Glossary
Key business management terms, explained simply and practically.
Break-even point
The minimum revenue level needed to cover all costs, fixed and variable. Below this threshold, the business is losing money.
Budget
A numerical forecast of expected revenue, costs, and results for the next 12 months.
Cash flow
The difference between monetary inflows and outflows in a period. It measures the company's actual liquidity, not revenue.
Contribution margin
The difference between selling price and variable costs. It shows how much each unit sold contributes to covering fixed costs and generating profit.
DSO and DPO
DSO (Days Sales Outstanding) and DPO (Days Payable Outstanding): the two indicators that measure average collection time from clients and payment time to suppliers.
EBITDA
Earnings before interest, taxes, depreciation, and amortization: measures operating profitability.
Fixed and variable costs
Fixed costs don't change with production volume (rent, salaries). Variable costs do (materials, energy). Distinguishing them is the foundation of cost control.
Fractional controller
A professional who supports SME management control without being a full-time employee.
Full costing
A costing method that includes all costs — direct, indirect, and overhead — in a product's cost. The most complete way to know what something really costs you.
Hourly cost
The total cost the company bears for every hour of work by an employee. Includes salary, contributions, severance, holidays, sick leave, and indirect costs.
Income statement
The document summarizing a company's revenue, costs, and result over a period.
Job / Project
A specific job or project delivered to a client, with traceable costs and revenue.
KPI (Key Performance Indicator)
A key performance indicator: a summary number that measures the performance of a critical aspect of the business.
Management control
The business function that monitors and analyzes financial data to support the entrepreneur's decisions. It's not accounting — it's the intelligent reading of numbers.
Margin
The difference between the selling price and the cost of a product or service. It shows how much the company retains after covering costs.