A glossary is a curated set of term definitions for a domain. Fintra’s goes one step further: because Fintra is the AI Finance Operating System that records the ledger, builds the plan, runs payroll and equity, and governs every AI action, each definition is paired with how the concept is actually produced, approved, and audited in one system of record, not left as an abstract dictionary entry.
Glossary of finance, payroll and AI governance terms
203 plain-English definitions. Each one has a worked example and says where the term shows up in Fintra.
Accounting and Finance
- Accounts Payable (AP)What you owe suppliers for what you have already received: the bills side of the ledger.
- Accounts Receivable (AR)What customers owe you for what you have already delivered: the invoices side of the ledger.
- Accrual AccountingThe accounting method that records economic activity when it happens: regardless of when cash changes hands.
- Accrued ExpensesCosts you have already used but have not yet paid: captured so the period reflects what it truly consumed.
- AI Finance WorkspaceThe one screen that starts the finance day: a brief, the approvals waiting on you, cash, risks, and recommended actions in one place.
- Allowance for Doubtful AccountsThe reserve that sits against receivables so the balance sheet shows what you actually expect to collect.
- AmortizationSpreading an intangible asset’s cost, or a loan’s principal, evenly over the periods it applies to.
- Annual Recurring Revenue (ARR)The annualized run-rate of recurring revenue: the headline number for SaaS scale and valuation.
- ASC 606The revenue recognition standard every US company that contracts with customers has to follow.
- ASC 842The lease accounting standard that moved operating leases onto the balance sheet.
- Bad Debt ExpenseThe expense that recognizes customers who will not pay, so your receivables and profit stay honest.
- Balance SheetA snapshot of what you own, what you owe, and what is left for the owners, at a single moment.
- Bank ReconciliationProving your books agree with the bank: the control that catches errors, fraud, and missed entries.
- Bookings vs. Billings vs. RevenueThree numbers often confused: the signed commitment, the invoice, and the earned revenue.
- Break-Even PointThe sales level where you stop losing money and start making it, in units or in dollars.
- Budget VarianceThe gap between what you budgeted and what actually happened, and whether it helped or hurt.
- Burn RateHow fast you are spending cash each month: the number that, with your balance, sets your runway.
- CAC Payback PeriodHow many months until a new customer pays back what it cost to acquire them.
- Capex vs. OpexCapital expenditure versus operating expenditure: why one hits the balance sheet and the other hits the P&L today.
- Capital BudgetingHow businesses decide which long-term investments to fund: using NPV, IRR, and payback together.
- Cash Conversion CycleHow many days your cash is tied up between paying for inputs and collecting from customers.
- Cash Flow StatementWhere cash actually came from and went: split across operations, investing, and financing.
- Cash vs. Accrual AccountingThe two accounting methods, side by side, and why growing businesses move from cash to accrual.
- Chart of AccountsThe organizing backbone of your books: every account transactions can be recorded to.
- Churn RateHow fast you lose customers or revenue: the single biggest enemy of recurring-revenue growth.
- Cohort AnalysisGrouping customers by when they started and tracking each group over time: the clearest view of retention.
- Contingent LiabilityA possible future obligation that depends on an uncertain event: booked, disclosed, or ignored based on likelihood.
- Contribution MarginWhat each unit or dollar of sales actually contributes toward covering fixed costs and turning a profit.
- Cost of Goods Sold (COGS)The direct cost of delivering what you sell, and the line that sets your gross margin.
- Credit MemoA document that reduces what a customer owes, for returns, overcharges, or agreed discounts.
- Current RatioThe broadest short-term liquidity check: do current assets cover current liabilities?
- Customer Acquisition Cost (CAC)What it truly costs to win one new customer: sales, marketing, and everything in between.
- Customer Lifetime Value (LTV)The total profit a customer is expected to generate over their whole relationship with you.
- Days Inventory Outstanding (DIO)How long inventory sits before selling: a key driver of how much cash is tied up in stock.
- Days Payable Outstanding (DPO)How long, on average, you take to pay your bills after receiving them.
- Days Sales Outstanding (DSO)How long, on average, your cash is stuck in accounts receivable after you invoice.
- Debt-to-Equity RatioHow much of the business is financed by debt versus owner capital: a core measure of leverage and risk.
- Declining Balance DepreciationAn accelerated method that front-loads depreciation: bigger write-offs early, smaller ones later.
- DeferralThe adjusting entry that holds cash-received or cash-paid on the balance sheet until it is earned or used up.
- Deferred RevenueThe liability that sits between "customer paid" and "we delivered", and the backbone of subscription accounting.
- Deferred TaxThe tax you will pay or save later because the books and the tax return recognize items at different times.
- DepreciationSpreading the cost of a long-lived physical asset across the years it actually helps you earn.
- Direct vs. Indirect MethodTwo ways to show operating cash flow: one lists actual cash items, the other reconciles from net income.
- Double-Entry AccountingThe 500-year-old system that keeps books self-checking: every entry hits two sides.
- Driver-Based BudgetingBuilding the budget from the operational levers that actually move the numbers, not last year plus 5%.
- EBITDAA proxy for core operating profit that strips out financing, tax, and non-cash accounting choices.
- Economic NexusWhen your sales into a state cross a threshold and you suddenly owe sales tax there, even with no office.
- Effective Tax RateThe real average rate on profit: usually different from the headline statutory rate.
- Executive Control TowerRole dashboards that lead with the decisions and risks each leader owns, over one governed data model, instead of the same reports for everyone.
- FIFO vs. LIFOTwo ways to decide which inventory costs flow to COGS first, with real effects on profit and tax.
- Financial ConsolidationRolling multiple entities into one set of group financials, with intercompany and ownership adjustments handled.
- Fixed vs. Variable CostsWhich costs move with sales and which do not: the split behind break-even, pricing, and forecasting.
- Flux AnalysisThe month-end review that explains why each account changed period over period: the auditor favorite question.
- Free Cash FlowCash left after running and reinvesting in the business: what is truly available to owners and lenders.
- General LedgerThe master book of record where every transaction lives, organized by account.
- GoodwillThe premium in an acquisition above identifiable net assets: brand, relationships, and expected synergies.
- GR/IRThe clearing account that sits between receiving goods and receiving the invoice for them.
- Gross Burn vs. Net BurnTwo views of cash burn: everything you spend versus what you spend after revenue comes in.
- Gross MarginHow much of every revenue dollar survives after the direct cost of delivering it.
- Gross Revenue Retention (GRR)How much recurring revenue you keep from existing customers before any upsell: a pure churn measure.
- ImpairmentRecognizing that an asset is worth less than the books say, and writing it down to the truth.
- Income StatementThe profit-and-loss story over a period, from revenue at the top to net income at the bottom.
- Intercompany TransactionsTrades between entities you own: recorded in each set of books, then eliminated when you consolidate.
- Interest Coverage RatioHow many times over the business can cover its interest bill from operating profit.
- Internal Rate of Return (IRR)The effective annual return a project earns: the rate that makes its NPV exactly zero.
- Inventory TurnoverHow many times a year you sell through and replace your stock: a read on inventory efficiency.
- Israeli Privacy Protection Law (Amendment 13)Amendment 13 modernized Israel’s data-protection regime and raised the stakes for how companies handle personal data. Here is what it asks for, and an honest account of how Fintra maps it today through the control library, with a turnkey pack on the roadmap.
- Journal EntryThe atomic record of every transaction: balanced debits and credits that keep the books in equilibrium.
- Matching PrincipleThe rule that pairs expenses with the revenue they produce: the backbone of accrual profit.
- Minority InterestThe slice of a partly owned subsidiary that belongs to outside shareholders: shown separately in the group accounts.
- Month-End CloseThe recurring process of finalizing the books so each period’s numbers can be trusted.
- Monthly Recurring Revenue (MRR)The normalized monthly value of all active subscriptions: the heartbeat metric of any subscription business.
- Net Present Value (NPV)Today value of a project future cash flows, minus what it costs: the core rule for investment decisions.
- Net Profit MarginThe bottom-line ratio: how many cents of every revenue dollar survive all costs, interest, and tax.
- Net Revenue Retention (NRR)How much recurring revenue your existing customers grow into, or shrink out of, over a year.
- Operating MarginHow profitable the core business is before financing and tax: the cleanest read on operations.
- Payback PeriodHow long until an investment pays for itself: the simplest read on capital risk.
- Percentage-of-CompletionHow construction and long-project businesses recognize revenue as a job progresses, not only at the end.
- Prepaid ExpensesMoney paid up front for a future benefit: held as an asset and expensed as the benefit is consumed.
- Purchase OrderThe buyer formal commitment to purchase: the document that starts procure-to-pay and controls spend.
- Quick RatioThe acid-test of liquidity: can you cover short-term bills without selling inventory?
- Retained EarningsThe running total of profits reinvested in the business rather than distributed to owners.
- Return on Assets (ROA)How much profit the business squeezes from every dollar of assets, regardless of how they are financed.
- Return on Equity (ROE)How much profit the business generates on each dollar of owner capital.
- Return on Invested Capital (ROIC)The return the business earns on all the capital put to work: the truest test of value creation against cost.
- Revenue RecognitionThe rules that decide when a sale actually becomes revenue on your income statement.
- Revenue Run RateAnnualizing current revenue to a full-year figure: quick to compute, easy to misuse.
- Rolling ForecastA forecast that always looks the same number of periods ahead: updated continuously, not once a year.
- Rule of 40A balance test for software companies: growth rate plus profit margin should clear 40%.
- RunwayHow many months of cash you have left at your current net burn: the founder’s countdown clock.
- SaaS Magic NumberA quick gauge of go-to-market efficiency: how much new recurring revenue each sales-and-marketing dollar buys.
- Sales QuotaThe target a rep or team must hit in a period, and the building block of capacity-based revenue planning.
- Scenario PlanningModeling several plausible futures at once (base, upside, downside) so decisions hold up across outcomes.
- Sensitivity AnalysisTesting how an outcome moves when one assumption changes, to find which inputs really drive the result.
- Straight-Line DepreciationThe simplest depreciation method: the same expense every period across an asset useful life.
- Three-Way MatchThe AP control that checks a bill against what you ordered and what you actually received before paying.
- Transfer PricingHow related companies price the goods, services, and IP they sell each other, under tax-authority scrutiny.
- Trial BalanceThe checkpoint report that proves the ledger is in balance before statements are drawn.
- Unit EconomicsThe profit or loss on a single customer or unit: the test of whether growth actually pays.
- Weighted Average Cost of Capital (WACC)The blended rate a business pays for all its capital: the hurdle every investment must clear.
- Work in Process (WIP)The value tied up in jobs and products that are started but not yet finished.
- Working CapitalThe short-term liquidity cushion that funds day-to-day operations.
- Zero-Based Budgeting (ZBB)A budgeting method where every dollar must be justified from scratch each cycle, not carried over from last year.
Equity and People
- 401(k) MatchEmployer money added to an employee retirement savings: often the highest-return benefit an employee can get.
- 409A ValuationThe independent appraisal that sets a defensible strike price for the options you grant employees.
- 83(b) ElectionThe tax election that lets you pay tax on restricted equity up front, before it appreciates.
- ASC 718The standard that turns equity grants into a real, recognized expense on your income statement.
- Cap TableThe single source of truth for who owns what (shares, options, and percentages) in your company.
- COBRA Continuation CoverageThe right to keep employer health coverage after leaving a job, at the employee own cost.
- DilutionHow your ownership percentage shrinks when new shares are issued, even as the pie gets bigger.
- Double-Trigger AccelerationEquity that accelerates only when two things happen: typically an acquisition plus losing your job.
- Early ExerciseBuying your options before they vest: a tax play with real upside and real risk.
- Employee Net Promoter Score (eNPS)A simple pulse on whether your people would recommend working here: a proxy for engagement.
- FICA TaxThe US payroll tax for Social Security and Medicare: paid half by the employee, half by the employer.
- Fully Diluted SharesThe share count if every option, warrant, and convertible turned into stock: the honest ownership denominator.
- FUTA and SUTAThe federal and state unemployment taxes employers pay to fund jobless benefits.
- Gross vs. Net PayThe difference between what an employee earns and what lands in their bank account.
- Headcount PlanningThe plan for how many people you hire, in which roles, when, and what it costs the budget.
- HRISThe system of record for your people: profiles, roles, pay, and org structure in one place.
- Imputed IncomeThe taxable value of non-cash perks: added to wages for tax even though no cash changes hands.
- ISO vs. NSOThe two flavors of employee stock options, and why the difference is mostly about tax.
- Liquidation WaterfallWho gets paid, and in what order, when the company is sold or wound down.
- Multi-State PayrollPaying a team spread across states, each with its own tax rules, registrations, and filings.
- Option PoolThe reserved block of shares set aside to hire and reward your team with equity.
- Overtime PayThe premium rate, usually time-and-a-half, for hours worked beyond the standard workweek.
- Pay EquityFair, defensible pay for comparable work: measured, monitored, and free of unjustified gaps.
- Pay PeriodThe recurring stretch of time a paycheck covers: weekly, biweekly, semimonthly, or monthly.
- Payroll RunThe end-to-end process of calculating, approving, and paying wages for a pay period.
- Payroll TaxThe taxes withheld from paychecks and owed by employers: FICA, unemployment, and withholding.
- Post-Money ValuationA company’s value right after new money goes in: the figure that sets investor ownership.
- Post-Termination Exercise Period (PTEP)The limited window after you leave a job to exercise your vested options: miss it and they are gone.
- Preferred vs. Common StockThe two main share classes, and why investors hold preferred while founders and employees hold common.
- PTO AccrualHow paid time off is earned bit by bit, and why it is a real liability on your books.
- Qualified Small Business Stock (QSBS)A US tax provision that can exclude much of the capital gain on qualifying startup stock: if strict rules are met.
- Restricted Stock Unit (RSU)A promise of shares that convert to real stock as they vest: no strike price to pay.
- Retroactive PayMaking up wages an employee was owed but not paid in a past period: a delayed raise or a payroll error.
- SAFE (Simple Agreement for Future Equity)The fast, founder-friendly instrument that turns early cash into future shares at the next round.
- Secondary SaleSelling shares you already own to another investor: liquidity without the company raising new money.
- Strike PriceThe fixed price you pay to turn an option into a share: set at fair value on the grant date.
- Structured InterviewThe same questions, the same rubric, every candidate: the hiring method the evidence actually backs.
- Supplemental WagesBonuses, commissions, and other extras: taxed under special withholding rules, not the same as regular pay.
- Tax WithholdingThe income tax an employer holds back from each paycheck and sends to the government on the employee behalf.
- Tender OfferA company-run program letting many shareholders sell shares at a set price in one organized event.
- Total CompensationThe full value of an offer (cash, bonus, equity, and benefits) not just the base salary.
- VestingHow employees earn their equity over time: the mechanism that aligns people with the long game.
- Vesting CliffThe minimum tenure before any equity is earned: usually the one-year mark.
- W-2 vs. 1099The line between an employee and an independent contractor, with big tax, benefit, and liability consequences.
- Wage GarnishmentA legally ordered deduction from an employee paycheck to repay a debt, which the employer must honor.
- Workforce PlanningPlanning the right people, roles, and cost over time: tied to strategy and the financial plan.
Compliance and AI Governance
- Access ReviewA periodic check that everyone has only the access they should, and nothing they should not.
- Adaptive TrustAutonomy that is earned, not granted: oversight that tightens or loosens with demonstrated reliability.
- Agent IdentityGiving every AI agent its own authenticated identity, so its actions can be permissioned and audited.
- Agentic WorkflowAn AI that plans and executes multiple steps toward a goal: reasoning, using tools, and acting, not just answering.
- AI Action GovernanceDeciding, for every consequential thing an AI tries to do, whether it should proceed, and proving it.
- AI Agent MarketplaceAn ecosystem where third-party AI agents plug in through governance APIs, so every external agent is governed before it can move money.
- AI Bill of Materials (AI-BOM)A complete inventory of the models, data, and tools inside your AI systems: you cannot govern what you cannot see.
- AI Decision InboxAn inbox where every item is a decision (context, exposure, and a recommended action) instead of a notification that leaves you to figure out what to do.
- AI GuardrailsThe policies and controls that keep an AI system inside safe, compliant, intended bounds.
- AI Red-TeamingDeliberately attacking your own AI to find how it breaks, before real users or adversaries do.
- AttestationA formal confirmation that something is true: often an auditor asserting your controls meet a standard.
- Audit TrailThe chronological record of who did what, when: the backbone of accountability and every audit.
- Change Management (IT Control)The control that ensures changes to systems and code are reviewed, approved, and traceable, not shipped unchecked.
- Company Memory (AI)The durable institutional knowledge a finance AI reasons over, so its decisions reflect how your company actually operates.
- Compliance EvidenceThe proof auditors actually want: that each control is real and operating, not just documented.
- Continuous ComplianceStaying audit-ready all the time: controls monitored and evidence collected continuously, not in a pre-audit panic.
- Control MappingLinking one set of controls to many frameworks, so you prove it once and satisfy SOC 2, ISO, HIPAA at once.
- Control OwnerThe named person accountable for a specific control actually working: the antidote to orphaned compliance.
- Data ClassificationLabeling data by sensitivity (public, internal, confidential, restricted) so protection matches the stakes.
- Data Processing Agreement (DPA)The contract that binds a vendor processing personal data on your behalf: required under GDPR.
- Data ResidencyWhere your data physically lives, and the laws that require it to stay in a specific place.
- Decision IntelligenceTurning data into ranked, explainable decisions with a "so what do I do", not another dashboard.
- EU AI ActThe world’s first comprehensive AI law: risk-tiered obligations that make AI governance mandatory.
- GDPRThe EU’s data-protection law: strict rules, real rights for individuals, and serious penalties.
- Governed AI ActionA consequential AI action that must pass a policy decision, and be logged, before it executes, so AI is governed at the point of action, not just at the prompt.
- Hallucination (AI)When an AI states something false as if it were true: confident, plausible, and wrong.
- HIPAAThe US law that governs how protected health information must be kept private and secure.
- Human-in-the-LoopKeeping a named person in the loop to approve or correct consequential AI decisions before they take effect.
- Incident ResponseThe organized process for detecting, containing, and recovering from a security incident, before, during, and after.
- ISO 27001The international, certifiable standard for running a real information-security management system.
- Jailbreak (LLM)A prompt crafted to trick an AI into ignoring its safety rules and doing what it should refuse.
- Model CardA standardized document describing an AI model purpose, data, performance, and limits: the spec sheet for a model.
- Model Context Protocol (MCP)The open standard that lets AI models plug into your tools and data: powerful, and something to govern.
- NIST Cybersecurity FrameworkA widely adopted framework that organizes cyber-risk management into a handful of clear functions.
- Non-Human IdentityThe service accounts, API keys, and AI agents that access systems: now outnumbering human users many to one.
- PCI DSSThe card-industry security standard everyone who touches payment card data must meet.
- PDP / PEPThe two halves of modern authorization: one decides if an action is allowed, the other enforces it.
- Penetration TestAn authorized simulated attack that tries to actually exploit weaknesses, not just list them.
- Policy-as-CodeWriting governance rules as versioned, testable code that systems enforce automatically and consistently.
- Principle of Least PrivilegeGive every user, service, and AI agent only the access it needs: nothing more.
- Prompt InjectionThe attack that smuggles instructions into an AI’s input to make it ignore its rules or act against you.
- Residual RiskThe risk left over after your controls do their job: what you must accept, transfer, or reduce further.
- Risk RegisterThe living record of what could go wrong, how bad it would be, who owns it, and what you are doing about it.
- Segregation of DutiesSplitting critical tasks so no single person, or AI, can complete a risky transaction alone.
- Shadow AIThe AI tools and agents running in your business that no one approved, and no one is governing.
- SOC 1The audit report focused on controls that affect your clients’ financial statements, not security broadly.
- SOC 2The security audit report SaaS buyers ask for: evidence you protect their data, checked by an auditor.
- Statement of Applicability (SoA)The ISO 27001 document that says which controls apply, why, and whether they are in place.
- Sub-processorA vendor vendor: the third parties your provider relies on to process your data.
- Tamper-Evident LogA log built so that quietly changing the past is impossible to hide: the basis of trustworthy records.
- Tool CallThe moment an AI stops talking and does something: invoking a function or API to act or fetch data.
- Trust LedgerA tamper-evident record of every consequential action and the reasoning and approval behind it.
- Vendor Risk ManagementAssessing and monitoring the security, privacy, and compliance risk your third-party vendors bring.
- Vulnerability ScanAn automated, repeatable check that flags known weaknesses across your systems: broad, not deep.
What is a business glossary, and why tie it to a platform?
About the glossary
What is the Fintra glossary?
The Fintra glossary is a plain-English reference for the finance, accounting, equity, HR, compliance, and AI-governance terms that show up when you run a business on modern software. Every entry gives a crisp definition, a worked example, and (because Fintra is the system that actually books, plans, and governs these things) a short "how Fintra handles it" section so the concept is grounded in a real workflow, not left abstract.
Who is the glossary for?
Founders, controllers, CFOs, HR and people leaders, and anyone evaluating finance or AI-governance software. The accounting and equity terms are written for operators who need a working definition fast; the compliance and AI-governance terms cover the frameworks (SOC 2, ISO 27001, the EU AI Act) and runtime concepts (guardrails, PDP/PEP, AI-BOM, adaptive trust) that increasingly decide whether AI can act inside a business.
How is this different from a generic finance dictionary?
Generic dictionaries stop at the definition. Fintra ties each term to how the number is produced, approved, and audited in a real system of record, for example, deferred revenue as a schedule that posts to the general ledger, or a 409A valuation as the input that sets ISO strike prices in the cap table. That grounding is what makes the entries useful when you are choosing tools, not just answering a quiz.
Does Fintra actually do everything defined here?
Fintra is an AI Finance Operating System that unifies accounting, budgeting and forecasting, expenses, bill pay, payroll and multi-state tax, equity, and continuous compliance on one shared data model, with Fintra Trust governance on every consequential action. Advanced capabilities are license-gated modules you enable as you grow. Each glossary entry notes where the concept lives in the platform and links to the relevant feature page.
Bring the term you are fighting with to a 15-minute demo.
We will show you where it lives in Fintra: how the number is produced, who approves it and what an auditor sees.