FINANCE GLOSSARY

Treasury and corporate finance, decoded.

50 essential terms every CFO, treasurer, and finance ops professional should master. Plain language. No jargon for the sake of jargon.

1

13-Week Cash Flow: A weekly forecast of cash inflows and outflows over the next 13 weeks. The PE / banker standard for short-term liquidity visibility.

Accounts Payable (AP): What your company owes to suppliers. Optimizing AP timing without hurting supplier relationships is the heart of DPO management.
Accounts Receivable (AR): What customers owe you. Faster AR collection reduces DSO and frees up working capital.
AISP: Account Information Service Provider — a regulated entity (under PSD2) authorized to access your bank accounts on your behalf. Bridge and Powens are AISPs.
ARR: Annual Recurring Revenue — the predictable subscription revenue normalized to a yearly run-rate. Standard SaaS metric.

Burn rate: The rate at which a company spends cash, typically expressed monthly. Gross burn = total spend; net burn = spend minus revenue.

Cash conversion cycle (CCC): DSO + DIO − DPO. Measures how long cash is tied up in operations. Lower is better.
CFONB: Comité Français d'Organisation et de Normalisation Bancaires — the French banking format standard for transaction files (CFONB 120, 240, 320).
Covenant: A condition in a loan agreement (e.g., minimum DSCR, maximum leverage). Breach can trigger penalties or accelerated repayment.

DPO: Days Payable Outstanding — the average number of days your company takes to pay its suppliers.
DSO: Days Sales Outstanding — the average number of days your company takes to collect payment from customers after a sale.
DSCR: Debt Service Coverage Ratio — operating cash flow ÷ debt service. A common bank covenant; usually >1.25x.
DIO: Days Inventory Outstanding — the average number of days inventory sits before being sold.

EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization — a proxy for operating cash flow used in valuation and covenants.

FEC: Fichier des Écritures Comptables — the French regulator-standard accounting export. Required for tax inspections.
Float: Money in transit between when a payment is initiated and when it settles. Reducing float frees up cash.
Free Cash Flow (FCF): Operating cash flow minus capital expenditures. The cash actually available for shareholders, debt repayment, or reinvestment.
FX exposure: Risk that currency movements will reduce the value of foreign-denominated cash, receivables, or payables.

Gross margin: (Revenue − cost of goods sold) ÷ revenue. Healthy SaaS gross margin is 75-90%; e-commerce 30-50%.

IBAN: International Bank Account Number — the global standard for identifying bank accounts. Always validated before payments to prevent fraud.
ISO 20022: The modern global standard for financial messaging. Replacing legacy SWIFT MT formats. Required for SEPA Instant payments.

Liquidity ratio: Current assets ÷ current liabilities. Measures short-term ability to meet obligations. >1 means solvent in the short term.

MFA: Multi-Factor Authentication — requiring two or more verification factors (password + phone code, etc.). Mandatory on Arxa for admins.
MMF: Money Market Fund — a low-risk fund investing in short-term debt. Common for parking idle corporate cash with daily liquidity.

Net Revenue Retention (NRR): (Beginning ARR + expansion − contraction − churn) ÷ Beginning ARR. >100% means existing customers are growing faster than they churn.
Net working capital (NWC): Current assets minus current liabilities (excluding cash and short-term debt). Cash trapped in operations.

OPEX: Operating Expenses — recurring costs of running the business (salaries, rent, software). Distinct from CAPEX.
Operating cash flow: Cash generated by core operations, before financing and investing activities. The most important short-term liquidity indicator.
Overdraft: A short-term credit facility on your bank account. Convenient but expensive — Arxa flags chronic overdraft usage.

PISP: Payment Initiation Service Provider — regulated under PSD2 to initiate payments on behalf of users. Used for one-click bill payments.
PSD2: Payment Services Directive 2 — EU regulation enabling open banking. Mandates banks to expose secure APIs to licensed third parties.

Quick ratio: (Current assets − inventory) ÷ current liabilities. A stricter liquidity test than the current ratio.

Reconciliation: Matching bank transactions to accounting entries to ensure books match reality. Arxa automates 95%+ of reconciliations.
Revolver: Revolving credit facility — a flexible loan you can draw down and repay repeatedly up to a limit. Used as a working capital safety net.
Runway: Cash on hand ÷ net monthly burn. Tells you how many months of operation are left before you need new funds. Critical for startups.

SCA: Strong Customer Authentication — PSD2 requirement that payments be authenticated with two factors (e.g., card + SMS code or biometric).
SEPA: Single Euro Payments Area — the unified European payments system. SEPA Credit Transfer (SCT) and SEPA Direct Debit (SDD) are the standards.
SEPA Instant: Real-time SEPA transfers, settled in under 10 seconds, available 24/7. Limit currently €100,000 per transaction.
Solvency: Long-term ability to meet obligations. Measured by debt-to-equity, interest coverage, and similar ratios.
SOC 2 Type II: An independent audit of a service organization's controls over security, availability, and confidentiality. The standard for B2B SaaS trust.
SSO / SAML: Single Sign-On using SAML 2.0 — lets enterprise customers log in with their existing identity provider (Okta, Azure AD, Google Workspace).
Stress test: Modeling cash positions under adverse scenarios (e.g., 30% revenue drop, key customer default). Required by some lenders and PE backers.

TFT: Tableau de Flux de Trésorerie — the French standard cash flow statement, with operating, investing, and financing sections.
Trapped cash: Cash held in a subsidiary or jurisdiction that can't easily be moved without tax leakage or regulatory friction.
Treasury: The function responsible for managing a company's cash, liquidity, banking relationships, FX exposure, and short-term investments.

Variance analysis: Comparing actual results to budget / forecast and explaining the gap. The bedrock of financial control.

Wire transfer: A direct, often-irrevocable bank-to-bank money transfer. SWIFT for international, SEPA for EU euros.
Working capital: Current assets minus current liabilities. Positive working capital means short-term obligations are covered by short-term assets.

Yield: The return on an investment, usually expressed as an annualized percentage. Idle corporate cash can typically earn 2-4% with minimal risk.

Zero-balance account (ZBA): A subsidiary account where the balance is automatically swept to a master account at end of day. Centralizes liquidity in groups.