| |
| A | |
| Accountant | Financial specialist who audits accounts, prepares annual financial statements and advises on financial matters. Protected professional title. |
| Alternative financing | Business financing where the financier is not a bank, but another party. |
| Asset, assets | The possessions/assets of a company. Assets are shown on the left-hand side of the balance sheet. |
| |
| B | |
| Balance sheet | A snapshot of the company's assets, liabilities and equity. A balance sheet has two sides: assets and liabilities. Its main characteristic is that it must always balance. |
| Bank financing | Business financing through a bank, for example a business loan or an overdraft facility. |
| Bank guarantee | With a bank guarantee, a bank guarantees payment of an amount on behalf of the entrepreneur to a beneficiary if the beneficiary makes a valid claim. A form of security. |
| Bankrupt, bankruptcy | A company is bankrupt when it no longer has enough money to meet its obligations. A court can then declare the company bankrupt. |
| Billable hours | Hours that you can charge to your customers. |
| BKR | Stichting BKR (Credit Registration Bureau) records personal loans and any payment arrears. By requesting a free credit report, you can see which loans and any payment arrears are registered in your name. |
| BMKB | SME Credit Guarantee Scheme. A government guarantee to the financier, providing the financier with additional security. |
| Bond loan | A loan issued by a company in which the total amount is divided into tradable units representing smaller amounts (bonds). The bond loan has a fixed term, interest rate and repayment schedule. |
| Book value | The value of assets at a particular point in time. Book value is calculated by subtracting depreciation from the purchase value. |
| Bookkeeper | Checks accounts, prepares annual financial statements and advises on administrative matters. |
| Bookkeeping | The financial administration of a company. |
| Bridge loan | A business loan used to bridge a short period of financial shortage. Also called additional working capital. |
| Budget | An estimate of income and expenditure over a certain period. |
| Bullet loan | An interest-only business loan that is repaid in one lump sum at the end of the term. |
| Business assets | Assets with a purchase value of at least €450 that you do not sell but use in your business for a longer period. Business assets are recorded as assets on the balance sheet and are depreciated. They are classified as fixed assets. |
| |
| C | |
| Cash and cash equivalents | The amount held in bank accounts and cash on hand. |
| Cash flow | Income minus expenditure over a certain period, such as a month or a year. Cash flow shows how your business is performing. It is not the same as the profit and loss account: you can have positive cash flow while actually making a loss, for example because depreciation has not yet been included or outstanding invoices have not yet been paid. |
| Co-financing | Financing in which another party also contributes funding. |
| Collateral | Something of value that serves as security for the financier. If the borrower does not meet the obligations, the financier may claim the collateral. A mortgage is a common form of collateral. Equipment, machinery, inventory and receivables can also serve as collateral. |
| Corporate income tax | Tax paid by a legal entity, such as a private limited company, on its profit. |
| Costs | The value of what you consume to produce goods or provide services. In accounting, expenditure and costs are different. Costs arise when profit is reduced in a certain period, even if no actual payment is made. Depreciation is an example of a cost that is not an expenditure. Expenditure occurs when money leaves the business. Buying a property is an example of expenditure that is not a cost. |
| Credit | The right-hand side of a balance sheet: the company's liabilities. |
| Creditors / accounts payable | Suppliers whom you still have to pay. |
| Crowdfunding | Raising money from the general public to finance your plans. |
| Current assets | Assets in your company that can be used during only one production process. In other words, assets that can be converted into cash relatively quickly, within one year. Examples include inventory and receivables. Current assets appear on the left-hand side of the balance sheet. |
| Current liabilities | Short-term debts. These appear on the right-hand side of the balance sheet. Examples include taxes payable (VAT), wages and short-term loans. |
| Current ratio | Accounting ratio calculated as current assets divided by current liabilities. For obtaining business financing, it is important to keep this ratio above 1.5. |
| |
| D | |
| Debit | The left-hand side of the balance sheet: the company's assets. |
| Debt capital | Money in the company that does not belong to the company itself. Debt capital includes loans, credit facilities, lease liabilities and creditors. |
| Debtors / accounts receivable | Customers from whom you still have money to receive. |
| Depreciation | Accounting reduction in the value of an asset. Only applies to business assets that last longer than one year and cost more than €450. The depreciation amount is treated as an expense for the company. |
| Direct costs | Costs that can be directly allocated to your company's activities and revenue. Often also called production costs. |
| Dividend | Distribution of realised profits to shareholders. |
| |
| E | |
| EBIT | Earnings Before Interest and Tax. Operating profit: the result from normal business operations before interest and taxes are paid. |
| EBITDA | Earnings Before Interest, Tax, Depreciation and Amortization. Operating profit plus depreciation and amortization. |
| Equipment and furnishings | Business assets used to run your company. Examples include your desk, laptop or other tools. These are company assets and therefore appear on the asset side of the balance sheet. |
| Equity | The money that the owners have invested in the business. Equity equals total assets minus total liabilities. |
| Equity participation | Risk-bearing capital in the form of shares. |
| Expenditure | Payments made by your company. In accounting, expenditure and costs are different. Expenditure occurs when money leaves the company. Buying a property is an example of expenditure that is not a cost. Costs arise when profit is reduced in a certain period; an actual payment is not required. Depreciation is an example of a cost that is not an expenditure. |
| |
| F | |
| Factoring | A common form of receivables financing. With factoring, you sell your outstanding invoices to a factoring company. The factoring company pays you part of the invoice amount and usually takes over the debtor risk. It then collects the outstanding invoices from your customers. |
| Financial fixed assets | These include interests in other companies, shares or other financial receivables. |
| Financing | Making money available to realise plans. |
| Financing costs | Interest, costs and repayments of financing added together. |
| Financing requirement | The amount you need to realise your plans. |
| Fixed assets | See business assets. |
| Fixed costs | Costs that do not vary with the quantity produced, or only change in very large steps. For example, the costs of your business premises. |
| |
| G | |
| GO | Enterprise Financing Guarantee. Under this scheme, banks can obtain a 50% government guarantee on medium-sized and large loans, making it possible for more entrepreneurs to borrow money from a bank. |
| Goodwill | The difference between the market value of an acquired company and the book value of its assets, such as land, buildings, machinery, patents and inventory. |
| Gross profit | Revenue minus costs. |
| Guarantor, guarantee | A natural or legal person (the guarantor) guarantees payment of the debt if the borrower does not pay. |
| |
| I | |
| Income tax | Tax paid by a natural person on income. |
| Indirect costs | Costs that cannot be directly allocated to activities or revenue. |
| Input VAT | VAT that you have paid on business costs and expenditure. You reclaim this input VAT in your VAT return. |
| Intangible fixed assets | Non-physical assets used to carry out business activities, such as licences, patents, goodwill or development costs. |
| Interest | Compensation paid to providers of debt capital. |
| Inventory | Inventory consists of goods needed to make your final product, as well as finished products that have not yet been sold. Packaging materials are also included. The value of inventory is shown on the balance sheet under current assets. |
| Investing | Purchasing fixed assets, such as machinery or property, for your business. With the investment, you hope to earn money in the future. |
| |
| L | |
| Lease | A form of financing in which the leasing company finances the business asset and the user pays a monthly amount for its use. There are different types of lease. |
| Liability, liabilities | The debts and equity of a company. Liabilities are shown on the right-hand side of the balance sheet. |
| Liquidity | How well a company is able to meet its current payment obligations. Liquidity can be measured in several ways, such as the current ratio and quick ratio. |
| Loan | An amount provided by a financier on the condition that it is repaid later. |
| Long-term debt, non-current liabilities | Loans and debts with a term of more than one year. |
| |
| M | |
| Margin | Selling price minus purchase price. Costs still have to be deducted from the margin to arrive at profit. |
| Mortgage, mortgage loan | A loan for a home or business property, with the property serving as security. |
| |
| N | |
| Net profit | Gross profit minus operating expenses. Available to the owners of the company. |
| |
| O | |
| Overdraft facility | An amount by which you may overdraw a bank account. A credit limit is agreed with the lender. You can use the amount partly or in full, repay it and draw it again up to the credit limit. You pay interest only on the amount used, unlike a loan where interest is paid on the full loan amount. |
| |
| P | |
| Payment term | The number of days within which an invoice must be paid. |
| Pitch | A short presentation of yourself, your product or service, or your company. |
| Preferred shares | Shares with a fixed return and, in some cases, special voting rights. |
| Private loan | A loan where someone borrows money from family or acquaintances without the involvement of a bank. |
| Profit and loss statement | An overview of a company's income and costs over a period. The result of this calculation shows the company's financial position. |
| Profitability | (Net profit divided by invested capital) x 100%. A ratio indicating the profitability of the company. |
| Provision | Provisions are recorded under liabilities on the right-hand side of the balance sheet. A provision is an obligation for your company whose amount and timing are still uncertain. It can be viewed as a reserve set aside for a future purpose. Provisions form part of debt capital. |
| |
| Q | |
| Quick ratio | Accounting ratio calculated as (current assets minus inventories) divided by current liabilities. For obtaining business financing, it is important to keep the quick ratio between 1.0 and 2.0. |
| |
| R | |
| Receivables financing | A form of financing in which a company sells outstanding invoices (receivables) to a finance company. The finance company pays a percentage of the value of the invoices and assumes the risk of collecting payments from customers. Factoring and invoice financing are both forms of receivables financing. |
| Refinancing | Taking out a new loan to repay one or more existing loans. |
| Repayment | Repaying (part of) a loan or debt. |
| Reserves | Part of a company's equity. Created through retained profits from previous years, the issue of shares above nominal value, or revaluation of assets. |
| Revenue | The total amount of sales in a certain period. |
| Risk capital / venture capital | Financing provided in exchange for an interest in the company, often in the form of share capital or a subordinated loan. Also known as venture capital. |
| |
| S | |
| Sales volume | The quantity of goods or services sold in a period. |
| Security / collateral | See collateral. |
| Share | Proof of ownership of part of the company. |
| Share capital | The amount for which a company has issued shares. |
| Short-term debt, current liabilities | Loans and debts with a term of less than one year. |
| Solvency | Accounting term for the extent to which a company is able to meet its financial obligations. Calculated as (equity divided by total capital) x 100%. A healthy solvency ratio varies by sector but ideally lies between 25% and 40%. |
| Stacked financing | Business financing in which multiple forms of business financing are combined. |
| Subordination, subordinated loan | A loan that ranks below other loans. It is repaid only after other loans have been paid off. |
| Supplier credit | A short-term loan where the supplier provides goods or services that the customer pays for later. Supplier credit is recorded under creditors/accounts payable on the balance sheet. |
| |
| T | |
| Tangible fixed | Land and buildings, machinery and equipment, inventory, with an asset value of more than € 450 that are used by the company for the long term. The value of these business assets is shown on the balance sheet and decreases due to depreciation. |
| Tax adviser, tax specialist | Specialist in taxation. Provides advice and prepares tax returns. |
| |
| V | |
| Value-added tax (VAT) | Also known as VAT. A tax that most entrepreneurs must charge customers on sales. VAT paid on business costs and expenditure may be offset against the amount payable to the tax authorities. |
| Variable costs | Costs that change with the quantity produced. |
| VAT | See turnover tax. |
| |
| W | |
| Working capital | Accounting term for the difference between a company's current assets and short-term liabilities. Working capital is needed to meet daily expenses. |