Glossary · 373 terms
Speak financefluently.
Plain-English definitions for the metrics, methods, and workflows behind modern finance.
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A
- Account reconciliationAccount reconciliation is the practice of matching an account balance to supporting source data and resolving any differences.
- Accounting cutoffAccounting cutoff is the rule that transactions are recorded in the correct period, a frequent source of close and audit errors.
- Accounts payableAccounts payable represents amounts a company owes suppliers for goods and services received but not yet paid.
- Accounts receivableAccounts receivable represents amounts customers owe a company for goods and services delivered but not yet collected.
- Accounts receivable agingAccounts receivable aging is a report that groups unpaid customer invoices by how long they have been outstanding, usually in current, 30, 60, 90, and over-90-day buckets.
- Accounts receivable collectionsAccounts receivable collections refers to the process of converting open customer invoices into cash by prioritizing outreach, resolving disputes, and tracking how collection.
- Accrual reversalAccrual reversal is an entry that backs out a prior-period accrual in the following period so the actual is not double-counted.
- Accrual vs cash basis accountingAccrual vs cash basis accounting is the difference between recognizing revenue and expenses when earned or incurred versus when cash moves.
- AccrualsAccruals are accounting entries that recognize revenue or expenses in the period they are earned or incurred, before cash changes hands.
- Accrued revenueAccrued revenue is revenue earned but not yet billed or collected, recorded as an asset until invoicing catches up.
- Adjusted EBITDAAdjusted EBITDA is EBITDA adjusted for one-time, non-cash, or non-recurring items to normalize operating performance across periods or companies.
- Adjusting journal entryAdjusting journal entry is an entry made at period end to record accruals, deferrals, depreciation, or corrections before reporting.
- Agent memoryAgent memory is information an AI agent stores or retrieves across steps or sessions so it can maintain context while working toward a goal.
- Agentic AIAgentic AI is artificial intelligence that can plan, choose tools, and take multi-step actions toward a goal with limited human supervision.
- Agentic financeAgentic finance is the practice of using autonomous AI agents to perceive, plan, and execute multi-step finance tasks with limited human intervention.
- Agentic workflowAgentic workflow is a multi-step process executed by AI agents that plan, act, and adapt.
- AI accuracyAI accuracy is the degree to which an AI system produces correct, reliable outputs for a defined task, data set, and evaluation standard.
- AI agentAn AI agent is a system that can perceive context, choose tools, plan steps, and take actions toward a defined goal.
- AI copilotAI copilot is an assistant that augments a human's work in context.
- AI evaluationAI evaluation is systematically testing and scoring model or system outputs against benchmarks or ground truth.
- AI finance infrastructureAI finance infrastructure is the foundational AI systems, data connections, and compute layer that support AI-driven finance workflows.
- AI governanceAI governance is the policies, controls, and accountability over how AI is used, including cost, risk, and compliance.
- AI guardrailsAI guardrails are constraints, checks, and policies that keep model behavior within safe, intended bounds for a defined finance workflow.
- AI hallucination in financeAI hallucination in finance is when an AI system outputs a confident but fabricated or incorrect financial figure, why it happens, and the reporting risk it creates.
- AI orchestrationAI orchestration is coordinating multiple models, agents, and tools with routing, shared state, and governance.
- AI transparencyAI transparency is disclosing how an AI system works, what data it uses, and its limits.
- AI-native financeAI-native finance is finance functions and tools built around AI and automation from the ground up rather than added onto legacy processes.
- AI-native FP&AAI-native FP&A is the practice of reimagining financial planning and analysis around AI agents and automation rather than manual planning processes.
- AmortizationAmortization is allocating the cost of an intangible asset, or a loan principal, over time as a periodic charge.
- Annual Contract ValueAnnual contract value is the recurring value of a customer contract normalized to one year, typically excluding one-time fees and usage outside the contract term.
- Annual operating planAnnual operating plan is the detailed one-year financial and operational plan that sets targets and budgets.
- Annual Recurring RevenueAnnual recurring revenue is the annualized value of committed recurring subscription revenue, excluding one-time fees and non-recurring services.
- API integrationAPI integration is the practice of connecting two or more software systems through their application programming interfaces so they can exchange data or trigger actions.
- Append-only ledgerAppend-only ledger is a data structure that only permits adding new records, never updating or deleting existing ones, preserving full history.
- ARR bridgeARR bridge is a roll-forward that decomposes the change in ARR from one period to the next into new, expansion, contraction, and churned ARR.
- ARR growth rateARR growth rate is the year-over-year or period-over-period percentage change in ARR, how it is calculated, and its role in efficiency rules like Rule of 40.
- ARR per employeeARR per employee is ARR divided by full-time headcount as a measure of operational efficiency, and typical benchmark ranges by stage.
- As-of reportingAs-of reporting is the practice of retrieving or presenting data as it existed as of a specified date, on either an effective-date or as-recorded basis.
- ASC 606ASC 606 is the FASB/IASB standard governing revenue from contracts with customers and its five-step model.
- Assertion timeAssertion time is a proposed third temporal dimension recording when a fact was asserted or believed, distinct from valid and transaction time.
- Audit trailAudit trail is a chronological, tamper-evident record of every change and action affecting data, enabling reconstruction of how a result was reached.
- AuditabilityAuditability is the degree to which a system's outputs can be independently traced, verified, and explained by an auditor.
- Autonomous agentAutonomous agent is an agent that acts toward goals with minimal or no human approval.
- Average Revenue Per AccountAverage revenue per account is the average recurring revenue generated per account or user, how it is calculated, and its role as an input to LTV.
- Average sales priceAverage sales price is the average value of a closed deal, how it differs from ACV, and why it shapes go-to-market motion and CAC payback.
B
- Balance sheetBalance sheet is the statement showing assets, liabilities, and equity at a point in time.
- Balanced scorecardBalanced scorecard is a strategy framework tracking performance across financial and non-financial perspectives.
- Bank reconciliationBank reconciliation is the practice of reconciling the cash balance per the books to the bank statement and explaining timing differences.
- Beyond BudgetingBeyond budgeting is a management model that replaces fixed annual budgets with adaptive, decentralized planning.
- BillingsBillings are invoices issued or amounts billed to customers during a period, distinct from bookings, recognized revenue, and cash collections.
- Bitemporal dataBitemporal data is modeling data along two independent time axes—valid time and transaction time—to capture both what was true and what was known when.
- Blended CACBlended CAC is CAC across all channels including organic, versus paid CAC from paid media only, and when each view is appropriate.
- Blended marginBlended margin is a single margin figure averaged across multiple products, segments, or channels, and why it can mask underlying mix.
- Board reporting packageBoard reporting package is the standardized set of financials and metrics prepared for a board meeting.
- BookingsBookings are signed customer commitments recorded during a period, often used as a forward-looking indicator before billings, cash collection, or revenue recognition.
- Bottom-up forecastingBottom-up forecasting is building a forecast from granular unit-, rep-, or transaction-level inputs aggregated upward.
- Breakeven analysisBreakeven analysis is the practice of calculating the sales volume or revenue at which total contribution margin covers fixed costs and profit is zero.
- Bridge chartBridge chart is a chart decomposing the movement between two values into additive and subtractive steps.
- Budget cycleBudget cycle is the practice of recurring sequence of steps to build, approve, and monitor a budget.
- Budget vs actualBudget vs actual is comparing budgeted figures to actual results to surface and act on variances.
- Burn multipleBurn multiple is net cash burned per dollar of net new ARR added, what the ranges signal by stage, and how it captures growth efficiency.
- Burn rateBurn rate is the pace at which a company spends cash over a period, usually measured as gross burn or net burn to assess runway and financing needs.
C
- CAC payback periodCAC payback period is the number of months to recover CAC, the simple versus gross-margin-adjusted formulas, and benchmark ranges by motion and ACV.
- Canonical metricCanonical metric is a single governed definition of a business metric that serves as the authoritative way it is calculated everywhere it appears.
- Capacity planningCapacity planning is the practice of matching available resources or capacity to forecasted demand.
- Capex vs opexCapex vs opex is the distinction between capitalized expenditures carried on the balance sheet and costs expensed in the period.
- CapitalizationCapitalization is recording a cost as an asset rather than an immediate expense, and the threshold policy that governs it.
- Cash conversion cycleCash conversion cycle measures how many days it takes to turn inventory and receivables into cash after accounting for supplier-payment timing.
- Cash flow forecastingCash flow forecasting is the process of projecting future cash inflows and outflows over a defined horizon to anticipate liquidity needs.
- Cash positionCash position is the total cash available to a company at a point in time, consolidated across bank accounts, payment processors, and other liquid cash sources.
- Cash runwayCash runway is the number of months a company can keep operating before it runs out of cash, usually calculated as cash balance divided by net burn.
- Certified finance engineerCertified finance engineer refers to a credentialed finance professional who can combine accounting, FP&A, automation, data systems, and AI-enabled workflows in a governed.
- Chain-of-thoughtChain-of-thought is a model reasoning step by step before answering.
- Change data captureChange data capture is a technique that detects and streams row-level changes from a source database so downstream systems stay in sync without full reloads.
- Chart of accountsChart of accounts is the structured, numbered list of every account a company uses to record transactions.
- Churn rateChurn rate is the rate at which customers or revenue are lost over a period, the customer-versus-revenue and gross-versus-net distinctions, and how it is measured.
- Churned ARRChurned ARR is the annualized recurring revenue lost to full customer churn in a period, and its place in the ARR bridge.
- Close checklistClose checklist is the structured list of tasks, owners, and sign-offs that governs the period-end close.
- Close cycle timeClose cycle time is the number of business days it takes to finalize the books after period end, a core close KPI.
- COGSCOGS is the direct costs of producing the goods or services a company sells, and what it includes versus operating expenses.
- Cohort analysisCohort analysis is grouping customers by a shared start period to track behavior and value over time.
- Cohort retentionCohort retention is grouping customers by start period to track how their retention and revenue behave over time, and how to read a cohort curve.
- Columnar databaseColumnar database is a database that stores data by column rather than by row, which speeds up analytical aggregation and scanning of large data sets.
- Committed ARRCommitted ARR is ARR that includes signed contracts not yet live, and how it differs from live or active ARR.
- Confidence scoreConfidence score is a model's estimated likelihood that its output is correct.
- Consolidated financial statementsConsolidated financial statements is financial statements presenting a parent and its subsidiaries as a single economic entity under ASC 810 / IFRS 10.
- Context engineeringContext engineering is designing what information a model receives at inference time.
- Context windowA context window is the amount of text, data, and instructions an AI model can consider at one time when producing an output.
- Continuous accountingContinuous accounting is the practice of distributing close tasks throughout the period so the books stay near real-time instead of batching at period end.
- Continuous planningContinuous planning is the practice of replacing the annual budget cadence with frequent, ongoing planning updates.
- Contra accountContra account is an account that offsets a related account, such as accumulated depreciation or allowance for doubtful accounts.
- Contraction revenueContraction revenue is lost recurring revenue from existing customers who downgrade or reduce seats without fully churning, and how it differs from churn.
- Contribution analysisContribution analysis is the practice of analyzing how products, segments, or customers contribute to overall profit.
- Contribution marginContribution margin is revenue minus all variable costs (direct and indirect), and how it differs from gross margin.
- ControllershipControllership is the function responsible for accounting accuracy, the close, internal controls, and compliance.
- Controlling interestControlling interest is an ownership stake large enough to direct an entity's decisions, generally a majority voting interest, requiring consolidation.
- Cost allocationCost allocation is the process of assigning shared or indirect costs to the products, units, departments, or entities that drive them.
- Cost driverCost driver is a factor whose change causes a change in cost, used to model and allocate expenses.
- Cost of revenueCost of revenue is the total direct cost of delivering a product or service, broader than COGS and common in SaaS and services businesses.
- Cross-sellCross-sell is the practice of selling an existing customer an additional or adjacent product, and how it differs from upsell as a driver of expansion revenue.
- Cumulative translation adjustment (CTA)Cumulative translation adjustment (CTA) is the equity (OCI/AOCI) account holding accumulated gains and losses from translating foreign operations into the reporting currency.
- Currency translationCurrency translation is converting an entity's functional-currency financials into the reporting currency using the current-rate method, with differences to CTA.
- Current ratioCurrent ratio compares current assets with current liabilities to assess whether a company can meet short-term obligations.
- Customer Acquisition CostCustomer acquisition cost is the total sales and marketing cost to acquire one new customer, what is included in the numerator and denominator, and common variants.
- Customer concentrationCustomer concentration is the share of revenue that comes from a small number of customers, used to assess how exposed a company is to the loss of major accounts.
- Customer lifetimeCustomer lifetime is the average length of time a customer stays, typically estimated as the inverse of churn, and its role as an input to LTV.
- Customer Lifetime ValueCustomer lifetime value is the gross-margin-adjusted recurring value a customer generates over their lifetime, the standard formula, and why it is an output not a target.
- Customer retention rateCustomer retention rate is the percentage of customers retained over a period by count, and how it differs from revenue retention and renewal rate.
D
- Data catalogData catalog is an organized inventory of an organization's data assets, with metadata, definitions, ownership, and lineage to help people find and trust data.
- Data connectorData connector is a prebuilt component that handles authentication and data exchange with a specific source system so its data can be pulled into a pipeline or platform.
- Data contractData contract is a formal, enforceable agreement between data producers and consumers that specifies the schema, semantics, and quality guarantees of a data set.
- Data freshnessData freshness is a measure of how recently data was updated relative to the real-world events it represents, and whether it is current enough to rely on for a decision.
- Data governanceData governance is the policies, ownership, roles, and processes that ensure data is accurate, consistent, secure, and used appropriately across an organization.
- Data immutabilityData immutability is the property that recorded data cannot be modified or deleted after creation, ensuring a stable historical record.
- Data lakeData lake is a centralized repository that stores raw structured and unstructured data at any scale on a schema-on-read basis, applying structure only when queried.
- Data lineageData lineage is the traceable record of where data originates and how it moves and transforms from source systems through to a final number or report.
- Data martData mart is a subject-specific subset of a data warehouse scoped to a single team or function, such as finance or sales, for focused reporting.
- Data modelData model is an abstract representation of how data elements relate and are organized within a system, spanning conceptual, logical, and physical levels.
- Data normalizationData normalization is the practice of restructuring or standardizing data into a consistent format and structure, covering both database normal forms and harmonizing values.
- Data observabilityData observability is the practice of monitoring the health of data and pipelines across dimensions such as freshness, volume, schema, and quality to detect and resolve.
- Data pipelineData pipeline is a series of automated steps that move and process data from one or more sources to a destination, including ingestion, transformation, and loading.
- Data provenanceData provenance is the documented origin and transformation history of a piece of data, from its source through every processing step.
- Data warehouseData warehouse is a central, structured, schema-on-write store optimized for analytical queries and reporting across data consolidated from many source systems.
- Database schemaDatabase schema is the formal structure that defines how data is organized in a database, including tables, columns, data types, keys, and the relationships between them.
- Days cash on handDays cash on hand measures how many days a company can cover operating expenses using available cash.
- Days inventory outstanding (DIO)Days inventory outstanding measures the average number of days inventory sits before being sold, usually calculated from inventory and cost of goods sold.
- Days payable outstanding (DPO)Days payable outstanding measures the average number of days a company takes to pay suppliers, usually calculated from accounts payable and cost of goods sold.
- Days sales outstanding (DSO)Days sales outstanding measures the average number of days it takes to collect payment after a sale, usually calculated from accounts receivable and revenue.
- Debits and creditsDebits and credits are the two sides of every accounting entry, used to record increases and decreases across asset, liability, equity, revenue, and expense accounts.
- Decision-grade analysisDecision-grade analysis is analysis accurate, traceable, and complete enough to base financial decisions on, versus directional or illustrative output.
- Default alive vs default deadDefault alive vs default dead is Paul Graham's test for whether a startup can reach profitability before it runs out of cash at its current growth and burn rate.
- DeferralsDeferrals are accounting entries that delay revenue or expense recognition until the related service, obligation, or benefit is delivered or consumed.
- Deferred revenueDeferred revenue is cash billed or collected for goods or services not yet delivered, carried as a liability until earned.
- Demand forecastingDemand forecasting is the practice of estimating future customer demand for products or services to guide supply and capacity.
- DepreciationDepreciation is allocating the cost of a tangible asset over its useful life as a periodic expense.
- Deterministic AIDeterministic AI is constraining AI systems so identical inputs yield identical, reproducible outputs.
- Deterministic computeDeterministic compute is a calculation engine that returns the same output for the same input every time.
- Deterministic financeDeterministic finance is the practice of producing finance figures that are computed and reproducible, where the same input always yields the same output, versus probabilistic.
- Dimension tableDimension table is a table in a dimensional model that holds the descriptive context, such as customer, product, or date, used to filter and group the facts.
- Dimensional modelingDimensional modeling is a Kimball-style approach to structuring warehouse data into fact and dimension tables optimized for analytical querying and reporting.
- Direct method (cash flow)Direct method cash flow builds a cash flow view from actual cash receipts and disbursements instead of starting with net income adjustments.
- Direct vs indirect costsDirect vs indirect costs is the distinction between costs traceable to a specific cost object (direct) and shared costs that must be allocated (indirect).
- Double-entry bookkeepingDouble-entry bookkeeping is the principle that every transaction is recorded in at least two accounts so the books stay balanced.
- Driver decompositionDriver decomposition is the practice of breaking a financial change into the contribution of each underlying driver.
- Driver-based forecastingDriver-based forecasting is building forecasts from operational drivers and assumptions rather than extrapolating historical line items.
E
- EBITDAEBITDA is earnings before interest, taxes, depreciation, and amortization — operating profit plus D&A, used as a proxy for operating cash flow.
- EBITDA marginEBITDA margin is EBITDA as a percentage of revenue, used to compare operating profitability across companies regardless of capital structure.
- Eliminating entriesEliminating entries is the consolidation journal entries that cancel intercompany balances and the parent's investment against subsidiary equity.
- ELTELT is a data integration pattern that loads raw data into the destination first and performs transformations inside the warehouse, enabled by cheap cloud compute.
- EmbeddingEmbedding is a numeric vector capturing semantic meaning.
- Entity hierarchyEntity hierarchy is the ownership structure and thresholds that determine whether an investment is consolidated, equity-method, or held at cost/fair value.
- Entity resolutionEntity resolution is the process of identifying when different records across or within systems refer to the same real-world entity and linking or merging them.
- Equity methodEquity method is the practice of accounting for investments with significant influence (typically 20-50%) by adjusting carrying value for the investor's share of results.
- ETLETL is a data integration pattern that extracts data from sources, transforms it into a target structure, and then loads it into a destination such as a warehouse.
- Expansion revenueExpansion revenue is additional recurring revenue from existing customers through upsell, cross-sell, or seat growth, and its role in NRR and the ARR bridge.
- Expense forecastingExpense forecasting is the practice of projecting future operating costs, including headcount-driven and variable expenses.
- Explainable AIExplainable AI is methods that make a model's outputs interpretable to humans.
F
- Fact tableFact table is the central table in a dimensional model that stores measurable quantitative events, such as transactions, along with foreign keys to dimensions.
- Finance automationFinance automation is the practice of using software and AI to automate finance and accounting tasks such as data consolidation, reporting, and analysis.
- Finance copilotFinance copilot is an AI assistant that helps finance teams answer questions, analyze data, and complete workflows in natural language.
- Finance engineerA finance engineer is a finance professional who combines accounting or FP&A judgment with data, automation, systems design, and AI workflow skills.
- Finance engineeringFinance engineering is the discipline of designing finance workflows, data models, automation, controls, and AI interfaces as an integrated operating system.
- Finance harnessFinance harness is a control and orchestration layer that lets finance teams direct AI and automation across their systems.
- Finance ontologyFinance ontology is a structured model of finance concepts, entities, and their relationships used to connect and reason over financial data.
- Finance operating systemA finance operating system is a connected software layer that unifies finance data, workflows, controls, and analysis for the office of the CFO.
- Financial auditFinancial audit is an independent examination of financial statements to opine on whether they fairly present results.
- Financial consolidationFinancial consolidation is the practice of accounting process of aggregating subsidiary financials into consolidated group statements and the systems used to do it.
- Financial controlsFinancial controls are policies, approvals, reconciliations, and review procedures that protect reporting accuracy, reduce risk, and make finance work auditable.
- Financial dashboardFinancial dashboard is a visual display of key financial metrics and KPIs for monitoring performance.
- Financial modelingFinancial modeling is building structured representations of a company's financial performance to support decisions.
- Financial planning and analysisFinancial planning and analysis is the finance function responsible for budgeting, forecasting, analysis, and decision support.
- Financial systems engineeringFinancial systems engineering is the practice of designing and integrating the systems, data flows, and tooling that support finance operations and reporting.
- Fine-tuningFine-tuning is further training a base model on domain data.
- Five-step revenue recognition modelFive-step revenue recognition model is the five steps under ASC 606 from identifying the contract to recognizing revenue as obligations are satisfied.
- Fixed costFixed cost is costs that stay constant in total regardless of production or sales volume within a relevant range.
- Flash reportFlash report is a quick preliminary summary of key results issued before the full close is final.
- Flux analysisFlux analysis is explaining period-over-period changes in account balances and the reasons behind each fluctuation.
- Forecast accuracyForecast accuracy measures how closely forecasted results match actual outcomes, often using error metrics such as MAPE, variance, or absolute error.
- Forecast biasForecast bias is a systematic tendency to over- or under-forecast and how to detect and correct it.
- Forecast horizonForecast horizon is the length of time a forecast projects into the future and how it affects accuracy.
- Foundation modelA foundation model is a large pretrained model that can be adapted to many downstream tasks instead of being trained for only one narrow use case.
- Free cash flowFree cash flow is the cash a company generates after operating expenses and capital expenditures, often used to assess financial flexibility and value creation.
- Frontier modelA frontier model is a leading-edge AI model that pushes current capability limits and usually requires extra evaluation, governance, and risk controls before business use.
- Fully-loaded CACFully-loaded CAC is CAC that includes the full cost of acquisition such as salaries, tools, and allocated overhead, and how it differs from a media-only CAC.
- Fully-loaded costFully-loaded cost is the total cost of a resource, unit, or activity including direct costs plus allocated overhead, benefits, and indirect costs.
- Functional currencyFunctional currency is the currency of the primary economic environment in which an entity operates, determined by facts under ASC 830 / IAS 21.
- FX gain/lossFX gain/loss is gains or losses from settling or remeasuring foreign-currency transactions and balances, recognized in earnings.
G
- GAAPGAAP is the common set of US accounting standards, codified by the FASB, that public companies report under.
- GAAP vs IFRSGAAP vs IFRS is the key differences between US GAAP and IFRS, including inventory (LIFO), revaluation, and presentation.
- General ledgerGeneral ledger is the master record of all financial accounts and transactions that feeds the financial statements.
- Generative AIGenerative AI is artificial intelligence that creates text, images, code, or other content from learned patterns and prompts.
- Governed finance AIGoverned finance AI is the practice of applying governance, controls, and guardrails to AI used in finance so outputs stay accurate, auditable, and compliant.
- Graph databaseGraph database is a database that stores data as nodes and edges to represent entities and their relationships, optimized for traversing connections.
- Gross burnGross burn is total monthly cash operating outflow before offsetting revenue, used to understand the cost base and runway pressure.
- Gross marginGross margin is gross profit as a percentage of revenue, what it includes (revenue minus COGS), and how to read it.
- Gross margin per unitGross margin per unit is gross margin expressed for a single unit sold — unit price minus per-unit cost of goods.
- Gross profitGross profit is revenue minus the cost of goods sold, expressed in absolute dollars rather than as a percentage.
- Gross Revenue RetentionGross revenue retention is the percentage of recurring revenue retained from existing customers before expansion, showing how much revenue remains after churn and contraction.
- GroundingGrounding is anchoring model outputs in verified, retrievable source data.
H
- HallucinationHallucination is a model producing plausible but fabricated or incorrect output.
- Hard closeHard close is a complete period-end close with all entries finalized and reconciled to support reported financials.
- Headcount planningHeadcount planning is the practice of planning the number, timing, and cost of hires against business needs and budget.
- Headless BIHeadless BI is an architecture that separates metric and semantic logic from the visualization layer, serving governed metrics via API to BI tools, notebooks, apps, and AI.
- Holding companyHolding company is a company whose main purpose is owning equity in other companies rather than operating a business directly.
- Human-in-the-loopHuman-in-the-loop is a human reviewing or approving AI output before it is acted on.
I
- IFRSIFRS is the international accounting standards issued by the IASB and used in most countries outside the US.
- Immutable ledgerImmutable ledger is a record store whose entries cannot be altered or deleted once written; corrections are appended as new entries.
- Income statementIncome statement is the statement reporting revenue, expenses, and profit over a period of time.
- Incremental budgetingIncremental budgeting is building a budget by adjusting the prior period's figures up or down.
- Indirect method (cash flow)Indirect method cash flow derives operating cash flow by adjusting net income for non-cash items and working-capital changes.
- InferenceInference is running a trained model to generate output.
- Integrated business planningIntegrated business planning is a cross-functional process aligning financial, sales, and operational plans on one cadence.
- Intercompany eliminationIntercompany elimination is the practice of removing intercompany revenue, expenses, balances, and unrealized profit so consolidated statements reflect only third-party.
- Intercompany reconciliationIntercompany reconciliation is the practice of matching intercompany balances recorded by each entity to identify and resolve mismatches before consolidation.
- Intercompany transactionsIntercompany transactions is transactions of goods, services, loans, or interest between entities under common control, and how they are tracked for consolidation.
- Internal controls over financial reportingInternal controls over financial reporting is the processes that provide reasonable assurance over the reliability of financial reporting.
J
K
- Key performance indicatorKey performance indicator is a quantifiable measure used to track performance against a goal.
- Knowledge cutoffKnowledge cutoff is the date after which a model has no training knowledge.
- Knowledge graphKnowledge graph is a graph-based representation of real-world entities and the relationships between them, used to connect data across sources and support querying and.
L
- LakehouseLakehouse is a hybrid architecture that combines the low-cost open storage of a data lake with the management, structure, and query performance of a data warehouse.
- Large language modelA large language model is a neural network trained on large text datasets to understand, summarize, and generate language.
- Leading and lagging indicatorsLeading and lagging indicators is the distinction between predictive leading metrics and outcome-based lagging metrics.
- Levered free cash flowLevered free cash flow is cash available to equity holders after debt service, commonly used to evaluate equity value.
- Lineage to sourceLineage to source is an unbroken trace connecting a derived figure back to the specific source records and transformations that produced it.
- LiquidityLiquidity is a company's ability to meet near-term obligations using cash or assets that can be converted into cash without major loss.
- Liquidity forecastA liquidity forecast projects whether a company will have enough available cash and borrowing capacity to meet obligations over a future period.
- LLM routerLLM router is a layer that directs each query to the most suitable or cost-effective model.
- LLM temperatureLLM temperature is a model setting that controls randomness in generated output, with lower values producing more predictable responses and higher values producing more.
- Logo churnLogo churn is churn measured as the percentage of customers lost by count, and why it can diverge sharply from revenue churn.
- Long-range planLong-range plan is a multi-year strategic financial plan, typically three to five years, linking strategy to financials.
- LTV:CAC ratioLtv:cac ratio is the ratio of customer lifetime value to acquisition cost, the 3:1 rule of thumb, and what very high or low ratios signal.
M
- Management accountsManagement accounts is periodic internal financial statements prepared for management decision-making.
- Management consolidationManagement consolidation is an internal, decision-oriented consolidation view that may differ from the statutory consolidation in groupings and adjustments.
- Management reportingManagement reporting is internal financial and operational reporting that supports management decisions.
- Margin of safetyMargin of safety is the amount by which actual or expected sales exceed the breakeven point, expressed in units, dollars, or percentage terms.
- Marginal costMarginal cost is additional cost of producing one more unit of output.
- Master data managementMaster data management is the discipline of creating and maintaining a single consistent set of core reference data, such as customers, products, or entities, across systems.
- Matching principleMatching principle is the GAAP principle that expenses are recognized in the same period as the revenues they help generate.
- MaterialityMateriality is the threshold above which an omission or misstatement could change a user's economic decisions.
- Metrics layerMetrics layer is a centralized layer that stores governed metric definitions so a metric like ARR or churn is calculated identically across every tool that consumes it.
- Model Context Protocol (MCP)Model context protocol (MCP) is an open standard introduced by Anthropic in November 2024 that standardizes how AI applications connect to external tools, data, and systems.
- Model driftModel drift is the decline in model performance that happens when real-world data changes from the data patterns the model was trained or evaluated on.
- Model-agnosticModel-agnostic is a system not tied to a single model or provider.
- Model-agnostic financeModel-agnostic finance is the practice of designing finance AI so it is not locked to a single LLM provider, keeping context and logic portable across models.
- Monte Carlo simulationMonte carlo simulation is modeling outcome probabilities by running many randomized simulations of uncertain inputs.
- Month-end closeMonth-end close is the practice of recurring process of finalizing the books at period end so the financials can be reported.
- Monthly business reviewMonthly business review is a recurring meeting reviewing financial and operational performance for the month.
- Monthly Recurring RevenueMonthly recurring revenue is the normalized monthly value of committed recurring subscription revenue, usually tracked by new, expansion, contraction, and churn movements.
- Multi-agent systemMulti-agent system is multiple AI agents coordinating, often in parallel, on a complex task.
- Multi-currency reportingMulti-currency reporting is the practice of producing financial reports across entities that transact in different currencies, with translation into a common reporting.
- Multi-entity consolidationMulti-entity consolidation is the practice of combining the financial results of multiple legal entities into a single set of group statements, including eliminations, FX, and.
- Multimodal AIMultimodal AI is models that process and combine text, images, audio, or other inputs.
N
- Natural language queryNatural language query is asking data questions in plain language and getting structured answers.
- Negative churnNegative churn is the condition where expansion revenue from existing customers exceeds revenue lost to contraction and churn, producing NRR above 100%.
- Net burnNet burn is gross cash burn minus revenue over a period, showing the true cash loss that determines runway.
- Net marginNet margin is net income as a percentage of revenue — the bottom-line profitability ratio after all expenses, interest, and taxes.
- Net new ARRNet new ARR is the net change in ARR over a period, equal to new plus expansion minus contraction minus churned ARR, and its role in efficiency metrics.
- Net new logosNet new logos is the net number of customers added in a period, equal to new logos minus churned logos, and how it differs from net new ARR.
- Net revenue churnNet revenue churn is churn that nets expansion revenue against contraction and lost revenue, why it can go negative, and its relationship to NRR.
- Net Revenue RetentionNet revenue retention is the percentage of recurring revenue retained from existing customers after expansion, contraction, and churn, often used to measure account growth.
- Net working capitalNet working capital is current assets minus current liabilities, used to understand short-term operating resources and how balance-sheet changes affect cash.
- New logo ARRNew logo ARR is ARR added from newly acquired customers in a period, as distinct from expansion ARR and from net new ARR.
- Non-controlling interest (NCI)Non-controlling interest (NCI) is the portion of a subsidiary's equity and income not attributable to the parent, presented within consolidated equity.
- North Star metricNorth star metric is the single metric that best captures the core value a product delivers to customers.
O
- Office of the CFO (oCFO)Office of the CFO (ocfo) is the CFO's full organizational remit spanning planning, forecasting, reporting, treasury, accounting, and related finance functions.
- OKRs in financeOkrs in finance is the practice of using the objectives-and-key-results framework to set and track finance goals.
- OLAPOLAP is a category of processing optimized for fast, multidimensional analytical queries such as aggregations and slicing across large historical data sets.
- OLTPOLTP is a category of processing optimized for high volumes of short, concurrent transactional operations such as inserts and updates in operational systems.
- OntologyOntology is a formal model of the concepts, entities, and relationships in a domain, including hierarchies and constraints that support inference, distinct from the analytic.
- Open-weight modelOpen-weight model is a model whose trained parameters are released for self-hosting and adaptation.
- Operating budgetOperating budget is the plan of expected revenues and expenses for a period that guides spending.
- Operating cash flowOperating cash flow is the cash generated or used by core business operations before financing activities and most investing activities.
- Operating cycleOperating cycle measures the days it takes to turn inventory into sales and then collect the resulting receivables.
- Operating incomeOperating income is profit from core operations — gross profit minus operating expenses, before interest and taxes (equivalent to EBIT).
- Operating marginOperating margin is the practice of operating income as a percentage of revenue, capturing profitability after operating expenses but before interest and taxes.
- Operational planningOperational planning is the practice of translating strategy into specific short-term activities, resources, and targets.
- Overhead allocationOverhead allocation is the practice of distributing indirect overhead costs to cost objects using an allocation base or rate, such as labor hours or machine hours.
P
- Parent-subsidiaryParent-subsidiary is the relationship in which one company controls another through majority ownership, triggering consolidation.
- Pipeline coveragePipeline coverage is the ratio of open sales pipeline to the bookings target for a period, the common 3x to 4x rule of thumb, and how win rate affects it.
- Point-in-time reportingPoint-in-time reporting is the practice of reporting financial figures as they stood as of a specific date, reflecting only information known at that point.
- Posting periodPosting period is the defined time window to which transactions are posted, and the rules for opening or closing it.
- Predictive forecastingPredictive forecasting is the practice of using statistical or machine-learning models to project future financial results.
- Prepaid expensesPrepaid expenses is costs paid in advance and carried as an asset, then expensed over the periods they benefit.
- Price-volume-mix analysisPrice-volume-mix analysis is the practice of decomposing a revenue or margin change into price, volume, and product-mix effects.
- Prompt engineeringPrompt engineering is the practice of designing instructions, examples, constraints, and context so an AI model produces more useful outputs.
- Prompt injectionPrompt injection is manipulating an LLM with crafted input to override its instructions.
- Push-down accountingPush-down accounting is recording an acquirer's new basis (fair values and goodwill) directly in the acquired subsidiary's own financial statements.
Q
R
- Ratio analysisRatio analysis is the practice of using ratios drawn from the financial statements to assess performance and health.
- Reasoning modelReasoning model is a model that spends extra inference steps working through a problem before answering.
- Recurring revenueRecurring revenue is revenue a business can reasonably expect to continue at a predictable cadence, and how it differs from one-time and variable revenue.
- ReforecastReforecast is the practice of updating a forecast mid-period as new actuals and assumptions become available.
- Remaining Performance ObligationsRemaining performance obligations is the total contracted revenue not yet recognized, disclosed under ASC 606, split into current and long-term, and how it differs from.
- Remeasurement (foreign currency)Remeasurement (foreign currency) is converting balances into an entity's functional currency using the temporal method, with differences recognized in earnings.
- Renewal rateRenewal rate is the percentage of contracts or revenue up for renewal in a period that renews, and why it differs from period retention metrics.
- Reporting automationReporting automation is the practice of using software to generate recurring financial reports with minimal manual effort.
- Reporting currencyReporting currency is the currency in which consolidated group financial statements are presented, into which each entity is translated.
- ReproducibilityReproducibility is the ability to regenerate an identical result from the same inputs and method, a precondition for audit and verification.
- RestatementRestatement is the practice of revising previously issued financial statements to correct a material error in prior reporting.
- Retained earningsRetained earnings is cumulative net income kept in the business rather than paid out as dividends, reported in equity.
- Retrieval-augmented generationRetrieval-augmented generation is retrieving relevant documents at query time to ground an LLM's output.
- Revenue churnRevenue churn is churn measured as the percentage of recurring revenue lost before any expansion offset, and how it differs from logo and net churn.
- Revenue driverRevenue driver is an operational input such as volume, price, or conversion that directly moves revenue.
- Revenue forecastingRevenue forecasting is the practice of projecting future revenue from pipeline, bookings, retention, and pricing drivers.
- Revenue recognitionRevenue recognition is the rules determining when and how much revenue is recorded as goods or services are delivered.
- Reverse ETLReverse ETL is the practice of syncing modeled data from the warehouse back into operational tools such as CRMs and marketing platforms so teams act on it where they work.
- Rolling forecastRolling forecast is a forecast continuously extended period by period as actuals replace estimates, instead of a fixed annual horizon.
- Root cause analysisRoot cause analysis is the practice of identifying the underlying cause of a financial result or variance rather than its symptom.
- Rule of 40Rule of 40 is a SaaS benchmark where revenue growth rate plus profit margin should total at least 40 percent.
- Rule of XRule of x is an evolution of the Rule of 40 that weights growth more heavily than profit margin, and why later-stage investors increasingly use it.
- Run rateRun rate is the practice of annualizing recent performance to estimate a full-year figure, and its limitations.
S
- SaaS gross marginSaas gross margin is gross margin for subscription businesses, the typical 75%-plus benchmark, why AI-native products often run lower, and what belongs in COGS.
- SaaS magic numberSaas magic number is a sales-efficiency metric comparing new ARR to prior-quarter sales and marketing spend, its one-quarter lag, and interpretation thresholds.
- SaaS quick ratioSaas quick ratio is the ratio of new plus expansion MRR to churned plus contraction MRR as a measure of growth efficiency, and how it differs from the accounting quick ratio.
- Sales capacity planningSales capacity planning is modeling rep headcount, ramp, and productivity needed to hit a revenue target.
- Sales efficiencySales efficiency is the family of metrics relating revenue generated to sales and marketing investment, the common definitions, and how they overlap.
- Scenario planningScenario planning is modeling multiple plausible futures to test strategy and prepare for uncertainty.
- Segregation of dutiesSegregation of duties is the control of splitting responsibilities across people so no one can both create and conceal an error or fraud.
- Self-service analyticsSelf-service analytics is the practice of enabling non-technical users to explore data and build reports without analyst help.
- Semantic finance layerSemantic finance layer is a business-friendly modeling layer that defines finance metrics, entities, and relationships once over underlying data sources.
- Semantic layerSemantic layer is a business-friendly abstraction above the warehouse that defines metrics, dimensions, joins, and access rules once so all downstream tools compute the same.
- Semantic searchSemantic search is finding results by meaning rather than keyword match using embeddings.
- Semi-variable costSemi-variable cost is a cost with both a fixed base component and a variable component that scales with volume, such as a utility with a base charge plus usage.
- Sensitivity analysisSensitivity analysis is the practice of measuring how changes in one input affect an output, holding others constant.
- Single source of truthSingle source of truth is the practice of structuring data so that every element is mastered in exactly one authoritative place, with other systems referencing rather than.
- Snowflake schemaSnowflake schema is a dimensional design where dimension tables are normalized into related sub-dimensions, branching out from the fact table like a snowflake.
- Soft closeSoft close is a faster, less rigorous interim close that relies on estimates rather than fully finalized figures.
- SOX complianceSOX compliance is the Sarbanes-Oxley requirements for internal controls over financial reporting and management attestation.
- Star schemaStar schema is a dimensional design with a central fact table joined directly to surrounding dimension tables, forming a star shape for fast analytical queries.
- Statement of cash flowsStatement of cash flows is the statement reconciling net income to cash across operating, investing, and financing activities.
- Statistical forecastingStatistical forecasting is the practice of projecting results using historical time-series patterns and statistical methods.
- Statutory vs management reportingStatutory vs management reporting is the distinction between legally required, framework-compliant reporting and flexible internal reporting for decision-making.
- Step costStep cost is a cost that stays fixed over a range of activity and then jumps to a new level once a capacity threshold is crossed.
- Strategic financeStrategic finance is the practice of forward-looking finance work focused on driving decisions, capital allocation, and growth.
- Strategic finance engineeringStrategic finance engineering is the practice of applying engineering and automation practices specifically to strategic finance, planning, and decision support.
- SubledgerSubledger is a detailed ledger for a specific account (AP, AR, fixed assets) that rolls up into the general ledger.
- Synthetic dataSynthetic data is artificially generated data used to train or test models.
- System of recordSystem of record is the application designated as the authoritative source for a given type of data, such as the general ledger for accounting or the CRM for customer records.
- System promptSystem prompt is the persistent instruction that sets a model's role and constraints.
T
- Temporal databaseTemporal database is a database that natively stores and queries time dimensions, preserving historical states rather than overwriting them.
- Text-to-SQLText-to-sql is converting a natural language question into an executable SQL query.
- The three financial statementsThe three financial statements is the balance sheet, income statement, and cash flow statement and how they link together.
- Three-statement modelThree-statement model is an integrated model linking the income statement, balance sheet, and cash flow statement.
- Time-travel queryTime-travel query is a query that returns the database state as of a chosen point in valid and/or transaction time.
- TokenA token is a unit of text an AI model processes, such as a word fragment, punctuation mark, or symbol, used to measure context length and model cost.
- Tool use (function calling)Tool use (function calling) is an LLM invoking external functions or services and using structured results.
- Top-down forecastingTop-down forecasting is forecasting from market size or company-level targets down to segments and line items.
- Total Contract ValueTotal contract value is the total value of a contract over its full term including recurring and one-time fees, and how it differs from ACV.
- Transaction timeTransaction time is the time dimension recording when a fact was stored in the database, forming the immutable system-of-record history.
- Transfer pricingTransfer pricing is the practice of setting prices for goods, services, or intangibles exchanged between related entities under the arm's length principle.
- Treasury managementTreasury management is the discipline of managing cash, liquidity, banking, funding, payments, and financial risk for a company.
- Trend analysisTrend analysis is the practice of examining financial data over multiple periods to identify direction and patterns.
- Trial balanceTrial balance is a listing of all ledger account balances used to verify that total debits equal total credits.
U
- Unit economicsUnit economics is the direct revenues and costs associated with a single unit — customer, order, or product — used to assess whether growth is profitable.
- Unlevered free cash flowUnlevered free cash flow is cash available to all capital providers before debt service, commonly used with WACC to value the enterprise.
- UpsellUpsell is the practice of selling an existing customer a higher tier or more of the same product, and how it differs from cross-sell as a source of expansion revenue.
- Usage-based revenueUsage-based revenue is revenue that scales with customer consumption rather than fixed subscription fees, why it breaks standard MRR formulas, and how it affects retention.
V
- Valid timeValid time is the time dimension recording when a fact is true in the real world, independent of when it was entered into the system.
- Variable costVariable cost is costs that change in total in proportion to production or sales volume.
- Variable interest entity (VIE)Variable interest entity (VIE) is an entity consolidated based on control of its economic activities rather than majority voting interest, under the ASC 810 VIE model.
- Variance analysisVariance analysis is comparing actual results against budget, forecast, or prior period and explaining the drivers behind each gap.
- Variance bridgeVariance bridge is a bridge that decomposes the gap between planned and actual figures by driver.
- Variance commentaryVariance commentary is the written explanation accompanying variances in management or board reporting.
- Vector databaseVector database is a store for embeddings that enables similarity search.
- Version control of dataVersion control of data is the practice of tracking and retaining successive states of a dataset or model so any prior version can be retrieved and compared.
W
- What-if analysisWhat-if analysis is the practice of testing how changes in assumptions would affect financial outcomes.
- Workforce planningWorkforce planning is the practice of aligning workforce size, skills, and roles with strategic needs over time.
- Working capitalWorking capital is current assets minus current liabilities, used to measure the short-term resources available to operate the business.
- Working capital managementWorking capital management is the practice of optimizing receivables, payables, and inventory so the business can free up cash without weakening operations.