sumzee

Finance glossary for founders

32 terms your accountant uses and never explains — defined in plain English, with the formula and a real example where it helps.

ABCDEFGLMNPRSUVW

A

Accounts payable (AP)

Money you owe suppliers for goods or services already received.

Accounts receivable (AR)

Money customers owe you for work already delivered.

Accrual accounting

Recording revenue and costs when they are earned or incurred, not when cash moves.

ARR (annual recurring revenue)

MRR multiplied by twelve — the annualised run rate of recurring revenue.

B

Balance sheet

A snapshot of what you own, what you owe, and what is left over.

Break-even point

The revenue level where total costs are exactly covered.

Budget variance

The difference between what you planned and what actually happened.

Burn rate

How much cash you consume per month.

C

CAC (customer acquisition cost)

What it costs, on average, to win one new customer.

CAC payback period

How many months of gross profit it takes to recover the cost of winning a customer.

Cash basis accounting

Recording revenue and costs only when money actually moves.

Cash flow

The money that actually moved in and out of your bank account over a period.

Cash gap

A period when money leaves faster than it arrives and your balance goes negative.

Churn rate

The share of customers or revenue lost in a period.

COGS (cost of goods sold)

Costs that exist only because you delivered the sale.

Contribution margin

Revenue minus all variable costs — what each sale contributes to fixed costs.

D

Deferred revenue

Cash received for work you have not delivered yet.

DSO (days sales outstanding)

The average number of days it takes to collect an invoice.

E

EBITDA

Earnings before interest, tax, depreciation, and amortisation.

F

Fixed costs

Costs you pay regardless of how much you sell.

G

Gross margin

What is left from revenue after the direct cost of delivering it.

L

LTV (lifetime value)

The total gross profit you expect from one customer over the whole relationship.

M

MRR (monthly recurring revenue)

Predictable subscription revenue normalised to a monthly figure.

N

Net profit

What remains after every cost, including tax and interest.

Net revenue retention (NRR)

How revenue from existing customers changes over a year, including upgrades and churn.

P

P&L (profit and loss)

A statement of revenue, costs, and profit over a period.

R

Rolling forecast

A forward view of cash and profit, updated continuously instead of once a year.

Runway

How many months your current cash lasts at your current burn rate.

S

Single source of truth

One dataset every report and dashboard reads from.

U

Unit economics

Revenue and cost measured per single unit — one customer, one order, one project.

V

Variable costs

Costs that move up and down with sales volume.

W

Working capital

Short-term assets minus short-term liabilities — the money running your operations.

Tired of looking these up?

Sumzee turns your scattered spreadsheets into one source of truth and a live dashboard that shows these numbers without the jargon.

Get your prototype