Finance Glossary for Startup Founders and Founders
Plain-language definitions of the finance terms OmniScope360 uses with founders in Oman, the GCC and Sydney. Each definition is general; confirm tax rules with the Oman Tax Authority or the Australian Taxation Office.
Cash
Cash flow: the money that moves in and out of your bank account over a period.
Net burn: monthly cash out minus monthly cash in, when cash out is higher.
Runway: cash on hand divided by monthly net burn, in months.
Working capital: current assets (cash, receivables, stock) minus current liabilities (payables, short-term debt).
Debtor days (DSO): the average days customers take to pay, receivables divided by revenue times the days in the period.
Creditor days (DPO): the average days you take to pay suppliers, payables divided by cost of sales times the days in the period.
Cash conversion cycle: the time from paying for stock or services to collecting cash from customers.
Cash buffer: the minimum bank balance you choose not to go below.
Reporting
Management accounts: monthly financial reports for decision making, usually the profit and loss, balance sheet and cash flow with commentary.
Month-end close: the fixed steps that finalise a month's accounts, from reconciliations to sign-off.
Accrual: an expense or income recorded when it is earned or incurred, not when cash moves.
Reconciliation: agreeing a ledger balance to an outside record such as a bank statement.
Gross margin: revenue minus cost of sales, as a percentage of revenue.
EBITDA: earnings before interest, tax, depreciation and amortisation.
KPI: a key performance indicator, a measure you track against a target.
Unit economics: profit and cash generated by one unit of the business, such as a product, customer or customer cohort.
Variance: the difference between actual results and budget or a prior period.
Funding
Three-statement model: a financial model linking the profit and loss, balance sheet and cash flow.
Use of funds: how the money raised will be spent.
Debt service coverage ratio (DSCR): cash available to pay debt divided by the debt payments due in the period.
Covenant: a condition in a loan agreement, such as a minimum ratio or reporting requirement.
Security or collateral: an asset or guarantee pledged to support a loan.
Tax
VAT: value added tax. Oman applies VAT at 5% on most goods and services.
GST: goods and services tax. Australia applies GST at 10% on most goods and services.
BAS: the business activity statement used in Australia to report and pay GST, PAYG withholding and other amounts.
PAYG withholding: tax an Australian employer withholds from employee pay and sends to the ATO.
Zero-rated supply: a supply taxed at 0% where the supplier can still recover input VAT.
Exempt supply: a supply on which no VAT is charged and input VAT is generally not recoverable.
Reverse charge: the buyer accounts for the tax instead of the supplier, for example on services from a non-resident supplier.
Frequently asked questions
Runway is how many months you can operate with the cash you have: cash on hand divided by monthly net burn.
What is the difference between profit and cash flow?Profit is revenue minus costs in an accounting period. Cash flow is the money that actually moves through the bank account.
What is a 13-week cash flow forecast?A week-by-week forecast of cash in, cash out and closing bank balance for one quarter, updated weekly.
Want this set up for your startup?
Book a free discovery call. We review your numbers and agree what to fix first, with no cost and no obligation.
Written by Akram El-Karrar, CPA, from the work we do for startups every week.