Glossary
34 terms. Each one defined in a sentence or two, with a note on why it matters.
Finance and accounting
- Accounts payable (AP)
- Money a business owes its suppliers. AP automation tools capture invoices, route approvals and pay vendors.
- Accounts receivable (AR)
- Money customers owe the business. AR tools send invoices, chase payments and forecast collections.
- Accrual accounting
- Recording revenue when earned and expenses when incurred, not when cash moves. Required for meaningful monthly financials and for most investors and auditors.
- Bank reconciliation
- Matching every transaction in the ledger to the bank statement so the books reflect reality. AI tools now suggest most matches automatically.
- Burn rate and runway
- How much cash a company loses each month, and how many months it can keep going at that rate. Startup ledgers such as Puzzle and Digits show both next to the books.
- Chart of accounts
- The list of categories (accounts) every transaction is coded to. A clean chart of accounts is the single biggest factor in how well AI categorisation works.
- Consolidation
- Combining the financials of several entities or locations into one set of statements. Painful in spreadsheets, a core feature of multi entity tools.
- Days sales outstanding (DSO)
- The average number of days it takes customers to pay. Lower is better. AR automation exists to bring it down.
- FP&A
- Financial planning and analysis: budgeting, forecasting and explaining variances. FP&A tools connect to the ledger and CRM so the model updates itself.
- General ledger (GL)
- The master record of every financial transaction, organised by account. QuickBooks, Xero, NetSuite and Digits are general ledgers.
- Month end close
- The process of finalising a month's books: reconciling, accruing, reviewing and reporting. Measured in business days. Three is excellent, ten is common. Read more
- Nexus
- A connection to a tax jurisdiction that obliges you to collect and remit tax there. Software companies trigger sales tax nexus by revenue or transaction count per US state.
- Prepaid and deferred
- Prepaid expenses are paid now and expensed over time. Deferred revenue is cash received now and recognised as revenue over time. Both need scheduled journal entries that tools can automate.
- SOX controls
- Internal controls required of US public companies under the Sarbanes Oxley Act. Approval workflows and audit trails in AP tools exist largely to satisfy them.
AI in finance tools
- Auto categorisation
- Machine learning that assigns a transaction to an account based on description, counterparty and history. Gets better with corrections and worse with a messy chart of accounts.
- Continuous close
- Reconciling and categorising every day so month end becomes a review rather than a project. The promise of AI native ledgers.
- Data residency and training
- Where a vendor stores your data and whether it uses it to train models. Business plans usually exclude training. Check both before uploading client financials. Read more
- Exception handling
- What happens to the items automation cannot resolve. Good tools queue them for a named person with context; bad tools bury them.
- Human in the loop
- A workflow where a person reviews or approves AI output before it takes effect. The right default for anything that posts to the ledger or pays money.
- Large language model (LLM)
- The kind of AI behind ChatGPT, Claude and Gemini. In finance tools it drafts memos, answers questions about the data and explains variances. It does not replace the arithmetic in the ledger.
- Optical character recognition (OCR)
- Turning a receipt or invoice image into text. The older layer under every expense and AP tool; modern extraction adds a model that understands layout and meaning.
- Straight through processing rate
- The share of invoices or transactions handled end to end with no human touch. The honest metric for AP and bookkeeping automation. Ask vendors for it after the first 90 days, not at the demo.
Search, links and AI visibility
- AI Overviews
- The AI generated summary Google shows above normal results for many queries, with citations to a handful of sources. Being one of those sources is the new position one.
- Anchor text
- The clickable words of a link. Brand names and natural phrases are safe. Repeating exact money keywords across many paid links is the classic penalty trigger.
- Backlink and referring domain
- A backlink is a link from another site to yours. A referring domain is a site that links at least once. Ten links from one site count far less than one link each from ten sites.
- Dofollow and nofollow
- By default a link passes ranking signals (dofollow). Adding rel="nofollow" tells search engines not to count it. Directories and comment sections are usually nofollow.
- Domain rating (DR) and domain authority (DA)
- Scores from Ahrefs (DR) and Moz (DA) estimating the strength of a site's backlink profile, from 0 to 100. Buyers of guest posts use them as a shorthand for value. They say nothing about traffic.
- E-E-A-T
- Experience, expertise, authoritativeness and trust: the qualities Google's quality raters look for. Named authors, real bios, sources and corrections policies are how a site shows them.
- Generative engine optimisation (GEO)
- Getting a brand mentioned and cited in AI generated answers from ChatGPT, Perplexity, Gemini and Google AI Overviews. In practice: being present in the listicles, directories, review sites and community threads those systems draw from. Read more
- Guest post and link insertion
- A guest post is a new article published on another site with a link to yours. A link insertion adds your link to an article that already exists and is already indexed, which is why it often works faster.
- Listicle
- A "best X tools" article. Unglamorous, but the most cited content type in AI answers for software categories. Getting into the right ten listicles beats ranking one article.
- Private blog network (PBN)
- A group of sites owned by one person purely to sell or pass links. Links from them are cheap, detectable and a common cause of ranking drops. Real traffic is the test.
- rel="sponsored"
- The attribute Google asks publishers to put on paid links. It protects both sites from link spam penalties. Any site selling links without it is taking a risk with your money.
- Site reputation abuse
- Google's 2024 policy against publishing third party content that exploits a host site's rankings without oversight. It is why serious publishers label sponsored posts, keep them on topic and cap how many they run.
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