The Valiant business finance glossary

Confused by business finance terms? We’re here to help. This glossary strips out the jargon, explaining loans, contracts, and taxes in plain English so you can make smarter financial decisions fast.

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Annual Percentage Rate (APR)

Annual Percentage Rate (APR) is the annual rate charged on a loan or earned on an investment, expressed as a percentage. It includes fees and other costs, providing a clearer picture of the true cost of borrowing.

Asset Finance

Asset finance refers to funding for the acquisition of assets, such as equipment, vehicles, or machinery, without using large amounts of cash upfront. This option allows businesses to maintain cash flow while still investing in essential tools for growth.

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Balance Sheet

A Balance sheet is a financial statement providing a snapshot of a business's assets, liabilities, and equity at a specific point in time. It helps stakeholders assess the company’s financial stability and liquidity.

Balloon Payment

A Balloon payment is a large final payment due at the end of a loan, often significantly larger than the preceding regular payments. This type of repayment structure allows borrowers to keep their monthly repayments lower throughout the loan term, but requires careful financial planning to cover the final amount.

Borrower

A borrower is an individual or business that takes out a loan from a lender, agreeing to repay the borrowed amount along with interest over an agreed period. Borrowers typically seek loans for various purposes, such as buying a home, financing education, or supporting business growth.

Breach of Contract

A breach of contract happens when a party fails to meet the obligations set out in a legally binding agreement. This can include not delivering goods or services as promised or not following contract terms. Breaches can be material (significant) or minor (less serious), which influences what legal actions the non-breaching party can take.

Break-even Point

The break-even point is the level of sales at which total revenue equals total costs, resulting in neither profit nor loss. It helps businesses determine the minimum amount of sales needed to avoid losing money.

Business Activity Statement (BAS)

A Business Activity Statement (BAS) is a financial report that businesses in Australia must submit to the Australian Taxation Office (ATO) to meet tax obligations, including goods and services tax (GST), pay as you go (PAYG) withholding, and other tax liabilities. It's typically lodged quarterly or annually and helps businesses track and manage their taxes efficiently.

Business Credit Score

Business credit score is a number representing a business's creditworthiness and ability to repay debts. It's calculated based on several factors, including payment history, credit usage, and overall debt, and is used by lenders to assess risk when granting credit.

Business Term Loan

Business term loans are a type of financing that allows businesses to borrow funds for a fixed period, usually with regular repayments. Approval is generally based on the business's financial health and creditworthiness, rather than requiring assets as collateral.

Capital Gains Tax

Capital Gains Tax (CGT) is a tax on the profit from selling an asset, such as property or shares, that has increased in value. In Australia, it's important to understand CGT implications when disposing of assets, as it can significantly impact investment returns.

Carrying Forward Losses

Carrying forward losses refers to the tax provision that allows businesses to offset future taxable income with losses from previous years. It can reduce tax liability and help manage financial performance over time.

Cash Flow

Cash flow refers to the movement of money into and out of a business. It represents the net balance of cash receipts and payments during a specific period, helping businesses assess their financial health.

Cash Flow Statement

A cash flow statement is a financial report providing a summary of the cash inflows and outflows within a business over a specific period. It helps stakeholders understand how funds are generated and spent and shows the business's liquidity position.

Collateral

Collateral refers to an asset a borrower pledges to secure a loan, which the lender can claim if the borrower fails to repay. It's often used to lower the risk for lenders, as secured loans tend to have lower interest rates compared to unsecured loans.

Comparison Rate

A comparison rate helps consumers understand the true cost of a loan, as it includes not only the nominal interest rate but also most fees and charges. It provides a more comprehensive overview of the loan's costs, makin it easier to compare different financial products.

Cost of Goods Sold

Cost of Goods Sold (COGS) represents the direct costs of producing the goods a company sells, including materials, labour, and production-related overheads. COGS helps determine the gross profit and overall profitability of a business.

Covenants

Covenants are formal promises made in a contract, typically outlining the actions or obligations of one party in relation to another. They're common in real estate, finance, and legal documents, where they establish specific duties and rights.

Debtor Finance

Debtor finance is a type of financing where businesses use their invoices to access immediate cash flow, by selling them to a third-party financier. This improves liquidity and enables them to meet operational expenses.

Deductible Expenses

Deductible expenses are costs that can be subtracted from a company's total income to reduce taxable income. These expenses must relate directly to the operation and production of income, such as employee wages, rent for business premises, and goods purchased for resale.

Default

Default refers to the failure to fulfil an obligation, such as repaying a loan or following contractual terms. It represents a breach of duty, which can lead to legal action and financial penalties.

Depreciation

Depreciation refers to the reduction in an asset's value over time, often due to wear and tear or obsolescence. It impacts financial statements and tax liabilities, and helps businesses better manage their assets and plan for replacements.

Director’s Guarantee

A director’s guarantee is a personal commitment made by a business director to ensure that the company's debts are paid. This can put the director's personal assets at risk, as the lender may be able to pursue them in case of default.

Early Repayment Fee

An early repayment fee is a charge that lenders impose on borrowers who pay off their loans earlier than required. It compensates the lender for interest they would have earned if the loan ran its full term. It's important for borrowers to understand these fees when considering refinancing or early repayment.

Earnings Before Interest and Tax (EBIT)

Earnings Before Interest and Tax (EBIT) is a measure of a company's profitability from operations before any deductions for interest and taxes. It helps analysts and investors gauge core business performance and compare companies.

Embedded Finance

Embedded finance refers to the integration of financial services into non-financial platforms or apps. It allows businesses to offer financial products directly within the customer experience, facilitating transactions without using separate financial institutions.

Embedded Lending

Embedded lending refers to the integration of lending services within non-financial platforms, allowing customers to access credit at the point of need without going through traditional financial institutions. It streamlines the borrowing process and delivers tailored financial solutions.

Equipment Finance

Equipment finance is financing that helps businesses buy or lease machinery and equipment needed for operations. It allows companies to manage cash flow while accessing essential tools without large upfront costs.

Exit Fee

An exit feee is a charge a borrower may pay when ending a loan or agreement early. It compensates the lender or service provider for potential losses.

Facility Agreement

Facility agreement is a contract outlining the terms and conditions under which a lender provides funding to a borrower. It typically details the amount of the loan, interest rates, repayment schedules, and other obligations of the parties involved.

Fixed Costs

Fixed costs are expenses that stay the same regardless of how much a business produces and can significantly impact profitability and budgeting decisions.

Fixed Interest Rate

A fixed interest rate is a type of interest rate that stays the same throughout the life of a loan, giving borrowers predictable repayments. This can make it easier for businesses to budget and plan their finances without worrying about interest fluctuations.

Fleet Finance

Fleet finance refers to the financial management of a business's vehicle fleet, including funding, acquisition, operation, and maintenance costs. It elps allocate resources efficiently, improve productivity, and reduce costs associated with vehicle use. Fleet finance can also include leasing, purchasing options, and lifecycle cost analysis.

Fringe Benefits Tax (FBT)

Fringe Benefits Tax (FBT) is a tax applied to most fringe benefits provided by employers to employees in Australia. It's separate from income tax and is calculated on the taxable value of the benefits. Employers are responsible for reporting and paying FBT, usually on an annual basis.

Goods and Services Tax (GST)

The Goods and Services Tax (GST) is a 10% tax on goods and services in Australia, including imports. Businesses collect GST at each stage of the supply chain, which is ultimately passed on to consumers.

Gross Profit

Gross profit is the difference between revenue and the cost of goods sold (COGS). It shows how much a business earns after covering production-related costs, and helps assess efficiency and profitability.

Guarantor

A guarantor is a person or business that agrees to take responsibility for a borrower's debt if they fail to meet their commitments. This role is common in financial agreements like loans, providing extra security to the lender.

Income Tax Return (ITR)

An Income Tax Return (ITR) is a form submitted to the ATO reporting a business's income, expenses, and other financial details for a financial year. It’s used to calculate tax payable or determine any refund owed.

Indemnity

Indemnity is a legal principle where one party compensates another for loss or damage. It often appears in contracts to protect against potential claims or legal liabilities.

Interest Coverage Ratio

Interest coverage ratio measures a business's ability to pay interest on its outstanding debt, calculated by dividing earnings before interest and taxes (EBIT) by interest expenses. A higher ratio indicates better financial health and the ability to cover interest obligations.

Interest Rate

An interest rate is the percentage charged on a loan, usually expressed annual. It influences borrowing costs and a business's financial health.

Invoice Finance

Invoice finance is a way for businesses to unlock cash from unpaid invoices, using accounts receivable as collateral. It helps improve cash flow, especially for small businesses facing late client payments.

Late Payment Fee

A late payment fee is a charge applied when a payment isn't made by the agreed due date. It compensates the lender for the inconvenience and risk associated with late payments.

Liabilities

Liabilities are financial obligations a business owes to outside parties. They can arise from borrowing money, credit purchases, or other contractual agreements. Liabilities are typically classified as current or non-current, depending on their due dates.

Line of Credit

A line of credit is a flexible borrowing option that lets businesses access funds up to a predetermined limit, only incurring interest on the amount used. It's often used for short-term financial needs and helps manage cash flow.

Liquidity

Liquidity refers to how easily assets can be converted into cash without affecting their market price. It helps businesses meet their short-term financial obligations.

Loan Agreement

A loan agreement is a legal document outlining the terms and conditions of a loan between a lender and a borrower. It specifies details like the loan amount, interest rate, repayment schedule, and any collateral required.

Maturity Date

The maturity date refers to the date when a financial obligation, like a loan, is due to be paid in full, including principal and any outstanding interest.

Merchant Cash Advance (MCA)

Merchant Cash Advance (MCA) is a type of financing that provides businesses with quick access to capital, with repayments based on daily sales. Higher sales lead to higher repayments, while lower sales reduce them, offering flexibility during fluctuating revenue periods.

Net Profit

Net profit is the amount of money that remains after all expenses, taxes, and costs have been deducted from total revenue. It reflects a company's profitability and financial performance.

Non-recourse

Non-recourse refers to a type of loan where the lender's can only claim the collateral if the borrower defaults, and not any other other assets or income.

Operating Expenses (OPEX)

Operating expenses (OPEX) refer to the ongoing costs for running a business's day-to-day operations, including rent, utilities, salaries, and maintenance. Unlike capital expenditures, OPEX are fully deductible in the fiscal year they're incurred.

Overdraft

An overdraft occurs when a bank allows a business to withdraw more money than is available in its account, up to a certain limit. It provides flexibility for cash flow, but interest and fees may apply.

Overhead Costs

Overhead costs are the ongoing expenses that a business pays to run its operations, but aren't directly tied to production. Examples include rent, utilities, and administrative salaries.

Pay As You Go (PAYG) Instalments

Pay As You Go (PAYG) Instalments are regular payments businesses make towards their estimated tax liability throughout the year. It helps avoid a large tax bill at year-end.

Pay As You Go (PAYG) Withholding

Pay As You Go (PAYG) withholding allows employers to withhold tax from employees' wages and pay it directly to the ATO. It ensures employees meet their income tax obligations gradually, rather than in one lump sum at the end of the financial year.

Payroll Tax

Payroll tax is a state tax on employers, calculated on the salaries and wages they pay their employees. It's used to fund services, like health and education. Each state in Australia sets its own rates and thresholds, so employers need to comply with the rules applicable to their location.

Personal Property Security Register (PPSR)

The Personal Property Security Register (PPSR) is Australia's national online register for recording and searching for security interests in personal property. It helps businesses and lenders check whether assets are encumbered, facilitating secured transactions and protecting interests.

Principal & Interest Repayments

Principal & interest repayments refer to the regular payments that borrowers pay back to lenders over the term of a loan. The principal is the original amount borrowed, while interest is the cost of borrowing.

Profit Margin

Profit margin is the percentage of revenue remaining after covering the costs of production. It reflects how efficiently a business is managing its finances and can be used to compare profitability across organisations. A higher profit margin suggests a more financially efficient business.

Profit and Loss Statement (P&L / Income Statement)

A Profit & Loss Statement (P&L), also known as an income statement, is a financial document that summarises a business's revenue, costs, and expenses over a set period. It provides insight into operational efficiency, profitability, and financial performance.

Recourse

Recourse refers to the legal right to demand compensation or repayment in case of a loss. It's often invoked in contracts and financial agreements where a party can seek payment or restitution from another party.

Return on Investment (ROI)

Return on investment (ROI) measures the return generated on an investment relative to its cost, expressed as a percentage, helping businesses determine the profitability of their initiatives.

Revolving Credit Facility

A revolving credit facility is a type of credit that allows business to withdraw, repay, and borrow again up to a maximum limit. It's commonly used to manage short-term cash flow needs, providing flexible access to funds without needing to reapply each time.

Secured Loan

A secured loan is a type of financing where the borrower provides an asset as collateral. If they fail to repay, the lender can claim the asset to recover their funds. Secured loans typically have lower interest rates than unsecured loans, as the risk for lenders is reduced.

Statement of Changes in Equity

A statement of changes in equity is a financial document showing changes in a business’s equity over a specific period. It details movements in items like share capital, retained earnings, and other reserves, providing insight into how an business's net worth has evolved.

Superannuation Guarantee (SG)

Superannuation guarantee (SG) is a system in Australia that mandates employers to contribute a minimum percentage of an employee's salary to a superannuation fund, ensuring workers save for retirement. As of January 2026, the rate sits at 12%.

Syndicated Loan

A syndicated loan is a loan provided by a group of lenders (a syndicate) to a single borrower, typically a large business or government. It distributes the financial risk across multiple parties and allows the borrower to access larger amounts of capital.

Tax Offsets / Credits

Tax offsets/credits are reductions in the amount of tax business has to pay. They can arise from deductions, rebates, or concessions provided under Australian tax law, helping businesses reduce their tax burden and retain more cash.

Taxable Income

Taxable income refers to the portion of income subject to tax by the Australian government. It includes wages, salaries, dividends, and interest, after allowable deductions. Understanding taxable income helps businesses report earnings accurately and meet tax obligations.

Trade Finance

Trade finance refers to financing that helps businesses cover the upfront costs of international trade. This funding can be repaid over a period of 2 to 9 months, typically through a flat fee or interest.

Trustee

A trustee is an individual or organisation appointed to manage assets or funds on behalf of a business or lender. In business finance, trustees may hold security or collateral, manage repayments, and ensure the terms of a loan or financial arrangement are properly administered.

Unsecured Loan

An unsecured loan is a type of loan that doesn’t require collateral, meaning the borrower doesn’t have to provide assets as security to obtain the loan. These loans typically come with higher interest rates compared to secured loans, reflecting the increased risk to the lender.

Vehicle Finance

Vehicle finance helps businesses to obtain a vehicle without the need for an upfront payment. Options include loans, leases, and hire purchase agreements, allowing costs to be spread over time.

Working Capital

Working capital refers to the funds available to a business for its day-to-day operations, calculated as current assets minus current liabilities. It's essential for maintaining liquidity and supporting smooth business operations.