3 Financial Terms Every Business Owner Should Know

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finance

If you own a business, you need to know as much as you can about running your company. While you may have a team to help you with specific tasks, you should have a basic understanding of every department. Knowing about business finance is especially important as it can affect how successful your business can be now and in the future. If you know some important terms, you won’t have to ask your finance department about every small financial issue.

1. Cash Flow

The first term you should know is cash flow, and it refers to how money flows in and out of your business. If your business ever becomes tight on cash flow, that could be a huge problem when it comes time to pay important bills or send out payroll. Typically, you will have cash flow reports that show how cash is moving within the business during a specific amount of time, and this can show you how well your business is doing. You can also use cash flow projections to determine a plan for the future.

2. Fraud Chargeback

As a business, you provide a service or product to your customers, and usually, you will have happy customers. However, some customers might ask their bank for a chargeback, despite enjoying the service or product. When this happens, you’ll face a fraud chargeback, and it can be hard to fight if the customer claims that the charge was unauthorized. Unfortunately, it can be hard to predict when this might happen, so make sure you always offer great customer service to minimize the chance of people asking for a chargeback.

3. Revenue

Of course, one of the most important financial terms to know is revenue, which is the money that your business brings in. It’s not the same as profit as it includes all money that comes in, whereas profit is your revenue minus expenses. The revenue belongs to your business, and it can be frustrating when you lose out on money, for whatever reason. In that case, Ethoca cnp solutions and similar companies can help you ensure the money your business earns makes its way into your business bank account. It can also be helpful when you need to recover revenue from purchases made online or through a credit card.

While there are plenty of other financial terms to know as a business owner, cash flow, fraud chargeback, and revenue are essential. Especially if you run your business completely or partially online, you need to know these terms so that you can protect your business from fraudulent activity and false claims.