Glossary of business terms for Australian small businesses

Understanding the language of business is crucial. Not only will it help you navigate day-to-day operations, it will also give you confidence when dealing with other business owners and support specialists, like accountants, bookkeepers and business coaches.

This glossary has been collated for all Australian small businesses, with a special nod to businesses in trades services that we coach. (Tip: If you’re an electrician, plumber, or other tradie specialising in the commercial sector, check out our glossary on tender terms.)

Before you dive in, I’ll say this: it’s one thing to understand the concepts of business; it’s another thing to apply them to grow your business. If you want to know how to use these terms to take your business to the next level, give us a call or drop us a line.

A

ABN

Australian Business Number. This is a unique 11-digit number issued by the Australian Business Register (ABR). This number identifies a business for tax and other business purposes.

Accounting period

The time for which profits are being calculated, normally months, quarters or years.

Accounts

Businesses are obligated to produce an annual set of accounts. If they are listed on the stock exchange, they must also show half-year profits (information regarding profits six months into the financial year).

Accounts payable

In short: What you owe to external suppliers. In detail: a record of all unpaid short-term (less than 12 months) invoices, bills and other liabilities. Examples of accounts payable include invoices for goods or services, bills for utilities and tax payments due.

Accounts receivable

In short: What is owed TO you. In detail: a record of all short-term accounts (less than 12 months) from customers you sell to but are yet to pay. These customers are called debtors and are generally invoiced by a business.

Accounts receivable finance

see Factoring.

Accrual accounting

an accounting system that records transactions at the time they occur, whether the payment occurs now or in the future.

ACN

Australian Company Number. This is a unique 9-digit number issued by the Australian Securities and Investments Commission (ASIC).

Acquisition

The purchase of one company or resources by another.

Administration

There are two meanings relating to this word in business. (1) The organisation and running of a business. (2) A business going into administration, meaning that a business has gone bankrupt and its creditors can get in touch to try and claim any money they are owed.

Affiliate marketing

A retailer or service provider advertising its goods or services via a third party in return for a commission on any sales.

Amortisation

the process of offsetting assets such as goodwill and intellectual property over a period of time. See also Depreciation.

Annual equivalent rate (AER)

A quote of what interest paid on savings and investments would be. It is calculated by adding each interest payment to the original deposit, then working out the next interest payment, compounding the interest.

Annual leave

an entitlement for most full-time and permanent part-time (pro-rata) employees to four weeks of paid leave per year.

Annual percentage rate (APR)

This is the rate of interest you agree to pay on money borrowed. The higher the amount, the more you will pay.

Apprenticeships

apprenticeships allow a person to study for a trade qualification, for example as a carpenter, chef or hairdresser. It takes approximately three to four years to complete an apprenticeship.

Arbitrage

The process by which a person or business takes advantage of the difference in price of a share or a currency.

Assets

things you own. These can be cash or something you can convert into cash such as property, vehicles, equipment and inventory.

Audit

a check by an auditor or tax official on your financial records to check that you account for everything correctly.

B

B2B

Business to business. For example, if you’re an electrician specialising in commercial maintenance for factories, you’re in the B2B sector.

B2C

Business to consumer. For example, if you’re running an allied health clinic providing wellness services with physio or chiro treatments, you’re in B2C.

Bad debts

money that is unlikely to be paid in the near future.

Balance sheet

A ‘snapshot’ of a company’s assets, liabilities and capital at a particular point in time.

Balloon payment

A final lump sum payment due on a loan agreement. Loans with a larger final ‘balloon payment’ have lower regular repayments over the term of the loan.

Bank reconciliation

A cross-check that ensures the amounts in your cashbook match the relevant bank statements.

Bankrupt

An individual is bankrupt when they cannot pay their debts and aren’t able to reach an agreement with their creditors.

Bankruptcy

The process where an individual is legally bankrupt and an appointed trustee manages their assets and financial affairs.

BAS

Business Activity Statement. A form used to report business tax entitlements and obligations, including Goods and Services Tax (GST) and Pay As You Go (PAYG).

Benchmark

a set of conditions against which you can measure a product or business.

Benchmarking

the process of comparing your business to similar businesses in your industry.

Billable hours

The amount of an employee’s work time that can be charged to a client. This is an important measure in businesses that have labour as their main cost, such as plumbers, electricians, landscape construction. Click here to find out how Tenfold coaches support trades businesses.

Bill of sale

a legal document for the purchase of property or other assets that details the purchase, where it took place, and for how much.

Black swan

Financial events that are difficult to predict. It is called this because before people ventured to Australia, swans were assumed to only be white. No one had seen a black one until then.

Bookkeeping

the process of recording the financial transactions of a business.

Bootstrapping

where a business funds its growth purely through personal finances and revenue from the business.

Bottom line

see Net profit.

Break-even point

the exact point when a business’s income equals its expenses.

Bridging loan

This loan is taken out by people who need access to finance while their property is being sold.

Budget

a listing of planned revenue and expenditure for a given period.

Business coach

Also known as a small business coach, is an experienced advisor who provides guidance, tactics and strategies to grow your business. They are impartial and are paid a fee for their service and their knowledge. They may also provides their services in return for a stake in the company or for a success-based fee.

Business cycle

The tendency for economies to experience peaks and troughs that follows a cyclical pattern – known colloquially as ‘boom and bust’. Governments are tasked with smoothing the peaks and troughs and limiting the effect of these cycles on consumers and businesses.

Business life cycle

The key stages a business goes through from start to end. The stages are marked by the different resources and decisions required to continue the business’ progress. Business coaching across the business life cycle can provide advice and support.

Business plan

A guide for your business that outlines goals and details how you plan to achieve those goals.

C

Capital

Wealth in the form of money or property owned by a business.

Capital cost

a one-off substantial purchase of physical items such as plant, equipment, building or land.

Capital expenditure (capex)

Money spent to create future benefits. Capital expenditure is money spent by a company either to buy fixed assets or to add to the value of existing fixed assets with a useful life that extends beyond the taxable year. With regard to tax, capital expenditure cannot be deducted in the year the money is paid. Compare with operating expenditure (OPEX), which refers to ongoing costs to run a product, service or system.

Capital gain

the amount gained when an asset sells above its original purchase price.

Capital growth

an increase in the value of an asset.

Cash

includes all money available on demand, including bank notes and coins, petty cash, certain cheques, and money in savings or debit accounts.

Cash accounting

an accounting system that records transactions at the time you actually receive money payment.

Cash book

a daily record of all cash, credit or cheque transactions received or paid out by a business.

Cash flow

The movement of cash into and out of a business.

Chart of accounts

An index of the accounts a business will use to classify transactions. Each account represents a type of transaction such as asset, liability, owner’s equity, income, and expense.

Collateral

Collateral is something lenders can use to give security against a loan. Often this is a major asset such as a house.

Commercial bill (also known as a bill of exchange)

a form of commercial loan on an interest only basis, or interest reducing basis. Commercial bills typically require some sort of security and suit short-term funding needs such as inventory.

Commodity

This is any item which can be freely bought and sold. Examples include gold, food products and coffee beans.

Contingent liability

a liability where payment is made only if a particular event or circumstance occurs.

Copyright

The exclusive legal right, owned by the individual or group who created a work, or by an individual or group assigned by the originator, to use certain material and to allow others the right to use the material.

Corporate social responsibility

Corporate social responsibility (CSR) is a form of self-regulation, where companies integrate social, environmental and ethical policies into their overall business strategy. Companies embracing CSR should take responsibility for their actions and take a proactive approach to having a minimal negative impact on the world.

Cost control

Also known as cost management. The practice of identifying and reducing business expenses to increase profits.

Cost of goods sold (COGS)

The total direct costs of producing a good or delivering a service. If your business has labour as a major part of your service – tradies, we’re talking to you – then your labour expenses should be recorded as COGS. That includes the costs of any subcontractors you use. The reason is because it allows you to work out the job profitability and utilisation, both of which are key growth drivers for labour-based businesses.

Cost reductions

The process used to reduce costs and increase profit.

Credit

a lending term for when a customer purchases a good or service with an agreement to pay at a later date. This could be an account with a supplier, a store credit card or a bank credit card.

Credit history

a report detailing an individual’s or business’s past credit arrangements. A lender may seek a credit history when assessing a loan application. Visit ASIC’s MoneySmart website to read more about credit reports.

Credit limit

a dollar amount that you cannot exceed on a credit card or the maximum lending amount offered for a loan.

Credit rating

a ranking applied to a person or business based on their credit history that represents their ability to repay a debt. Visit ASIC’s MoneySmart website to learn more about credit ratings.

Creditor

anyone who you owe money to, such as a lender or supplier; a person or business that allows you to purchase a good or service with an agreement to pay at a later date. .

Critical success factor

A critical success factor is an element that must occur in order for a business to achieve its ultimate goal.

Crowdfunding

is a way of financing your business idea through donations of money from the public. This usually occurs online, through a crowdfunding website.

Current asset

an asset in cash or something you can convert into cash within 12 months.

Current liability

a liability that is due for payment within 12 months.

D

Debit

In double-entry bookkeeping, a debit is an entry made on the left-hand side of a journal or ledger representing an asset or expense.

Debt

Any amount that you owe including bills, loan repayments and income tax.

Debt consolidation

The process of combining several loans or other debts into one for the purposes of obtaining a lower interest rate or reducing fees.

Debt finance

Money provided by an external lender, such as a bank

Debtor

A person or business that owes you money.

Debtors finance

See Factoring. And also be careful. This type of financing can erode your margins, sometimes sending you backwards. To find out more, speak with a small business coach at Tenfold.

Default

A failure to pay a loan or other debt obligation.

Depreciation

The reduction in value of assets over time, usually due to wear and tear. In accounting it’s the process of offsetting an asset over a period of time. You can depreciate an asset to spread the cost of the asset over its useful life.

Disbursements

Money that a business pays out, usually to shareholders, equity holders such as business owners.

Discount

A reduction applied to a full priced good or service. See also Mark Down. And also try to avoid providing discounts.

Diversification

When new products, services, customers or markets are added to your company’s portfolio. Diversification usually occurs as a risk reduction strategy.

Dividend

Money paid regularly by a company to its shareholders.

Double-entry bookkeeping

is a bookkeeping method that records each transaction in 2 accounts, both as a debit and a credit.

Drawings

Personal expenses of the business owner paid for from the business account. Often used in place of wages for the business owner.

Drip pricing

When one price is presented at the beginning of an online shopping experience. Gradually, incremental fees and charges are added (or ‘dripped’) as you progress, for example, when buying a plane ticket. Drip pricing can result in the customer paying a higher price for a service or product than they first thought. However, you are required to show fees and charges at the beginning of an online shopping process and not gradually add them in.

E

Economic growth

This is the term used to describe an increase in the amount of goods and services produced by the county, known as gross domestic product (GDP).

Economies of scale

The cost advantages obtained by a business when buying an item in bulk. The price of an item usually decreases as the amount bought increases.

Employee share schemes

Where you give your employees the opportunity to buy shares in your company. Other terms include an ’employee share purchase plan’ or an ’employee equity scheme’. This is different from a profit sharing arrangement; it’s structured differently and has different tax implications.

Encumbered

an encumbered asset is one that is currently put forward as security or collateral for a loan.

Enterprise value

This is the market value of a business. It is calculated by market capitalisation times current share price, minus cash, plus debt.

Equity

The value of ownership interest in the business, calculated by deducting liabilities from assets. See also Owner’s equity.

Equity finance

Money provided to a business in exchange for part ownership of the business. This can be money invested by the business owners, friends, family, or investors like business angels and venture capitalists.

Ethical investment

Investments made in companies that are specifically chosen for their environmental or moral credentials. Defence contractors, or companies known to use contentious labour practices, will generally be avoided by ethical investors.

Excise duty

An indirect tax levied on certain types of goods produced or manufactured in Australia including petrol, alcohol, tobacco and coal.

Exit strategy

A plan to enable you to leave your business, either after achieving your goal or deciding you would like to move on to do something else while recouping any capital you invested when starting the company. At Tenfold, we provide coaching support to sell your business so you can fully access the weath that you’ve created. .

Export

Selling your goods or services overseas.

F

Facility

an arrangement such as an account offered by a financial institution to a business (such as a bank account, a short-term loan or overdraft).

Factoring (also known as debtor’s finance and accounts receivable finance)

when a factor company buys a business’s outstanding invoices at a discount. The factor company then chases up the debtors. Factoring is a way to get quick access to cash, but can be quite expensive compared to traditional financing options.

FBT

Fringe Benefits Tax. Tax employers must pay on certain benefits they provide to their employees.

Finance

money used to fund a business or high value purchase.

Financial management

Planning, analysing, monitoring, organising, reviewing and controlling an organisation’s monetary resources. Responsibility for financial management often falls to the finance director, and by extension the financial department.

Financial statement

a summary of a business’s financial position for a given period. Financial statements can include a profit and loss, balance sheet and cash flow statement.

Financial year

a 12-month period typically from 1 July to 30 June.

Fixed asset

a physical asset used in the running of a business.

Fixed cost

Any cost that remains the same in the short-term, despite changes in volume. Fixed costs usually include rent, and salaries of people not directly involved in producing the goods or services such as admin team members.

Fixed interest rate

when the interest rate of a loan remains the same for the term of the loan or an agreed timeframe.

Float

when a private company offers shares in the company to the public for the first time. See Initial public offering.

Forecast

a list of future financial transactions. Forecasts help to plan a more accurate budget.

Fringe benefits

non-monetary benefits, such as company cars and mobile phones, included as part of a salary package.

Fully drawn advance

is a long term loan with the option to fix the interest rate for a period. These loans are usually secured and can help fund a new business or equipment.

G

Goodwill

an intangible asset that represents the value of a business’s reputation.

Gross income

the total money earned by a business before you deduct expenses.

Gross profit (also known as net sales)

the difference between sales and the direct cost of making the sales.

GST

Goods and Services Tax. A tax of 10% on most goods and services

Guarantor

a person who promises to pay a loan in the event the borrower cannot meet the repayments. The guarantor is legally responsible for the debt.

H

Half year

This is a term used to describe six months into the financial year when British listed companies must produce profit figures.

Hire-purchase

a type of contract where you purchase a good through an initial deposit. You then rent it and pay the balance off in instalments plus interest charges. When you make the final payment, ownership of the good transfers to the purchaser. See also Rent to buy.

Horizontal merger

When two companies within the same industry and at the same stage in production merge together.

Hostile takeover

This is a takeover bid of a company that is deemed unacceptable or has unwelcome terms as deemed by the company’s board.

Hyperinflation

This is inflation that is rapid or out of control. It usually only occurs during wars or during severe political instability.

I

Import

Buying goods or services from overseas and bringing them into the country.

Income statement

Determines the net income/profit of a business. An annual summary of both income and expenses.

Inflation

The term used when prices rise.

Insolvent

a business or company is insolvent when they cannot pay their debts as and when they are due.

Intangible assets

non-physical assets with no fixed value, such as goodwill and intellectual property rights.

Intellectual property

Any works or inventions that are original creative designs. The individual or company responsible for the designs will be entitled to apply for a copyright or trademark on the designs.

Interest

the cost of borrowing money on a loan or earned on an interest-bearing account.

Interest rate

a percentage used to calculate the cost of borrowing money or the amount you will earn. Rates vary from product to product and generally the higher the risk of the loan, the higher the interest rate. Rates may be fixed or variable.

Interim profit statement

This updates shareholders on a company’s unaudited profits for the first half of the financial year.

Inventory

a list of goods or materials a business is holding for sale.

Investment

the purchase of an asset for the purpose of earning money such as shares or property. Visit ASIC’s MoneySmart website for more about personal investing.

Invoice

a document to a customer to request payment for a good or service received.

Invoice factoring

Invoice factoring involves a business selling its invoices on to a third party, who will then add their own fee to the charges and seek the money from the debtor.

Invoice finance

finance based on the strength of a business’s accounts receivable. This form of financing is similar to factoring, except that the invoices or accounts receivable remain with the business. See also Factoring.

K

Key performance indicator

A key performance indicator (KPI) is a measure of performance to assess the success of a company or a certain activity the company is taking part in.

L

Leveraged buyout

When a company is acquired using borrowed funds. The debt is usually repaid by money made by the acquired company.

Liability

any financial expense or amount owed.

Line of credit

an agreement allowing a borrower to withdraw money from an account up to an approved limit.

Liquid asset

Any asset which can be easily converted into cash.

Liquidate

to quickly sell all the assets of a company and convert them into cash.

Liquidation

the process of winding up an insolvent company. An appointed administrator will do this by ceasing business operations, selling assets, and paying creditors and shareholders.

Liquidity

how quickly you can convert assets into cash.

Loan

a finance agreement where a business borrows money and pays it back in instalments (plus interest) within a specified period of time.

Loan to value ratio (LVR)

your loan amount shown as a percentage of the market value of the property or asset that you purchase. The ratio helps a lender work out if they can recover the loan amount if the loan goes into default.

M

Margin

the difference between the selling price of a good or service and the profit. Margin is generally shown as a gross margin percentage which shows the proportion of profit for each sales dollar.

Mark down

a discount applied to a product during a promotion or sale for the purposes of attracting sales or for shifting surplus or discontinued products. See also Discount.

Mark up

the amount added to the cost price of goods, to help determine a selling price. Essentially it is the difference between the cost of the good/service and the selling price. It does not take into account what proportion of the amount is profit.

Market segmentation

A market segment is a division of a market with similar characteristics (e.g. age, gender, religion) that cause them to demand similar products and/or services. For example, in an area with a large Jewish community, kosher foods are likely to be in greater demand.

Market share

The percentage or portion of the overall market controlled by one company.

Marketing mix

The combination of marketing elements used by a company to encourage consumers to purchase its product or service. Also known as the seven Ps: product, price, promotion, place, people, process, physical evidence.

Merger

When two or more companies are combined into one.

Modern awards

regulations which state the conditions of work for employees in specific occupations and industries, including minimum wages, hours worked, and more.

N

Negative equity

When the value of an asset you have already bought becomes worth less than what you initially paid.

Net

The amount of profit remaining after deductions such as tax have been made.

Net asset value

A way of measuring investment trusts. Take the total number of its assets minus its liabilities.

Net assets (also known as net worth, owner’s equity or shareholder’s equity)

the total assets minus total liabilities.

Net income

the total money earned by a business after tax and other deductions.

Net profit (also known as your bottom line)

the total gross profit minus all business expenses.

Net worth

see Net assets.

Nominal interest rate

An interest rate that isn’t adjusted for inflation.

Nominal values

These values do not take inflation into account.

Non-executive director

This is a director who helps the company and offers an independent view on strategies and performance but is not actively involved in the day-to-day running.

O

Oligopoly

A market where only a few firms control the percentage of total sales.

Operating expenditure (opex)

On-going costs for running a business, service or system that includes day-to-day expenditure such as sales and administration. Compare with capital expenditure, which is money spent on fixed assets or extensions to already-owned fixed assets. A photocopier, for example, would involve capital expenditure whereas toner and paper for the photocopier would be operating expenditure.

Operating profit/loss

The profit or loss a company makes. These figures reflect how the business is performing.

Ordinary share

Also known as common shares, this is one unit of a businesses share capital.

Overdraft facility

a finance arrangement where a lender allows a business to withdraw more than the balance of an account.

Overdrawn account

a credit account that has exceeded its credit limit or a bank account that has had more than the remaining balance withdrawn.

Overheads

the fixed costs associated with operating a business such as rent, marketing, utilities and administrative costs. See also Fixed costs.

Overheads

Costs that do not vary regardless of the level of production and are not usually directly involved with the cost of production, such as rent.

Overheads

also known as operating expenses which refer to those expenses associated with running a business.

Owner’s equity

see Net assets.

P

Patent

An official legal document confirming that an individual or company has the sole right to make, use or sell a particular invention.

PAYG

Pay as you G. A method of collecting income tax on behalf of the Government by taking it directly from your employees’ weekly/monthly pay.

Personal leave

an entitlement for all Australian employees to paid days off when the employee or their immediate family member is unwell.

Personal Property Security Register (PPSR)

the PPSR replaces a number of registers of security interests. It provides a single national noticeboard of security interests in personal property. Read more about how to use PPSR for your business.

Petty cash

cash for small miscellaneous purchases such as postage.

Philanthropy

Making donations to charities in order to improve human wellbeing.

Plant and equipment

a group of fixed assets used in the operation of a business such as furniture, machinery, fit-out, vehicles, computers and tools.

Present value

Comparison of the money available to the company in the future with the value of money it currently holds, e.g. due to interest.

Principal

the original loan amount borrowed or the remainder of the original borrowed amount that is still owing (excluding the interest portion).

Private limited company

A type of legal company structure that, among other features, limits the personal liability of the company owners so that they can’t be made bankrupt by company debts.

Privatisation

The process of moving state-owned assets into the private sector.

Product elasticity of demand (ped)

The degree to which demand for products or services changes with the price. Essential goods, such as food, do not experience an increase in demand when the price changes, and are deemed “inelastic”, but non-essential goods do.

Profit

the total revenue a business earns minus the total expenses. See also Revenue.

Profit and loss account

A financial statement that shows any incomes or outgoings of a company over a certain period of time so as to show the net profit or loss for that time.

Profit and loss statement (also known as an income statement)

a financial statement listing sales and expenses. Use it to work out the gross and net profit of a business.

Profit margin

see Margin.

Projection

see Forecast.

PTY LTD

short for Proprietary Limited. This is a company structure that operates privately and has not offered shares to the general public. Proprietary Limited.

R

R&D

stands for ‘research and development’. Businesses conduct research and development to innovate, create new products and find better ways of doing things.

Rate of return

This is represented as a percentage and is the annual income an investment makes back.

Real interest rate

The rate of interest minus the current rate of inflation.

Real values

Real values show how relative particular prices are to prices in general. They are adjusted according to inflation.

Receipts

a document given to a customer to confirm payment and to confirm the sale of a good or service.

Record keeping

the process of keeping or recording information that explains certain business transactions. Record keeping is a requirement under tax law.

Refinance

when a new loan helps to pay off an existing one. Reasons to refinance include: extending the original loan over a longer period of time, reduce fees or interest rates, switch banks, or move from a fixed to variable loan.

Rent to buy

a finance arrangement where you purchase something through an initial deposit and then ‘lease’ it while pay it off. After the final payment, the purchaser has the option (but no obligation) to buy the good or continue leasing. See also Hire-purchase.

Repossess

the process of a bank or other lender taking ownership of property/assets for the purpose of paying off a loan in default.

Retention of title

a clause in contracts where a buyer may receive property, but doesn’t take legal ownership until the full price is paid.

Return on investment (ROI)

a calculation that works out how efficient a business is at generating profit from the original equity from the owners/shareholders. It’s a way of thinking about the benefit (return) of the money you invest into the business. To calculate ROI, divide the gain (net profit) of the investment by the cost of the investment. The ROI then becomes a percentage or a ratio.

Revenue

Also known as top line income, total sales, and turnover. It’s the amount of money your business generates from selling its goods or services. Revenue is the amount earned before any expenses, taxes or other deductions.

S

Scam

a deliberate and targeted deception to obtain money or information unlawfully.

Security (also known as collateral)

property or assets that a lender can take ownership of when repayment of a loan does not occur.

Share options

A right to buy shares in a company in the future, at a favourable price, in addition to a regular salary if the person meets specific performance targets or predetermined criteria.

Shareholder

An owner of shares in a company.

Shareholder’s equity

see Net assets.

Single-entry bookkeeping

a bookkeeping method within a cash accounting system that records one side of each transaction.

Small business

the ATO defines a small business as one that has an annual revenue turnover of less than $2 million (excluding GST). Fair Work Australia defines a small business as one that has less than 15 employees.

SME

Small and medium-sized enterprises. A small business has fewer than 50 staff and a medium-sized business has fewer than 250 staff. Micro-businesses, with fewer than 10 staff, would also come under the term ‘SME’.

SMSF

stands for self-managed superannuation fund. An SMSF is a way of saving for your retirement. Unlike other super funds, an SMSF is self-managed, which means you’re responsible for making sure the super fund complies with super and tax laws. ASIC’s MoneySmart also has useful information on SMSFs.

Social enterprise

Social mission driven businesses, with social and/or environmental aims, that use market-based strategies to achieve their goals. Social enterprises can be both non-profit and for-profit.

Stakeholders

Any individual or party that has an interest in or may be affected by a business and/or its activities. This can include anyone, from shareholders to residents of the local community.

Stock

the actual goods or materials a business currently has on hand.

Stocktaking

a regular process involving a physical count of merchandise and supplies actually held by a business, to verify stock records and accounts.

Superannuation

also known as ‘super’ for short. Money put aside by an employer and invested in a fund for the employee’s retirement. There is useful information on ASIC’s MoneySmart website about businesses paying their employees super.

Supply chain

The different elements making up the process involved in producing and distributing an item or items.

Sustainability

The use of natural resources with a minimal impact on the environment; e.g. no depletion of resources. For example, a company that manufactured paper would be sustainable if it only made 100 percent recycled paper or planted a new tree for each one it cut down.

T

Takeover

The buying out of one company by another.

Tax invoice

an invoice required for the supply of goods or services over a certain price. You need a valid tax invoice when claiming GST credits. See also Invoice.

TFN

Tax File Number. It is a unique 8- or 9-digit identifier issued by the ATO.

Trademark

A logo, brand name or phrase legally registered by one company to represent them.

Triple bottom line

People, planet, profit. The bottom line was originally considered as just profit. In recent years, with the growth in popularity of corporate social responsibility, businesses are increasingly measuring project success not only in monetary terms, but also by examining their social and environmental performance.

Turnover – staff

The total sales of a business or company during a specified period.

U

V

Variable cost

a cost that changes depending on the number of goods produced or the demand for the products or service.

Variable interest rate

when the interest rate of a loan changes with market conditions for the duration of the loan.

Venture capital

an investment in a start-up business that has excellent growth prospects. However, it does not have access to capital markets because it is a private company.

Venture capital

Capital invested into projects with higher risks, usually start-up businesses.

Vertical merger

A merger between companies that are in the same industry but are not at the same production stage. For example, if a car manufacturer buys a tyre company. They are part of the car manufacturing industry, but now the car maker can reduce the cost of tyres.

W

Workers’ compensation

a compulsory form of insurance for all employers in Australia. It provides protection to workers if they suffer a work-related injury or disease.

Working capital

the cash available to a business for day-to-day expenses.

Working capital

This is the capital a business uses in its day-to-day trading. It’s the difference between current assets and current liabilities. It provides an indication of liquidity and the businesses ability to meet its current obligations.

Work-life balance

The balance in demands of both life at work and personal life.

WPN

Withholding Payer Number. This is a number issued to employers who have PAYG withholding obligations.

Y

Yield

The income from an investment. Calculated by taking the annual dividend or interest payment, multiplying by 100 and dividing by the current market price.