in the state, including in FBA warehouses.
Read definition →FinancingSBA Loan
A small-business loan from a bank that is partly guaranteed by the U.S. Small Business Administration, often with longer terms than a regular bank loan. The 7(a) program is the most common.
Read definition →FinancingSDE (Seller's Discretionary Earnings)
A measure of what a small business earns for one owner-operator: profit before taxes, interest, depreciation, plus the owner's salary and personal or one-time expenses. It is the standard basis for valuing smaller e-commerce businesses.
Read definition →Costs & InventorySell-Through Rate
The percentage of inventory received that you sold during a period. It shows how fast a product or purchase order is actually moving.
Read definition →Costs & InventoryShrinkage
Inventory that disappears through theft, damage, miscounts, receiving errors or unrecorded losses, so physical stock is lower than the records say.
Read definition →Costs & InventorySKU (Stock Keeping Unit)
Your internal code for each distinct product variant you sell, such as each size and color, used to track inventory, sales and cost.
Read definition →Costs & InventorySKU Rationalization
Reviewing your product line to cut or consolidate SKUs that do not earn their keep, so cash and attention go to the products that drive profit.
Read definition →Costs & InventoryStandard Cost
A preset expected cost for each product, used to value inventory and COGS consistently, with any difference from actual costs tracked separately as a variance.
Read definition →Costs & InventoryStockout
When a product runs out and you cannot fill orders for it.
Read definition →MarketplacesStorage Fees (FBA)
The monthly fee Amazon charges for the space your FBA inventory takes up, based on cubic feet and size tier. Rates rise sharply from October through December.
Read definition →T
TACoS (Total Advertising Cost of Sale)
Ad spend as a percentage of your total sales, both from ads and organic. It shows how dependent your overall business is on advertising.
Read definition →Importing & LogisticsTariff (Import Duty)
A tax charged on imported goods, usually a percentage of their customs value, based on the product's HTS code and country of origin.
Read definition →Accounting BasicsThree-Way Match
Checking that the purchase order, the receiving record and the supplier's invoice all agree on items, quantities and prices before paying a bill.
Read definition →RevenueTrade Spend
The money a brand spends to sell through retailers, such as promotional discounts, slotting fees, marketing co-op, damage allowances and compliance chargebacks.
Read definition →Accounting BasicsTrial Balance
A list of every account in the general ledger with its ending balance at a point in time, used to confirm debits equal credits and as the starting point for financial statements.
Read definition →U
Uncategorized Transactions
Transactions in your accounting software that have not been assigned to the correct account, often sitting in "Uncategorized Income," "Uncategorized Expense" or "Ask My Accountant."
Read definition →Accounting BasicsUndeposited Funds
A temporary account in QuickBooks where received payments wait until they are matched to the bank deposit they arrived in.
Read definition →MarketplacesUnfulfillable Inventory (Amazon)
FBA units Amazon cannot sell because they are damaged, expired or defective, usually from customer returns or warehouse handling. You must remove or dispose of them, or Amazon may do it for you.
Read definition →ProfitabilityUnit Economics
The revenue and costs of selling one unit or one order, showing exactly how much profit each sale makes after all variable costs.
Read definition →V
Variable Costs
Costs that rise and fall with sales volume, like product cost, marketplace fees, fulfillment, shipping, payment processing and most ad spend.
Read definition →ProfitabilityVariance Analysis
Explaining the difference between actual results and the budget, forecast or prior period, and identifying what caused it.
Read definition →MarketplacesVendor Central
Amazon's program where you sell to Amazon wholesale and Amazon resells to customers, instead of selling directly to customers through Seller Central.
Read definition →W
Weighted Average Cost (WAC)
An inventory costing method that values every unit at the average cost of all units available, recalculated as new inventory arrives.
Read definition →RevenueWholesale
Selling your products in bulk to retailers or distributors, who then resell them to consumers, usually at about half of retail price.
Read definition →Systems & SoftwareWMS (Warehouse Management System)
Software that runs warehouse operations: receiving, putaway, bin locations, picking, packing and counts. Most 3PLs run one and give you access to it.
Read definition →Costs & InventoryWork in Progress (WIP)
Inventory that is partly made: raw materials and labor already invested in products that are not finished yet.
Read definition →Cash FlowWorking Capital
The short-term cash cushion your business runs on: current assets (cash, receivables, inventory) minus current liabilities (payables, credit cards, short-term loans).
Read definition →Accounting BasicsWrite-Off
Removing an asset's value from the books because it no longer has value, such as an uncollectible invoice or inventory that has been thrown away.
Read definition →Y
Year-End Close
The final, more thorough close of the fiscal year: reconciling everything, counting inventory, recording final adjustments and preparing the books for taxes and annual reporting.
Read definition →ProfitabilityYear-over-Year (YoY)
Comparing a period's results with the same period last year, which removes seasonal swings from the comparison.
Read definition →ProfitabilityYear-to-Date (YTD)
Results from the start of the fiscal year through today, used to track progress against annual goals.
Read definition →Z
Zero-Based Budgeting
Building a budget from zero each period, where every expense must be justified on its own merits instead of starting from last year's numbers.
Read definition →Importing & LogisticsZone Skipping
Shipping a large batch of packages by truck to a carrier hub near your customers and injecting them there, so each package travels fewer shipping zones and costs less.
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