Small Business Dictionary

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"on us" field

The portion of a Business Check, typically printed before the routing number, that indicates whether the check is able to be converted into an ARC or BOC ACH Transaction.

401(k) Plan

A type of retirement plan offered to employees by employers. 401(k) is an IRS designation for this type of account which enables the employee to delay paying taxes on the money deposited into it and the gains generated by the investment until it is withdrawn after retirement. For more information on 401(k) plans, see http://www.irs.gov/retirement/participant/article/0,,id=151753,00.html

A

ABA/RT

The bank routing number of the bank where the merchant has their Direct Deposit Account (DDA) or where payments are automatically withdrawn (such as ABA/RT/IBAN).

Accepted Credit Card

The Truth in Lending Act & Regulation defines an "accepted credit card" as one that has been applied for, received, and used (by the applicant, or by a designated authorized user).

Account Executive

The person at a company who is in charge of overseeing a particular account -- also called an Account Manager. This person should be a single point of contact for a customer to ensure a good customer experience with the company.

Account Manager

see Account Executive

Account Payable

A purchase made on credit for which your company has received the product or service, but will pay for it on a future date. The "account payable" is the amount owed. The accounts payable department is the division of your company responsible for administering the payments to vendors.

Account Receivable

A sale made on credit for which the product or service has been delivered and payment will be made at a future date. The "account receivable" is the amount owed. The accounts receivable department is the division of the company responsible for the collection of funds due.

ACH Return

An ACH Transaction that has been submitted to the ACH network for processing, but has been rejected for some reason. Common reasons for rejection are a bad account number, non-sufficient funds in the account to cover the check, or a block on the account for ACH processing. A full list of ACH Return reasons is available here

Acid Test

see Quick Ratio.

Acquirer

In relation to credit card processing, an acquirer is a bank, or an alliance between a Processor and a bank, that is in the business of issuing merchants accounts for credit card processing. As a merchant, the company that issues your Merchant Account is your acquirer. The acquirer is responsible for Funding your bank account for the transactions you process.

In relation to ACH processing, an acquirer is the company or agent that transfers ACH transactions into the ACH network. As a merchant, this is the company that issues your ACH processing account and funds your bank account for the transactions you process.

Acquiring Financial Institution

An acquiring financial institution (or Acquirer) contracts with the bank and merchants to enable credit card transactions. The Acquirer deposits the daily credit card totals and debits the end-of-month processing fees from the merchants' accounts.

Activity Ratios

Activity Ratios, also called Asset Management Ratios, measure how effectively a company is managing its assets. The key is to maintain a good mix of assets to achieve optimal Cash flow and increase the value of the company. Too much investment in long-term assets can hurt liquidity; too little investment can hurt profitability and sales.

Ad Words

A Google advertising program that enables contextually relevant advertisements to appear on Google search results pages. This is a common low-cost way for small businesses to dip a toe in online advertising.

Address Verification Service (AVS)

The process of validating a Cardholder's given address against the issuer's records, to determine accuracy and deter fraud. This service is provided as part of a credit card authorization for mail order/telephone order transactions. A code is returned with the authorization result that indicates the level of accuracy of the address match and helps secure the most favorable Interchange rates.

Adjustment

An adjustment is initiated by the Acquirer to correct a processing error. The error could be a duplication of a Transaction or the result of a Cardholder Dispute. The Acquirer debits or credits the merchant DDA account for the dollar amount of the adjustment.

AdSense

A Google advertising program that enables contextually relevant advertisements to appear on websites. As an Advertiser, you can let Google select sites for your ads based on their content, or your can select sites yourself from a network. As a Host, you can make money when your site visitors click on ads served by the Google network.

Advertorial

An article in print, online, on the radio or on television that is specifically written to promote a particular company. Typically, the media must identify advertorial content, but sometimes it is disguised as true editorial, so it is always important to question the source of information you encounter in print, online, or on radio and TV.

Adwords

A Google advertising program that enables contextually relevant advertisements to appear on Google search results pages. This is a common low-cost way for small businesses to dip a toe in online advertising.

Affidavit

A signed document, witnessed by a notary or other person legally authorized to administer oaths, in which a person makes a statement or assertion and swears to the truth of its contents. For example, you might be asked by your bank to submit an affidavit if you claim you never authorized an ACH Transaction that appears on your bank statement. The affidavit would be your sworn statement that you did not authorize the Transaction. Note that new NACHA rules no longer require an affidavit to Dispute a Transaction.

Affiliate Marketing

An internet Marketing program in which one web-based company pays another web-based company for sending traffic to its site. A typical arrangement involves company A placing some type of advertising on company B's website (a Banner Ad, a text ad, an Advertorial, a "buy now" button, etc.), and paying company B for each time a user on its site takes a pre-determined action (clicks the link to company A's site, fills out a form on company A's site, makes a purchase on company A's site, etc.). The key to effective affiliate Marketing is having a solid system in place that can track real clicks and purchases so that the company B's are properly compensated, but that can also track fraudulent or haphazard clicks so that Company A only pays for real customers.

Alternative Dispute Resolution (ADR)

Any means used to settle a legal Dispute, such as Conciliation, mediation, or Arbitration that does not involve the court system.

Amortization

The process of paying off a loan in a series of equal payments of which a portion is Principal and a portion is interest. An amortization schedule will show you how much of each equal payment is allocated to interest and how much to Principal over time. Typically, you will pay more interest when the Principal amount is large and more Principal when it is small (a majority of the loan has been paid off). Try this amortization calculator to help figure out how much a loan payment will be and what the amortization schedule looks like when Principal, interest rate, and loan term are provided.

Angel Investor

Originally referring to a wealthy individual who financed a Broadway play, it now refers to any individual who provides substantial backing to a start up company, but who is not involved in the day-to-day management of the business.

Anti-Money laundering

The legal requirements for financial institutions to report any suspicious transactions to the federal government.

Anti-virus Software

Software programs that reside on a computer designed to prevent, detect, and neutralize any malicious programs designed to damage, impair, track, or otherwise interfere with the operation of your computer. The two leading anti-virus software providers are McAfee and Norton, but you can also get low cost and free virus protection packages, such as AVG Anti-Virus Free Edition. This free addition is available from the CNet trusted download site: http://www.download.com/AVG-Anti-Virus-Free-Edition/3000-2239_4-10320142.html?tag=contentBody;mostPopTwoColWrap&cdlPid=10891365

Arbitration

A legally binding way to resolve a Dispute in which the two opposing parties engage a third party (either a person or a panel) to decide a conflict instead of taking it to trial in court. Because arbitration is typically considerably less costly than a trial, many companies are now placing arbitration clauses in all of their contracts which means by signing the contract as a Consumer or business buyer, you may be relinquishing your right to sue in court. Arbitration can be beneficial to both parties, but be sure that the terms of the arbitration clause do not unduly benefit for the other party (for example, enabling the other party to unilaterally select the arbitrator).

Arbitration Clause

A clause in a contract that binds both parties to the Arbitration process if a Dispute arises. see Arbitration.

ARC

The ACH processing code for an Accounts Receivable Entry. This is a paper check received in the mail or left at a designated drop-off facility, that is scanned and converted into an electronic ACH Transaction.

ASP

Application Service Provider. The provider of a hosted software application that is accessed over the WEB instead of being installed and maintained by a end-user company on its own equipment. Also see SaaS and Cloud Computing.

Asset

Any item of value owned by an individual or business. On a Balance Sheet, assets are broken into two sections: Current Assets which include Cash and other assets that can be quickly converted into Cash, such as accounts receivable and inventory; and Fixed Assets which include buildings, equipment, and other items of value that are not immediately liquid.

Asset Management Ratios

see Activity Ratios

Associations

Any entity formed to administer and promote credit and cards. The best known examples of Associations are MasterCard and Visa.

At-Will Employment

A relationship between employer and employee in which there is no contract and either party may end the employment relationship for any reason without any penalty.

ATM

Automated Teller Machine. This is a stand alone Kiosk device that enables you to access your bank account to make remote deposits and withdrawals. As part of the Transaction, the computer in the ATM accesses the ATM Network to check your account balance and authorize the Transaction, provided sufficient funds exist in the account.

ATM Network

The network of banks that enable them to share information about account holders so that any account holder can access funds via an ATM. The ATM Network can verify an account holders PIN, check the balance of his account, enable a deposit or a withdrawal, and perform other account maintenance functions.

Authorization Code

A code that a credit Card Issuing Bank returns in an electronic message to the merchant's POS equipment that indicates approval of the Transaction. The code serves as proof of authorization.

Authorization Response

An Issuing Financial Institution's electronic message reply to an authorization request, which may include:

• Approval—transaction was approved
• Decline—transaction was not approved
• Call Center —response pending more information and the merchant must call the toll-free authorization phone number

Auto Close

A Terminal feature that allows an end-of-day Batch closing to occur automatically at a specified time, without having to be initiated by the merchant.

Automated Clearing House (ACH) File

A file with instructions for the exchange and Settlement of electronic payments passed between financial institutions. It represents debits and credits to be deducted from an account automatically as they occur.

Average Ticket (Average Sale)

The average dollar amount of a merchant's typical sale. The average ticket amount is calculated by dividing the total sales volume by the total number of sales for the specified time period.

B

B2B

Business to Business. A B2B company is one that primarily targets its products and services to other businesses. For example, an Industrial Equipment Maintenance company would be classified as B2B.

B2C

Business to Consumer. A B2C company is one that primarily targets its products and services to individuals. For example, a fashion clothing boutique would be classified as B2C.

Bad Faith

In the context of general business practices: the intention to mislead or deceive in a business dealing in order to achieve an objective. Bad faith entails a conscious decision not to perform as promised, rather than negligence or ineptitude. For example, if a wedding dress store sells you a dress for delivery on June 1 and takes full payment for the dress with the knowledge that it is in bad financial shape and will be forced to declare bankruptcy next week (and thus never order the dress from the supplier or deliver it to you), the sale is made in bad faith.

Bait and Switch

The practice of advertising one product or one Price and then offering the purchaser a different product or a higher Price when they attempt to buy the advertised item. For example, an auto dealer who advertises a car for $500, but then tells the customer that the car has been sold already and tries to sell other far more expensive cars on the lot is practicing bait and switch.

Balance Sheet

A point in time snapshot of a company's financial position. One side of the balance sheet lists assets and the other lists Liabilities and equity. The two sides must be equal, which can lead to some creative accounting. If you see a large disparity between the assets and liability portion of the balance sheet, look to the 'goodwill' line in the equity section and you will likely see where the discrepancy is equalized.

Bankcard

A credit card issued by a Visa or MasterCard-sponsored financial institution. (American Express, Discover, Diners Club, JCB, and so on, are issued directly from their respective operations, rather than through banks.)

Banner Ad

A graphic ad that appears on a website.

Basic Earning Power Ratio

Profit (EBT) / Total Assets. This ratio shows the basic earning power of a company's assets before taxes are taken into account -- meaning how much of a profit it makes by utilizing its assets. The higher the ratio value, the better.

Batch

The accumulation of captured credit card transactions in the merchant's Terminal or POS awaiting Settlement.

Benchmarking

The practice of comparing your company against other similar companies or against an industry average. Benchmarking can be done against any data point, from brand awareness to financial ratios to management efficiency.

Bill Presentment

An online system that enables customers to view and pay invoices online. Also known as EBPP (electronic bill payment and presentment).

Board of Directors

The governing board of a company, elected by stockholders, that have general oversight responsibility for the company.

BOC

Back Office Conversion. A type of ACH Transaction in which a paper check is accepted form a customer at the time of sale, which is later scanned and converted into an ACH payment for processing electronically.

Bona Fide Occupational Qualification (BFOQ)

A valid defense if a company is charged with discriminatory hiring under Title VII of the civil rights act. A BFOQ exists when a person's gender, religion, or national origin is a required qualification for a job and is essential for effective job performance -- for example, a female attendant for a ladies' room. Note that a BFOQ is not found to be applicable to race or color discrimination.

Bonded Employee

An employee of a company that has been insured for any damages it may cause to customers. For examples, members of a cleaning service are typically bonded so that if they steal something from your business while working there, you will be reimbursed for the value of the stolen item. Any time contract employees will have access to sensitive customer information or will be working in areas containing valuable data, files, or equipment, it is important to make certain that they have all been "bonded"-- the process of which typically includes a background check.

BRC

Business Reply Card. A post card sent to customers that you would like them to complete (to enter an order, respond to a survey, register a Warranty, etc.) for which the postage has been pre-paid or will be paid by the addressee.

BRE

Business Reply Envelope. An envelope in which you would like a customer to enclose a reply or payment (to enter an order, renew a subscription, respond to a survey, register a Warranty, etc.) for which the postage has been pre-paid or will be paid by the addressee.

Breach of Contract

Violation of any terms of a contract without a valid legal excuse. For example, failing to pay for goods delivered to you would be breach of contract. Failing to pay invoice for goods that you never received would not be breach of contract.

Breach of Duty

The failure to act as a reasonable person would act in the same or similar circumstances. Typically, a breach of duty claim is made in conjunction with a negligence lawsuit.

Breach of Warranty

In relation to sales of products or services: failure to live up to contractual promises made to the customer (typically made in the Warranty section of a contract) with regard to the performance of the product purchased or service rendered. For example, if your contract promised to repair any leaks to a roof you installed for 5 years after installation, but refused to make those repairs when your customer called you 2 years after installation, you would be in breach of Warranty.

Breakeven Point

The point at which the return equals the investment. The breakeven point for a manufactured product is the volume of sales at which per item sale Price = per item cost before taxes. For a Marketing campaign, it means when the cost of acquiring a new customer = the total Profit from purchases by that customer over a given time period.

Business Check

A check written on a business bank account (as opposed to one written on a personal bank account).

Business Plan

For a potential start-up company, a business plan outlines all aspects of the proposed new venture including its mission, market, and Strategy as well as projected start-up costs and projected operating costs, Cash flows, and income statements. For an existing business, a business plan describes the past, current, and projected future of the company. Tools for creating your business plan can be found on the SBA (Small Business Association) website: http://www.sba.gov/smallbusinessplanner/plan/writeabusinessplan/index.html

C

C2C

Consumer to Consumer. A business in which an individual, instead of a company, is selling to another individual. A good example of C2C is auctions on eBay that take place between two individuals.

Cache

In relation to WEB browsing, the cache is the portion of memory used on your computer to store the WEB pages and images you view online. Storing, or caching, these WEB page components makes the typical browsing experience faster. A common error people make when browsing is thinking that they are viewing the latest version of a WEB page, when they are actually seeing a version cached by their own browser. To make sure you are seeing the latest version of a page, click the "refresh" button on your browser -- that will retrieve the latest version of the page from the server on which it is hosted.

Capital

In business, assets used to produce other assets. For example, Cash used to create Inventory is capital. For financial statements, capital is equal to total assets minus total Liabilities, which leaves those assets which are available for use in growing the business, as opposed to those that must be used to discharge debt. See also Capital Asset and Working Capital.

Capital Asset

An Asset used to produce other Assets, such as a piece of equipment. See capital.

Capital Gain

The total Profit on the sale of a Capital Asset that is sold for more than its purchase Price. For example, if I buy a building for $100,000 and sell it for $200,000 after making $25,000 of Capital improvements and paying a $25,000 real estate commission, the Capital gain would be $50,000.

Capital Improvement

Changes made to a Capital Asset that increases its value. For example, adding an additional wing to an office building is a Capital improvement.

Capital Loss

The total loss on the sale of a Capital Asset that is sold for less than the sum of its purchase Price plus the cost of any Capital improvements, plus the selling Expense. For example, if I buy a building for $100,000 and sell it for $50,000 after making $25,000 of Capital improvements and paying a $5,000 real estate commission, the Capital loss would be $80,000.

Capture

The submission of an electronic credit card Transaction for financial Settlement. Authorized credit card sales must be captured and settled in order for a merchant to receive funds for those sales. Also see Settlement.

Card Issuing Bank

An EFT Network Member-Bank that runs a credit card or Debit Card purchasing service for their account holders. An example is Citibank and the Citibank Visa Card that they issue.

Cardholder

Any person who holds a payment card account (Bankcard or otherwise). Person that uses a credit card to purchase goods and services.

Cash

Typically refers to paper money and coins, but in financial accounting refers to all funds readily accessible such as those in a checking account.

Cash Conversion Cycle

The time differential between the outlay of Expense for providing a product or service and the time payment for that product or service is collected. For example, if I pay my employee Joe the Plumber to fix Joe Six-pack's toilet on May 1, but Joe Six-pack does not pay me until June 1, my Cash conversion cycle is 30 days.

Cash Discount

In the context of invoice billing of accounts receivable, a Cash discount is the amount you are willing to deduct from the total due in exchange for payment before the contractual due date. For example, if your standard terms are net 30 days, you might provide a 2% discount for payment in less than 10 days. If the invoice was for $100, your customer could save $2 by paying you early.

A Cash discount may also be used to encourage payment via a method more efficient for your company to process. For example, you might offer a Cash discount of 3% if your customers pay online instead of mailing you a check.

Cash Equivalent

Immediately liquid funds that are not classified as Cash, such as securities that can be quickly exchanged, money market funds, or any other liquid debt that can be converted into Cash in less than 90 days.

Cash Flow

The flow of Cash into and out of the business: inflows result from sales and investment income, while outflows are comprised of costs incurred to run the business. Positive Cash flow means the company takes in more than it spends in a given period. Negative Cash flow means it is spending more than it takes in. Negative Cash flow does not always mean that a company has cost and pricing problems, it may indicate a problem with how long it takes to collect on accounts receivable.

Caveat Emptor

Latin for Buyer Beware. It is a common warning to those making purchase decisions that it is up to them to make a reasoned decision. While it is always a good practice, it is especially important when making 'as is' purchases where no Warranty exists or if you have little recourse if something goes wrong, such as when making purchases from a foreign company.

Caveat Vendtor

Latin for Seller Beware. It is a common warning to vendors making sales that seem too good to be true. It is often evoked when large amounts of Inventory are ordered on credit by a new customer about which the vendor knows nothing or little about. Seller beware: don't ship unless you have a reasonable expectation of being paid.

CCD

An ACH processing code for electronic transactions between two businesses. The Corporate Cash Disbursement (CCD) code is used for business transactions regardless of the method or origination -- by phone, in writing, etc.

Channel Marketing

Channel Marketing breaks up the total Marketplace by the way they access a product or services and concentrates Marketing efforts on each different access point individually. For example, different channels for purchasing electronics include bricks and mortar stores, catalogs, the internet, and value added resellers. A channel Marketing Strategy for selling electronics would create a different Marketing Strategy and campaign to promote sales in each of the 4 identified channels. Also see Marketing channel.

Chapter 11

A form of Bankruptcy in which a company undertakes re-organization under court supervision in order to get its financial house in order with the intention of resuming normal business at a future date.

Chapter 7

A form of Bankruptcy in which a company, under court supervision, liquidates assets to pay off outstanding debt (typically, only a small portion of the debt actually gets discharged and court proceedings determine which Creditors get paid first and most) with no prospect of ever resuming business.

Chargeback

A credit card Transaction that is billed back to the merchant after the sale has been settled. Chargebacks are initiated by the card issuer on behalf of the Cardholder.

When a credit card Transaction is disputed, the dispute is handled through a chargeback. A chargeback causes the disputed amount and sometimes a chargeback fee to be deducted from the merchant’s account. The chargeback process allows the Cardholder to send a disputed Transaction back to the Acquirer. Chargebacks occur after the Transaction under scrutiny has been completed, cleared, and settled.

Typical Cardholder disputes involve product delivery failure or product/service dissatisfaction. Cardholders are urged to try to obtain satisfaction from the merchant before disputing the bill with the credit card issuer.

Chargeback

For credit card transactions, a chargeback occurs when a customer tells the issuer of his/her credit card that a charge made against his/her card is not valid either because it is for the wrong amount, was never authorized, occurred on the wrong date, or even if they product received is perceived to be not as advertised. If a chargeback is initiated, the merchant has the right to Dispute the customer's assertion, but the final resolution is up to the card issuer. If the card issuer sides with the customer, the amount of the transaction is credited to the customer and retrieved from the merchant. Note that a merchant pays a fee for each chargeback a customer initiates against it.

For ACH transactions, a chargeback can only occur if the customer tells its bank that a transaction was not authorized, not authorized for the amount withdrawn, or authorized for a date later than the transaction took place. As with credit card chargebacks, the merchant has a chance to defend the transaction. If the bank sides with the customer, the amount of the transaction is credited to the customer and retrieved from the merchant. The merchant pays a fee for each ACH chargeback a customer initiates against it.

CI

Competitive intelligence. The practice of investigating your market and your competition to give your own company an advantage. For example, a CI project might entail discovering how your competitor can manufacture a similar product for half the cost it takes your company to make it. Or, a CI project might entail researching a potential customer so that you can tailor your sales pitch to its major pain points.

Clickstream

A clickstream is a record of a user's activity on the WEB. When it focuses on a specific person's activity, it can be used to create a picture of the person's interests so that marketers can more effectively market to the user, and also market to other users of a similar profile. Third parties are constantly looking for ways to record clickstreams for individual consumers, such as tool bars and third party cookies that are installed on the user's computer sometimes with and sometimes without their knowledge. Note: it is a good idea to set your WEB browser not to accept third party tracking cookies.

A clickstream can also be used to analyze individual user activity on your own WEBsite. This data can help you learn things like common paths through your site, places where you lose people, where they go, and where they were immediately before clicking to your site.

Clickthrough

The act of clicking a link on one page and going to another page. Typically seen in relation to internet advertising where a clickthrough is recorded when a user clicks a link in an WEB ad to go to the advertisers WEBsite.

Closely Held Corporation

A company that has Investors and issues common stock, but that stock is not actively traded on any exchange. The stock is held by a small group of Investors that typically include the company's top management.

Cloud Computing

also known as Software as a Service. The practice of using a hosted software solution -- one you access over the WEB -- instead of one installed and maintained by your own company on your own equipment. PaySimple is an example of cloud computing, as is the giant CRM provider SalesForce.com and the free suite of office applications offered by Google Office. The advantage to cloud computing is that for a relatively low cost subscription your company can take advantage of cutting edge software solutions without the burden of purchasing Capital equipment or hiring specialized IT staff to maintain and develop systems.

Co-branding

The practice of putting multiple brand names on a single product, service, or Marketing message. For example, when you see a commercial for Wal-Mart that advertises a low Price on Pepsi products, that's co-branding. When PayPal lets you put your logo on a payment page, but also display's their logo, that's co-branding, too.

Code of Conduct

A set of expected principals and associated behaviors that are expected from all members of a particular group which are used to guide decision making for participants by outlining what is and is not acceptable.

Comma Separated Value (CSV)

CSV is an acronym for (Comma Separated Value) and the result is the same as comma-delimited. This is also called a flat file because it's just data (no formatting like bold print or colors). The result is a record layout that separates data fields with a comma and usually surrounds character data with quotes, for example:

Pat Smith,Main St.,New Hope,PA,18950

K. Jones,34 8th Ave.,Syosset,NY,11724

Programs like Excel and Microsoft Access can open and read a CSV file.

Commercial Cards

Credit or charge cards issued to businesses to cover expenses such as travel and entertainment and procurement. Includes the multiple payment card brands of purchasing cards, business cards, corporate cards and multi-utility fleet cards. Visa and MasterCard now have special procedures for passing billing information back to the Card Issuing Bank so that it can be displayed on card holder statements; this is a program for promoting the use of credit cards for business purchases by providing purchase tracking to business users. New regulations require that this billing information be passed back with the transactions, otherwise a higher pass through fee will be incurred.

Commercially Reasonable

A non-precise standard of reasonableness judged based on what a similar person would do in similar circumstances within the same business community. For example, commercially reasonable solutions are required to meet security standards. A company must weigh security, operational, and cost concerns when making decisions about storing sensitive information and balance each of the needs. The most secure system might be so costly that it puts the company out of business and thus would not be commercially reasonable, nor would storing the data in an open file drawer when a locked fire safe is a low-cost more secure solution. There are no absolutes when it comes to commercial reasonableness and it is always judged on a case by case basis.

Competitive Advantage

Something about a company that enables it to be more profitable and successful than its competitors, such as above-average brand loyalty, a superior process that enables it to manufacture equivalent goods at a lower cost than competitors, a special deal with supplier, or a preferred relationship with the industry's largest customers.

Compliance Audit

An examination of a company's policies, procedures, and current practices to determine if it is operating in line with a set of rules or regulations. For example a PCI DSS (Payment Card Industry Data Security Standard) compliance audit determines whether a company's Security Policy, operations, and computer systems meet the requirements set forth in the PCI DSS specification for protection customer personal information and credit card numbers. (N.B--PaySimple is certified PCI compliant!!)

Compliance Program

A plan put in place by a company to ensure that it is operating in accordance with a set of rules and regulations.

Computer Hardware

The physical parts of a computer system, such as the Processor, monitor, RAM, hard drive, etc. that make up a computer system, as opposed to the software that operates on the hardware.

Computer Software

The programs that enable a computer to perform specific tasks, such as applications like word processing and games or interfacing between different hardware components such as drivers for monitors and joysticks.

Computer Virus

A specific type of Malware characterized by its ability to self-replicate itself within a computer into which it has been introduced without the knowledge of the user. Viruses take many forms but typically impair the functionality of the computers they infect.

Conciliation

Dispute resolution practice in which the interested parties get together to work out a solution without involving the courts or any other outside parties.

Consequential Damages

Damages caused by a Breach of Contract that are indirectly caused by the breach, such as personal injury, property damage, or lost profits. For example, if I breach my contract to supply your store with purple widgets on Black Friday and, as a result, all of my loyal customers buy their purple widgets from the store down the street My lost customers never return to my store and all the potential business they would have provided are a consequential damage of your Breach of Contract.

Consumer

A person or organization that purchases goods or services. In business, a consumer is typically an individual person as opposed to a business. See B2C and C2C.

Conversion Rate

In relation to advertising, the percentage of the audience for a specific ad that takes a specified action. For example, if 10 people are shown a webpage that contains a link to site A and a link to site B, and 4 click the site A link and 3 the site B link, then the conversion rate for any click is 70% (7/10), the conversion rate for site A is 40% (4/10) and the conversion rate for site B is 30% (3/10).

Cookie

A short snippet of text placed on a WEB users hard drive to identify it to a WEBsite. Session cookies get deleted when a user leaves the WEBsite that deposited the cookie. Persistent cookies remain until they are removed or until they are set to expire. First party cookies are those placed by the WEBsite that is being visited. Third party cookies, such as those launched from a Banner Ad, are those placed by a site other than the one being visited. You can set your browser to accept or reject cookies depending on what type they are. Typically, you should accept session cookies as they are essential to a smooth browsing experience. For example session cookies are used to keep track of your Shopping Cart on an E-Commerce site. Persistent First Party cookies are also useful for things like storing log-ins and customized content pages. Third party cookies are typically used for Clickstream tracking and, in most cases, should be rejected.

Corporate Card

Charge card designed for business-related expenses, such as travel and entertainment. Please see Commercial Card.

Corporation

A legal entity registered with a state for the purpose of conducting business. Assets and Liabilities of the company are separate and distinct from those of its shareholders and managers, meaning that no member of the company, its board, or its shareholders are personally liable for any activities of the corporation (they cannot lose any assets but those invested in company stock).

This is important for small business owners -- a sole proprietor may lost personal assets not related to the business if the business fails. Personal assets cannot be tapped to pay Creditors if the company is a corporation.

Cost of Sales

In service businesses, typically used in place of CGS (cost of goods sold), it comprises all costs involved in selling a service such as labor and materials. For example, if I contract with a plumbing business to fix my sink and I pay them $500 for the job, that is the sale Price. The business incurs the cost of paying Joe the plumber $100 for doing the work, $5 in transportation related expenses, and $50 in parts, and a $10 referral fee to the person who suggested I use their service, the cost of sales would be $165.

CPA

cost per action. The amount you pay for each person who performs a desired action.. For example, if your desired action as a result of a mass mailing is for people to order the product advertised in the mailing, and you pay $5000 for the campaign getting 5 orders, your CPA is $1000. Depending on the cost of your item and the Lifetime Value of the customer, this may or may not be a successful campaign.

CPC

cost per click. This is the amount you pay for each click to your website from an online advertisement. It can be a flat figure based on actual user action; for example, using Google Adwords you decide to pay $2 for each Clickthrough to your website from an ad hosted in Google search results, regardless of how often the ad is shown. Or it can be a calculation based on a fixed cost; for example, you pay website X $500 to display your ad for one month and during that month 100 people click the ad and visit your website, your calculated cost per click is $5 (and will go up or down based on how effective your ad is at generating clicks).

CPI

cost per inquiry. An advertising model where you pay a third party based on the number of actual sales inquiries from potential customers they send to you. These inquiries contain detailed information about the prospect and always include complete contact information. Typically with a CPI model, some level of pre-qualification is done to make sure the inquiry is a valid match for your company's product or service. A good rule of thumb is to expect to pay more for a higher degree of pre-qualification.

CPM

cost per thousand. CPM is a typical advertising measure of the number of Impressions an advertisement will receive. It can be number of people who view an ad on a website, number of listeners to a radio show, or number of readers of a magazine. Note that it is important to understand that depending on the medium CPM has a different meaning. For internet ads, it typically means the number of people who actually see your advertisement. For magazine ads, it typically means the number of people who get the magazine delivered to them -- not all of these people will ever see your ad.

Credit (Reversal)

Nullification of an authorized Transaction (sale) that has not been settled. If supported by the card issuer, a reversal will immediately undo an authorization and return it to the open-to-buy balance on a Cardholder's account. Some card issuers do not support reversals.

Credit Policy

The set of standards used by a company when making decisions about how much credit and the terms of credit repayment to offer customers. There are four components of a credit policy: credit period (how long the customer has to pay an invoice), credit standards (parameters for extending credit based on the credit worthiness of a customer, sometimes determined by their commercial credit rating), collection policy (your internal procedures for collecting on accounts Receivables), and discounts (any Cash discounts you offer for early payment or alternate payment methods).

Creditors

Any person or entity to which a business owes money.

CRM

customer relationship Marketing or customer relationship management. It is often associated with a software system that manages all interactions a company has with customers and potential customers. Using a CRM system can not only help serve customers better, but can also be a great source of aggregated data from which insights about purchasing patterns, demographic profiles, and Up Sell opportunities can be gleaned and employed in efforts to grow future sales from existing customers and acquire new customer.

Current Assets

Those assets that are in Cash form, can be converted to Cash form in less than one year, or sold or consumed in less than one year -- also called liquid assets. Liquid assets include accounts receivable, Inventory, pre-paid expenses (such as a block of pre-paid airfares), and short term certificates of deposit.

Current Liabilities

Money owed by a company that must be paid in less than one year.

Current Ratio

Current Assets divided by Current Liabilities. It is a measure of whether a company is in good financial shape when it comes to paying off short-term debts. It lets you know if you are taking in Cash fast enough so that you don't have to borrow or dip into Cash reserves to pay your debts. A current ratio of 1 means that your short-term Cash intakes exactly equal your Cash outflow. If its more than 1, your company has good Cash flow. If its less than 1, understand why and if necessary take measures to fix it -- for example, you might think about creating a system for recurring billing which typically results in faster collections than mailed invoices and checks.

Customer-Centric

In relation to a software system, making the core record in a relational Database be the customer record and having all other data branch off that record. For example, in the customer-central PaySimple Solution all reporting is centered on a customer ID and any Transaction related activity in the system can be tracked back to a unique customer ID.

Cycle

When a merchant is configured for fee assessments for Transaction processing. Depending upon a merchant’s accounting periods, this can be monthly, daily, weekly, every 2 weeks, and so on A merchant can have fees assessed at any time, which is why the generic cycle term is used.

D

Database

An organized collection of related information.

Database Mirroring

The process of automatically copying the data from one Database server to another, in essentially real time, so that in case of failure of the primary Database, the secondary Database can be immediately substituted.

DBA

doing business as. In relation to a company, it is the publically facing name of the company as opposed to the official name under which the company is registered. For example, if my company WEB Candy Stores, Inc. has three websites: Tom's Candy, Freddy's Fudge, and Susie's Sweets -- each of those names would be a DBA.

Debit Card

A card issued by a bank that is linked to the bank account and upon use immediately removes funds from the account. Debit cards come in two types: PIN debit cards, in which the user must swipe the card and enter a PIN (personal identification number) to authorize a Transaction and signature debit cards, in which the user signs a receipt, similar to a credit card Transaction to authorize the Transaction. Authorizations for signature debit card Transactions use the same process as credit card Transactions, while PIN debit cards are typically authorized using the same ACH network used by ATM machines to authorize Transactions.

Debt Collector

Defined by the Fair Debt Collection Practices Act -- a Debt Collector is any person or company, other than the original creditor or its attorney, that attempts to collect a debt owed.

Debt Retirement

The complete payment of a debt -- the point at which the debt has been paid in full. For example, when I make the final payment on my car loan, I have retired that debt.

Debt Service

Noun: The total amount of Principal and interest owed on a loan each period, over a period of time. For example, a one year loan of $100,000 with a 10% per year interest rate and monthly payments would total a debt service of $9166.67 per month.

Verb: The act of making the periodic debt payments.

Debt to Equity Ratio

This ratio (Total Debt / Net Worth) compares the amount of equity provided by Creditors to the amount provided by Investors. The ratio shows what percentage of total Capital is provided by debt. Companies with a lower ratio are attractive to lenders, but too low a ratio may mean that the tax advantages of debt are not being fully utilized.

Deferred Billing

The practice of letting a customer take possession of goods and services, then billing for them at a later date with no interest charges.

Deferred Taxes

Taxes that have been accrued (are owed) but not yet paid. Typically, deferred taxes will be included on an Income Statement so that it accurately reflects the total amount of taxes the company will pay, not just the amount that is actually paid in the period covered by the Income Statement. For example, if you owe tax of $10,000 on $100,000 of sales made in October, but you won't actually pay the tax until December, you would include a line item for deferred taxes on your October Income Statement for $10,000.

Demand Curve

A graph that shows the relationship of Price and demand for a particular good or service. The Law of Demands says that, all else being equal, as the Price goes up, the demand goes down, and the curve (which actually is often a straight line) is used to find the optimal Price that will generate the greatest total sales. See also Supply Curve. For an in-depth lesson on supply and demand see: http://www.econweb.com/MacroWelcome/sandd/notes.html

Demographics

Common characteristics used to group the market into segments -- for example: women over age 50, households earning over $200,000 per year, 18-25 year olds.

Denial of Service Attack (DoS)

Any attempt by a person or persons to use a computer or group of computers to prevent any computer system from being available for normal use. A common DoS attack involves sending large amounts of traffic to make requests of a server (access it an ask for data--such as serving a WEB page or submitting a form), thus making it unavailable to legitimate users.

Depreciation

A charge taken against an Asset that reflects the loss of value resulting from use of that Asset. For example, lets say you purchase a piece of equipment for $100,000 in January, and you use it to produce product all year -- in December, that piece of equipment is no longer "new" it is used and its total useful life (the amount of time before it breaks down entirely or becomes obsolete) will have shortened. Thus, instead of listing the equipment on the Balance Sheet at its purchase Price, it gets listed for 10% less or $90,000. The $10,000 difference is depreciation. Note that depreciation is very important when it comes time to filing your taxes, and that the government has special rules for how you can depreciate different types of Assets based on your business type. See http://www.irs.gov/businesses/small/article/0,,id=137026,00.html for IRS information on depreciation for small businesses.

Digital Storefront

Typically a website that sells goods or services. A digital storefront is used by E-Commerce businesses to enable potential customers to browse and buy merchandise, much as an actual storefront enables them to do when shopping.

Direct Mail

Marketing goods and/or services to customers via the mail.

Disaster Recovery

The process of recovering from a natural disaster or catastrophic failure by completing a full restoration of lost or compromised systems back to their pre-disaster state. Disaster Recovery plans are wide ranging, but typically include the ability to restore data and databases that may have been destroyed during a disaster.

Disbursement

The payment of Cash from one person or company account to another person or company account. For example, when I transfer $100 from my bank account to yours, that's a disbursement.

Discount Rate

The percentage of sales amounts that the Bankcard Acquirer or T&E card issuer charges the merchant for the Settlement of the transactions. This value appears in reports and varies, depending upon the report type. For details on specific report discount rate, refer to the corresponding Help topic for the report.

Dispute

When a Cardholder challenges a purchase on their credit or Debit Card because it is a duplicate charge, is unauthorized, involves a merchant problem, or is otherwise disputed. In general, the term dispute refers to both retrieval requests and chargebacks.

Dual Agency

When a single person represents both sides in a contract negotiation or Dispute.

E

E-Commerce

Any Transaction performed over the Internet.

E-Sign Act

The Electronic Signatures in Global and National Commerce Act, which makes electronic signatures legally binding on contracts entered into electronically. See also electronic signature.

Early Adopters

People who are willing to try new products, services, and technology when it is first introduced to the market. These people are often prime Marketing targets for new products and services, as they like to try new things and are comfortable with change. Often, they are also very vocal in promoting products and services they like to others.

EBIT

Earnings Before Interest and Taxes. This is company's Profit before interest payments on short and long terms notes is taken into account, and before taxes are taken into account.

EBITA

Earnings Before Interest, Taxes, and Amortization. This is the company's Gross Profit, before deducting interest payments, taxes, and Amortization of Intangible Assets such as good will. It is helpful in evaluating a company's operating efficiency as it eliminates non operational costs that effect the bottom line.

EBITDA

Earnings Before Interest, Taxes, Depreciation and Amortization. This "pure" look at operating profits is useful when evaluating firms that are undergoing substantial investment programs, as it highlights the efficiency and profitability of operations by eliminating other costs that effect the bottom line. See also EBITA.

EBPP

Electronic Bill Payment and Presentment. The practice of viewing invoices from a company via the WEB, making payments via the WEB, and being able to access your billing and payment history via the WEB -- typically through a WEBsite owned by the company or owned by an EBPP company with which the billing company contracts.

EBT

Earnings Before Taxes. This is the company's Profit before taxes are taken into account.

EIN

Employer Identification Number. See Federal Tax ID #.

Electronic Date Capture (EDC)

Process of electronically authorizing, capturing and settling a credit card Transaction.

Electronic Signature

A method of legally signing a document electronically -- by checking a box, making a mark, typing a phrase, etc. In the United States, the Uniform Electronic Transactions Act (UETA) defines an electronic signature as "an electronic sound, symbol, or process, attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record." and declares it legally binding.

Elevator Speech

An elevator speech is the answer to the question "what do you do" delivered in the few seconds it takes to complete an elevator ride. In its most basic, simplest, and shortest form, it's a one or two sentence description of what you can do for your customers -- a simple succinct value proposition that leaves the listener wanting to hear more. For a longer elevator ride, you can add examples that illustrate your main point, a secondary related point, and/or something interesting or memorable about yourself or your company. Just be sure the entire speech takes no more than 30 seconds, which means about 80 or 90 words.

End User

The person who will actually be using a product or service -- the final buyer in the supply chain. For example, Company X makes orange widgets that it sells to a wholesalers, who in turn sells to a Retail chain, who in turn sells to its franchisees, who in turn sells the orange widget to Joe. Joe is the end-user.

Excited Utterance

An offer made by a person in an "excited" state that is not enforceable because of the excited state of the speaker. For example, if a star sales person tells the CEO that he has just landed a meeting with a huge potential client the company has been unsuccessfully trying to court for years, and the CEO exclaims, "If you close this deal I'll give you a million dollars!" If the sales person actually does close the deal, the offer of a million dollars would be treated as an excited utterance and the sales person would not be able to sue for his million in court and get it.

Exempt Employee

Employees that fall into a job classification that does not qualify them for overtime pay. Note, that being a salaried worker no longer automatically qualifies a person as an exempt employee. The 2004 amendment to the Fair Labor Standards Act created very specific categories for exempt workers including -- one that requires advanced education or knowledge, work in an original and creative artistic field, teaching, computer systems analyst, programmer, engineer, or similar field, Those who perform work which is intellectual and varied in character, the accomplishment of which cannot be standardized as to time, those who regularly exercise discretion and judgment. The laws an exemptions can be complicated. For detailed explanations of the Fair Labor Act and Exempt Employees, see http://www.dol.gov/elaws/esa/flsa/screen75.asp

Expense

For businesses, an amount paid for goods and services that is completely deductible in the current tax period, as opposed to a Capital expenditure that must be depreciated over time.

F

Federal Tax ID #

Also called an EIN (Employer Identification Number), a number assigned to your business by the IRS for tax purposes. It is used to identify your business for a number of federal agency with which it interacts, such as the IRS, Social Security Administration, and state government. Typically, any business that has employees (other than self proprietorships), and/or collects taxes on the goods and services it sells, should obtain a Federal Tax ID. You can download the application form here: http://www.irs.gov/pub/irs-pdf/fss4.pdf You can also use an easy online application process: http://www.irs.gov/businesses/small/article/0,,id=102767,00.html

Fiduciary Duty

The legal obligation for agents to act in the best interest of the parties they represent. For example, a corporations Board of Directors has a fiduciary duty to act in the best interest of the shareholders.

FIFO

First in, First Out. An accounting model by which Net Profit is determined by removing the oldest item in Inventory and its associated cost from the books each time a new sale is recorded. For example, lets say 10 items are produced on May 1 with a CGS (cost of goods sold) of $5 each, another 10 are produced on June 1 with a CGS of $6. If I sell my first item for $10 on July 1, I would calculate Net Profit based on a cost of $5 and thus record Net Profit of $5. Were I to use the alternate LIFO (last in first out) method, I would calculate Net Profit based on the most recently produced item and thus record a cost of $6 and a Net Profit of $4.

Financial Ratio

A comparison of two financial metrics expressed as either a decimal or a percentage that help understand the overall health and performance of a company in relation to other companies of similar size or in a similar industry. See PaySimple's Ratio Analysis Comparison tool for more information and to calculate financial ratios for your company. (Insert link to ratio tool when its done.)

Firewall

A hardware and/or software system that prevents unauthorized users from accessing a network.

Fixed Assets

Assets used in the running of a business that can not be easily liquidated and are not consumed during regular business processes. Tangible fixed assets include items such as buildings and equipment. Intangible fixed assets include things such as Goodwill and patents. All fixed assets are depreciated for tax purposes. See also Long Term Assets.

Fixed Cost

Business expenses that do not change based on production or sales. For example, an equipment lease, rent, or salary.

Franchise

A business relationship in which one party is granted the right to sell the branded goods and/or services of another party. The Marketing (and some times operational procedure) is largely or solely dictated by the party providing the goods and/or services. For example, fast food restaurants such as McDonalds and Burger King sell franchises to business people who want to open restaurant branches.

Freeware

Software you can legally download and use for free. Freeware is available for many types of software applications. For a good source of guaranteed tested and safe freeware see: http://www.download.com/windows/?tag=hdr;snav

Funding

Funding (Settlement) represents all of the transactions paid to a merchant.

Funding Time

The number of business days it takes after a financial Transaction is processed for the money to be deposited or withdrawn from the bank accounts involved. For example, if your ACH Transaction is on 3 day Funding and you initiate a Transaction during the December 1 banking day, then you should see the money in your account on the third business day after the Transaction date or December 4.

G

Good Faith

A legal term indicating that a party is acting with no intention of misrepresentation or of defrauding another party. Also, an honest effort to resolve a conflict.

Goodwill

As an accounting term, goodwill is used to represent that portion of a businesses' value that is not directly related to its assets and Liabilities. Goodwill typically comes into play when a company is purchased for more or less than the sum of its assets or book value. Thus by definition goodwill equals net value of the company's assets (total assets - total Liabilities) less book value (total value of Shareholder equity) and serves as the balancing figure on the Balance Sheet. For example, if a company has Total Assets of $10 million, total Liabilities of $2 million, and total owners equity of $7 million, then goodwill equals $1 million.

Grace Period

The period of time after a payment on a loan or on an invoice is due that you can make payment without incurring a late-payment penalty. For example, if an invoice is due on January 1 and you have a 15 day grace period, you can pay until January 15 without having to pay an additional late payment fee.

Gross Profit

Total sales less cost of goods sold.

Guarantee

Re products: A legally enforceable Warranty or assurance that the goods and service will continue to perform as they should for a given period of time. Re finance: a promise by a third party to take over the debt of the primary borrower in case of default.

H

Hard Cost

In accounting, the purchase Price of a fixed Asset, such as equipment or buildings.

Hit

In relation to website usage, a hit is recorded every time a browser makes a request to the server. Thus, a webpage with no graphics and no links to other resources (such as css style pages) will record one hit each time it is accessed. A page with 100 graphics on it will record 100 hits each time it is accessed. Once thought to be a good measure of website traffic, it is now understood that hits are a useless measure of website activity, while site visits and page views are a better gauge of actual usage.

Horizontal Market

A market covering multiple industries where the commonality between all the members is not related to a specific industry type. For example, small business is a horizontal market as is C-Level Executives. See also Vertical Market.

HTML

Hyper Text Markup Language. This is the name for the type of code used to program basic WEB pages.

HTTP

Hyper Text Transfer Protocol. The internet protocol that governs the transfer of information over the internet, commonly seen as the first part of a non-secure url.

HTTPs

Hyper Text Transfer Protocol Secure. The protocol that governs the transfer of secure data over the internet, commonly seen as the first part of a secure url. It represents a HTTP page that also employs SSL (Secure Socket Layer) encryption to make sure that any data transmitted from or to the page is encrypted during transfer.

I

Impressions

With regard to the viewing of WEB pages or WEB advertisements, impressions refers to the number of views a given WEB page or WEB ad receives during a given time period. Be sure to distinguish between total impressions (total number of views received) and unique impressions (total number of individual people viewing the ad or page). Total impressions often includes the same person viewing an ad or page multiple times.

Income Statement

A summary of incoming revenue and outgoing expenses for a given period -- typically a month, quarter, or year. The result is a net income calculation after expenses such as salary, overhead, and taxes are subtracted from net sale. This income is either re-invested in the business, paid to share holders as dividends, or often a mix of the two occurs.

Incorporation

With regard to a company, the process by which the company registers with the state to function as and be legally treated as a Corporation. Once this process is complete, the company will be officially "incorporated." Such companies typically use the abbreviation "Inc." after their names to indicate inCorporation.

Indemnity Clause

With regard to contract law, an indemnity clause represents that one party will financially reimburse the second party for any loss suffered as a result of the contract. For example, if Manufacturer A contracts with Sales Company B to sell its products, an indemnity clause in that contract might state that A would be bound to reimburse B for any financial loss B suffered due to lawsuits resulting from a defect in A's product.

Independent Sales Organization (ISO)

An ISO is an Independent Sales Organization that represents a Bank or Bank/Processor alliance. The ISO has an agreement to sell the services of the Bank or Bank/Processor alliance, and is allowed to mark up the Fees and sign up merchants.

Intangible Assets

Assets that do not have a physical existence, such as Goodwill, brand, business processes, or patented ideas.

Integration

In relation to computer systems, an interface that allows two systems to communicate with each other and to share data. A typical form of integration for software is accomplished with an API, which enables one program to request data from and send data to another program.

Interchange

Process: The exchange of information between all parties involved in a Visa or MasterCard credit card Transaction. Rate: The core rate charged by Visa or MasterCard to process a credit card Transaction before any fees for third parties involved in the process are added.

Interchange fee

A term used in commerce to describe fees charged to retailers and other merchants by an acquiring bank each time credit or debit cards, such as those issued by Visa or MasterCard affiliated banks are used to pay for a purchase. The Interchange fee is a percentage applied, according to Visa/MasterCard regulations, to the currency value of each Transaction. There are multiple categories of Interchange, and Visa and MasterCard each have their own criteria for their own categories. A Transaction must meet the specified criteria for a category in order for that category's rate to be applied. Each Transaction is evaluated individually, so various Interchange rates may apply within one Batch of merchant Transactions.

Internal Customer

Within a company, the person or department who receives the work of another person or department. For example, the internal customer for the Marketing department's sales brochure would be the sales department.

Internet Service Provider (ISP)

Internet Service Providers (ISPs) are the WEB Site Hosting companies that provide a home for merchant’s WEB sites.

Inventory

With regard to accounting, inventory is the number of products in stock currently available to be sold. It is typically listed as a current Asset on the Balance Sheet.

Inventory Turnover Ratio

Sales/Inventory, This ratio measures the Turnover rate for Receivables or how quickly a company gets paid, and thus its Liquidity. The best result for this ratio is 0, which indicates that no Receivables are found, such as in an all Cash business like a snack bar. For non-zero results, higher is better indicating that accounts Receivables are paid more quickly.

Investors

With regard to a company, the investors are people who have provided Capital to the company in exchange for a share of the profits generated by the company.

IP Address

A unique identifier for each device that accesses the internet. It takes the form of a 4 numbers between 0 and 255 , separated by periods. For example 1.192.4.1. Not only do IP Addresses enable devices to find each other and communicate with each other over the internet or an intranet, they are also useful for security purposes. For example, if malicious traffic or a denial of service address is found to originate from a specific IP address, all traffic from that device can be blocked. Want to know what your IP address is? Go here to find out: http://whatismyipaddress.com/

IRA

Individual Retirement Account. The standard IRA is one in which the deposits are tax deductible (up to a certain amount, based on income) and grow tax-deferred until they are withdrawn after retirement. There are many types of IRAs with different rules and financial implications. Its best to speak with an accountant or financial advisor before opening or making decisions about IRAs.

ISO

Independent Service Organization. In relation to credit card merchant accounts, an ISO is an independent business that is licensed by a bank to sell the bank's merchant processing services.

Issuing Financial Institution

The bank or other financial institution that extends credit to a Cardholder through Bankcard accounts. The financial institution issues a credit card and bills the Cardholder for purchases against the Bankcard account. Also referred to as the Cardholder's financial institution. Simply put the Issuer is a bank or other institution that issues a credit card or Debit Card to an individual.

J

JavaScript

Originally developed by Netscape, JavaScript is a programming language used on websites to create dynamic content.

Joint Liability

In legal terms, liability held by more than one party. When joint liability applies, both parties are typically also severally liable. For example in the case of a loan, if one of the parties defaults, the second party is responsible for repaying the loan in full.

Joint Ownership

Often applied to property, joint ownership exists when two or more parties own (typically equal parts) of a single item. Often joint ownership includes a rights of survivorship clause stating that when one owner dies the other owner(s) take possession of his share of the item.

Judgment Proof

A person so poor, or a company with no or little assets, that they are not worth suing in court because any judgment in favor of the plaintiff would never be paid.

K

Key Phrase

In relation to search engine Marketing, a key phrase is a set of words in a particular order that an advertiser targets with paid advertising or optimization. For example, "keyword advertising" would be a key phrase -- in advertising both those words would need to appear in that order to trigger an ad.

Keyword

In relation to search engine Marketing, a keyword is a single word and advertiser targets with paid advertising or optimization.

Kiosk

A small stand alone structure from which a product or service is sold. In relation to E-Commerce, a kiosk is typically a small computer stand from which the Internet or a proprietary shopping application can be accessed that enables customers to learn about products and services, and/or purchase using an electronic payment method.

L

Leave Behind

In relation to sales and Marketing, a leave-behind is a piece of literature (a brochure, a folder, a CD, etc.) that re-enforces the substance of a face-to-face sales meeting.

Leverage Ratios

Leverage Ratios, also called Debt Management Ratios, look at the amount of debt used by a company, the type of debt used, and the risk assumed by Creditors. Debit is not good or bad in and of itself, but must be looked at in terms of risk vs. return. If a company can generate more in Profit than it pays in interest, debt is typically beneficial. If a company relies too much on debt, the risks to Creditors rise, as does the risk to owners, as both will suffer in the event of bankruptcy.

Liabilities

In accounting, any debt owed by a company that must be repaid at a future date. Short-term liabilities must be repaid within one year. Long-term liabilities must be repaid in more than one year.

Life Cycle

In relation to a product, the period of time from the release of a product to the time when it is withdrawn from the market (often due to obsolescence) -- the useful life of the product.

Lifetime Value

A measure of the total business that can be expected from a given customer over a given period of time. Lifetime value is often used to determine how much a company can reasonably spend to acquire a customer based on the purchases that customer is expected to make over a given period. PaySimple provides two calculators to help you make this determination based on life time value (link to the two customer acquisition calculators.)

LIFO

Last in, First out. An accounting model by which Net Profit is determined by removing the newest item in Inventory and its associated cost from the books each time a new sale is recorded. For example, lets say 10 items are produced on May 1 with a CGS (cost of goods sold) of $5 each, another 10 are produced on June 1 with a CGS of $6. If I sell my first item for $10 on July 1, I would calculate Net Profit based on a cost of $6 and thus record Net Profit of $4. Were I to use the alternate FIFO (first in first out) method, I would calculate Net Profit based on the oldest item in Inventory, and thus record a cost of $5 and a Net Profit of $5.

Limited Partnership

A business partnership that is comprised of two types of partner: limited partners and general partners. The limited partners have little control over how the company is run, face reduced liability, and a smaller share of the profits. General partners have full control of the business, but are also fully personally liable for losses.

Liquid Asset

Any Asset, such as Inventory, accounts Receivables, CDs, securities, or notes due that can be converted to Cash in less than 30 days.

Liquidated Damages

As part of a contract, a specified sum of money that must be paid to the injured party if the terms of the contract are breached. For example, if Company A contracts with Company B to provide 100 orange widgets in January for $5 each, a liquidated damages clause would require Company B to pay Company A $500 if it fails to deliver the widgets on schedule.

Liquidity

The ability to turn an Asset, such as Inventory or accounts receivable, into Cash. A company's liquidity is typically measured by its ability to access Cash. See also liquid Asset.

Liquidity Ratios

Put simply, Liquidity ratios are a measure of a company's ability to pay its bills. In financial language, Liquidity ratios compare Current Assets to Current Liabilities and measure a company's abilities to meet current obligations (accounts payable, loan payments, salaries, etc.).

LLC

Limited Liability Company. This type of company is great for a small business. It is a type of company in which the Investors limit their liability to no more than the investment they made in the company, but get the tax advantages of being able to take profits as income on a schedule K instead of as dividends.

LLP

limited liability partnership-- same as LLC.

Long Tail

In relation to search engine Marketing, the long tail is the set of keywords and key phrases that individually get low search volume, but together make up a significant amount of a sites overall traffic. These words and phrases are typically easier to target (get high rankings in natural search, and get low cost-per-click in paid search), than the high volume phrases. For more information on long tail search strategies see http://www.hittail.com/faq/analyze.html. You may want to take advantage of the site's free trial to see if a long tail Strategy is right for your business.

Long Term Debt

Debt that will be paid off in longer than one year's time.

Long Term Debt Ratio

Long Term Debt / Total Assets. The Long Term Debt Ratio reflects the percentage of a company's assets that are provided by long term debt.

M

MAC address

Media Access Control address is an alphanumeric code that identifies an individual piece of hardware on a network.

Magnetic Stripe

A strip of magnetic tape affixed to the back of credit cards containing identifying data, such as account number and Cardholder name.

Mail Order/Telephone Order (MOTO)

Credit card transactions initiated via mail, email or telephone. Also known as card-not-present transactions.

Mailbox Rule

A rule in contract law that states that contractual acceptance is measured from the date that the offered (recipient of goods/services) sends the acceptance ("puts it in the mail") not the day it is actually received by the offeror (provider of goods/services).

Malware

Any kind of malicious software program, such as a virus, worm, Trojan horse, or spyware, designed to secretly track user activity, interrupt normal functioning of the computer, infect a network to impair it or render it inoperable, or otherwise cause damage to an individual computer or network or transmit data to an unauthorized party.

Margin

In business accounting, the margin is the difference between Net Sales and cost of goods/services sold.

Marginal Cost

In business accounting, the cost of producing one additional unit of output, also called incremental cost. For example, if it costs $100 to produce 25 units and $103 to produce 26 units, then marginal cost is $3. Marginal cost is an important factor to consider when deciding upon how much volume is profitable to a business and at what point additional volume can actually decrease profitability. Marginal cost typically increases with production volume as a result of operational efficiencies, but at some point it will begin to decline as resources become taxed.

Marginal Pricing

Pricing of a product at a rate that covers the Marginal Cost of producing it, but not the total cost of production. Marginal pricing does not take any fixed costs into account. It is typically employed only after sufficient Inventory has been sold at standard pricing to cover all fixed costs involved in production. For example, company A typically sells Green Widgets for $10 each. Its fixed costs are $900 per month. The variable cost is $1 per unit. Company A must sell 900 green widgets (for a marginal Profit of $9 each) to break even and cover its $900 fixed cost. After that, it can employ marginal pricing to charge $5 per widget and still make a Profit of $4 per widget. This risk to this approach is that customers will begin to expect the lower Price and you will not have sufficient demand at higher Prices to cover fixed costs.

Marginal Tax Rate

The tax rate at which your next dollar will be taxed. Taxes are typically levied on a sliding scale where you pay a low percentage on the first portion of income and a higher percentage on the next portion, until the highest rate is reached. For example, you might pay 10% in taxes on your first $25,000 in income, 15% on the next $50,000 in income, 20% on the next $50,000 in income, 28% on the next $100,000 in income, and 33% on the rest. If your total income is $224,000 your marginal tax rate would be 28%; if your total income is $225,001 your marginal tax rate is 33%, even though all but $1 of your income is taxed at lower rates.

Market Segment

A small slice of a total market that shares a common trait. For example, one could segment the small business market by employees (businesses with 1-2 employees, 3-10, 11-20, 21-50, 50+), by state, or by revenue.

Market Share

The percent of total sales in a particular market or Market Segment going to a particular company or brand.

Marketing

The activities involved in making people aware of the features and benefits of your product or service. The following is the Official American Marketing Association definition "Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. (Approved October 2007)"

Marketing Channel

A third party or group of third party organizations used by a producer to sell its good and/or services. For example, online retailers such as Amazon, Barnes & Noble, and Borders are one channel for publishers to sell books; bricks & mortar bookshops are another channel.

Marketing Plan

A written document outlining the Marketing Strategy for a company or an individual product, service, or brand. Typically a Marketing plan will consist of a Strategy, individual tactics, as well as budgets, goals, and ROI (Return on Investment) calculations and targets.

Marketplace

The place where information about goods and services are exchanged, and goods and services are purchased in person, as opposed to electronic interaction via computer. See also Marketspace.

Marketspace

The virtual equivalent of Marketplace -- used to describe the exchange of information and sale of products and services in an electronic (Internet) environment as opposed to a bricks and mortar location. See also Marketplace.

MCC/SIC

Merchant Category Code identifies the type and the line of business of the merchant who accepts cards for Transaction. This code is especially important in clearing and Settlement since it is one of the criteria that authenticate the Transaction.

Media Kit

A set of information about a company compiled specifically for use by the press. For a small business, a typical media kit should include background on the company and its key executives, a full product listing and information about each product/service line (if not each product/service individually), digital images that can be used by the press to accompany articles, and information on who at the company to contact for additional information. Other items that can be included are major customer lists, testimonials, case studies, and whitepapers.

Merchant Account

An account opened by a business that enables it to process credit card transactions. To obtain a merchant account, a business must apply, be underwritten by an authorized merchant Processor, and agree to the fees, terms and conditions required to accept credit cards.

Merchant ID (MID)

Each Merchant Account in the system has its own unique, numeric identifier generated by the system. This ID is tied both to a business name and a specific venue.

Merchant Identification Number (MID)

This is the unique number generated by a processor/acquirer and is specific to each individual merchant location. This number is used to identify the merchant during processing of daily transactions, rejects, adjustments, chargebacks, end-of-month processing fees, and so forth.

Midqualified rate

A rate charged merchants on credit card transactions. The Disqualified rate is applied only to Retail or card-present transactions (transactions where the merchant has the customer's credit card in hand), Rewards Card transactions, keyed in transactions (as opposed to swiped transactions), and transactions that are part of a Batch held for 24-48 hours before being submitted for processing. The actual rate is dependant on your merchant processing contract, but it is the second tier charge for Retail accounts -- higher than the qualified rate, but lower than the non-qualified rate. See also Qualified Rate and Non Qualified Rate.

Mission Statement

The core philosophy of a company that encompasses its vision and its reason for existing.

Money Laundering

The process of concealing the origin of illegally obtained funds to make them appear to result from legitimate business. Banks are required to report any Cash Transaction of greater than $10,000 to assist the government in combating money laundering.

Multi Level Marketing (MLM)

Multi Level Marketing is a distribution Strategy that utilizes chains of distributors who in turn recruit additional distributors. Each distributor is paid commission for products it sells directly, as well as for products sold by its recruits. While there are some legitimate MLM businesses, many fall into the fraudulent category of pyramid schemes where people at the top make money by taking advantage of people at the bottom. In such scenarios, there is often a fee to become a distributor which generates most of the profits for up-chain distributors, rather than the sale of any actual product. Note that it is very difficult for MLM businesses to obtain merchant accounts because of the high amount of fraud surrounding MLM businesses.

N

NACHA

National Automated Clearing House Association is a not-for-profit association that oversees the electronic transactions processed via the ACH (Automated Clearing House) network. For more information on NACHA, see its official website www.nacha.org

Net Price

The Price of a product or service after all discounts have been deducted.

Net Profit

The total Profit after all expenses are deducted. Also called the 'bottom line' or 'net income.'

Net Sales

Total sales less returns (and not including taxes collected), less all discounts and allowances -- the discounts and allowances include commissions paid to sales reps, sale discounts, coupons, and any other incentive provided either to a sales agent or directly to a customer.

Net Worth

The total value of a business. Typically defined as total assets - total Liabilities.

Non Qualified Rate

In relation to credit card processing, the non-qualified rate is the highest rate charged for either a Retail (swipe) or MOTO (mail order-telephone order) Transaction. Retail Transactions typically fall into the non-qualified bucket if the card is a corporate or government cards, or if the Transaction is batched more than 48 hours after it was authorized. For MOTO Transactions, the non-qualified rate is charged for corporate and government cards, some rewards cards, all Transactions batched more than 24 hours after being authorized, and for Transactions in which and AVS (address match) check was not performed. If you see Transactions receiving a non-qualified rate, you should contact your customer service representative to learn why your Transactions are being charged the higher rate and learn how you can fix any problems to ensure that you are charged the qualified rate whenever possible.

Non-Exempt Employee

As defined by the Fair Labor Standards Act, an Exempt Employee of a company is one that must be paid overtime. The non-exempt status is applicable to all hourly employees and to some salary employees based on job duties. See also Exempt Employee. For more information on exempt and non-Exempt Employees, see http://www.dol.gov/elaws/esa/flsa/screen75.asp

Non-Qualified Transaction Fees (NON-Qual)

Transaction Fees (NON-Qual)" onclick="showDialog('Bankcard');">Bankcard sales transactions that do not meet set Visa/MasterCard criteria for that particular merchant and are processed at a higher Transaction Fees (NON-Qual)" onclick="showDialog('Interchange');">Interchange rate. An example of this is a merchant that is Transaction Fees (NON-Qual)" onclick="showDialog('Retail');">Retail (card present) that processes a card-not-present transaction (or manually enters card data rather than swiping the Transaction Fees (NON-Qual)" onclick="showDialog('Magnetic Stripe');">Magnetic Stripe through the Transaction Fees (NON-Qual)" onclick="showDialog('Terminal');">Terminal). The merchant will pay the difference between what they should have paid on Transaction Fees (NON-Qual)" onclick="showDialog('Retail');">Retail and what they actually qualified for (card not present). This difference is called non-qualified Transaction Fees (NON-Qual)" onclick="showDialog('Interchange');">Interchange fees.

Nonpecuniary Benefits

Perks given to employees that compensate in a non-monetary fashion. For example, free coffee and soda at the office, the ability to telecommute, health club memberships, or even a big office are all types of nonpecuniary benefits. Note to small business owners -- this type of benefit can be hugely valuable to employees and can cost you relatively little in comparison to the returns you get. For example, letting employees telecommute on bad weather days will likely result in your getting more work hours from them (as they won't be stuck in long traffic jams during what should be working time) and it will make your employees lives considerably easier and less stressful.

Notes Payable

Debts owed by a company to another party. Short-term notes payable must be discharged within one year. Long-term notes payable must be discharged in more than one year. On a Balance Sheet, short term Liabilities include short term notes payable, and that portion of a long-term note that must be paid in the current year. All other Long-term notes, and portions of long-term notes, are included in long-term Liabilities.

O

Online Banking

The performance of standard banking functions, such as deposits, withdrawals, funds transfers, and bill payment, performed via the Internet.

Online Bill Payment

The practice of using an electronic funds transfer to pay a bill online. Customer-initiated online bill payment typically involves the customer instructing its bank to electronically transfer funds to the biller. Biller-initiated online bill payment typically involves the customer giving the biller permission to electronically withdraw funds from the customer's bank account.

Open Rate

In relation to email Marketing, the open rate is the percentage of emails sent as part of a campaign that are opened by the recipient. One way to calculate this percentage is to use the total emails sent divided by the number opened (typically an opened email is recorded by embedding a tracking graphic into it. When the server registers that the graphic has been accessed, it is counted as an open.) A better way to measure the effectiveness of your message is to use the number of emails actually delivered (which equals the total emails less all those that "bounce") by the number of opens. Finally, to refine the calculation even further, you can track unique opens, thereby eliminating multiple opens from the same person by dividing the total number of delivered emails by the total number of unique opens,.

Operating Capital

Cash or Cash Equivalent funds available to finance the day to day operations of a business. Typically, Current Assets less Current Liabilities.

Operating Current Assets

The sum of Cash, accounts receivable, and Inventory (current assets -- excluding short-term investments) used to support ongoing operations.

Operating Current Liabilities

The sum of money a company owes as a result of its operations, exclusive of interest charges on debt.

Operating Expenses

The costs related to the running of a business, not including debt payments on long-term Liabilities or property taxes.

Operating Profit

Earnings before income and taxes. See also EBT.

Operating Ratio

A measure of the efficiency of a firms management and business operations -- typically calculated by dividing total expenses by total revenue.

Operating System

In relation to software, the master program on a computer that enables interaction between the user and the computer's resources. Examples of operating system include Microsoft Windows, Apple MAC OS, Linux, and Unix.

Opportunity Cost

The value of what a company must give up in order to pursue a certain course of action. For example, if you have a lagging Product Line that could be improved in the hopes of improved sales, but you have a buyer who will purchase all rights to the line for $100,000; if you decide to keep the Product Line and improve it, the opportunity cost of doing that is $100,000.

P

Page View

In relation to website usage, a page view is recorded each time a user accesses an individual web page. A "unique page view" measures the number of times a web page is accessed by a user during a distinct Session (a Session is the time an individual user spends on a website without clicking away to a different site or closing the browser). Some people measure "unique page views" based on individual user activity in a given time period -- a day, week, month, etc.-- rather than by Session, and are able to do this by depositing tracking cookies in the user's browser or by requiring a log-in to view the pages.

Passphrase

A combination of one or more words used to gain access to a secure software environment, including your PC Operating System, an Online Banking account, or any other internet site. See also Password.

Password

A single word used to gain access to a secure software environment, including your PC operating system, an Online Banking account, or any other internet site. A password should be something easy for you to remember, but hard for someone else to guess. A strong password is commonly thought to contain at least 8 characters including at least one Capital letter, one lowercase letter, and one number.

Patriot Act

The act passed by the US government after the September 11, 2001 attacks. The entire text of the act can be accessed here: http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=107_cong_public_laws&docid=f:publ056.107. Of particular concern to small business owners is the rights the act gives the government to conduct searches and surveillance of telephone, email, and other correspondence, as well as the many new laws regarding Money Laundering.

Payback Period

The amount of time it will take to recoup an investment. For example, if I spend $5000 on a new piece of equipment that will reduce the cost of manufacturing a product by $100 per piece, and I sell 10 pieces per month, that means I would make an additional $1000 per month due to the new equipment, and thus my payback period would be 5 months.

Payment Gateway

An online software system that enables a merchant to electronically initiate a charge to a customer's bank account or credit card.

PCI DSS

Payment Card Industry Data Security Standard. The standards, created by a council including Visa, MasterCard, AMEX, and Discover, that govern payment account data security to which all corporations that deal with payment cards must adhere. For more information about PCI, see http://www.paysimple.com/small-business-resource/pci-compliance.html

PDF

Portable Document Format. A file type created by Adobe that enables anyone to view a properly formatted document, regardless of the program used to generate it. PDF documents are accessed using the free Adobe Acrobat Reader, which can be downloaded here: http://get.adobe.com/reader/?JSESSIONID=GQLDJ1qHVbXjQvTlrxyQthhNhrjhQbHqXKnQQnfLvLkhw1Qj9LM5!-314369639. Note that most versions of Internet Explorer come standard with a plug-in for .pdf documents.

Personal Check

A check written on a Consumer bank account, as opposed to a check written on a business bank account.

Phishing

In relation to computers and the internet, any attempt to get an unsuspecting person to disclose their Password or other personal information. For example, sending an email with a "click here" link to confirm a charge to your PayPal account would be phishing. If the email recipient clicked the link, he would be taken to a page that looked like PayPal, but really wasn't, and once he typed in his username and Password, it would be transmitted to thieves who would then use to it make fraudulent transactions. The best defenses against phishing are to never enter Passwords, credit card CVV2 numbers, or other personal information into a form accessed from a link in your email (use a bookmark, or type the site's domain into the browser bar yourself), and never provide credit card number, bank account number, PINs, CVV2 numbers, or other personal information over the phone unless you initiate the call.

Pin Debit Card

A Debit Card for which you must enter a PIN (personal identification number) in order to complete a Transaction.

Plug-N-Play (PnP)

In relation to computer devices, the ability to plug a device into a computer and have the computer automatically recognize the device without any additional user interaction.

POP

point of purchase, refers to the location where a product was purchased -- for example, a specific bricks and mortar storefront or a specific website.

POP3

Post Office Protocol version 3. A type of email service that enables users to retrieve email from a remote server and to download it onto their own computers.

Portable Document Format (PDF)

An open file format created and controlled by Adobe Systems; requires Adobe Reader (available free from adobe.com) to view.

Porter's 5 Forces

A model created my Michael Porter (which many believe to be outdated, but which can still prove useful) to measure competitive forces in a particular industry. The 5 Forces are: Rivalry, Threat of Substitutes, Buying Power, Barriers to Entry and Supplier Power. For an in-depth discussion of Porter's 5 Forces see: http://www.quickmba.com/strategy/porter.shtml

POS

Point of Sale. In relation to sales, it refers to the location where something is purchased. In relation to ACH transactions, a POS transaction is a specific NACHA ACH code that is used when a check provided as payment is immediately converted to ACH, while the customer is present, and then returned to the customer. In relation to Computer Hardware, POS equipment is any computer device, such as a credit card swiper, a check scanner, a Price scanner or a Cash register that is located at the place something is purchased as part of a system that enables that purchase to be completed.

Positioning Statement

In relation to Marketing, a positioning statement is a concise description of a product, service, or company that defines its key features and benefits as related to the market as a whole.

PPD

Pre-arranged Payments and Deposits. PPD is the NACHA ACH code used to designate an electronic payment or Disbursement made from a business to a Consumer (B2C), for which written permission has been granted prior to the Transaction occurring. A single written permission form can be used to authorize one or multiple future Transactions -- thus, all B2C recurring payment or Disbursement scheduled ACH Transactions are designated with the PPD code.

Precautionary Balance

An emergency fund. These funds are designed to be a safeguard for your business so that it can meet any unusual expenses, or make up for unforeseen sales slumps, surprise cost increases, and any other random event that causes Current Assets to be insufficient to meet Current Liabilities.

Predatory Pricing

The practice of pricing your goods or services at a very low rate (typically below your own cost) to Capture a very large percentage of Market Share and drive your competition out of business. When predatory pricing results in eliminating the competition, the predatory company can then increase prices at will, as no alternatives remain.

Press Kit

A package of information about your company distributed to the media. A press kit is designed to provide potential editors and writers who may be interested in covering your company in newspapers, magazines or online, a quick overview of who you are, what you do, why you do it, and why you're better than your competition. Traditionally, press kits were expensive printed packages that were mailed or distributed at trade shows. The new e-press kit is a much less expensive and more effective tool -- it should be readily available on the "Press" section of your website. At a minimum an e-press kit should include .pdf documents that provide: Background on your company and its key executives, a description of your product/service (or product lines), and a benefit statement describing why people should buy your product or service, as well as contact information for someone authorized to speak with the press to provide further information. Other items that can be included are whitepapers you've published, recent articles or product reviews written about your company, .jpg photographs of your products, lists of high-profile customers, short videos about your company or product/service, recent press releases, awards your company has won, and access to a free demo of your product for review.

Price

In relation to commerce, the price is the amount of money a business charges (and a Consumer pays) for a given product or service.

Principal

In relation to Capital investment, the principal is the initial deposit dollar amount on which future interest will be earned. In relation to debt, the principal is the total dollar amount borrowed, upon which future interest payments will be made.

Privacy Policy

With regard to E-Commerce, the privacy policy is a legal notice on a website that details exactly how a company may use personal information you provide it. You can view the PaySimple Privacy Policy here (http://www.paysimple.com/privacy.html). A sample privacy policy is available from the Better Business Bureau here: (http://www.bbbonline.org/Privacy/sample_privacy.asp), or try this Privacy Policy Generator from the Direct Marketing Association (http://www.dmaresponsibility.org/PPG/)

Private-Label

In relation to products, a product is said to be private labeled if it is produced and created by one company, but branded for and marketed by another. Typically a company that manufactures products for private-labeling, sells to multiple other companies, thus the exact same product may be available under multiple brand names. Often, slight variations to the same product (such as a custom color, custom feature mix, or tweaked performance level) to help differentiate the offerings of the different brands.

Pro Forma Financial Statement

A financial statement -- Balance Sheet, Income Statement, Cash flow statement, etc,-- created based on a set of assumptions that may or may not ever actually occur. It is often used to show prospective Investors a best case scenario for their investment and what they can expect to gain from investing in your company if all your goals are met. It can also be used to forecast the financial performance of your company based on different goal sets and help you choose the one that best balances risk, reward, and probability of success.

Processing Network (Vendor)

The medium of data transport between the merchant application and the Processor. This company authorizes and captures credit card transactions. Some examples of processing networks are Tsys and Chase Paymentech

Processor

A Processor is the company that actually routes an Authorization Request from a Point of Sale device (such as a credit card Terminal) to Visa or MasterCard, and then arranges for Fund Settlement to the merchant. Such processors are traditionally accessed via direct dial out modems connecting to their system.

Product Lifecycle

The stages a product goes through from inception to eventual discontinuation -- essentially from first order to last order of a product. The stages are defined differently by different industries, but generally relate to expected sales volume such that a bell curve sales graph shows 0 sales when the product is an idea in development, low but rising sales at first introduction, fast rising sales in the growth stage, peak sales at the start of the maturity phase that begin to level off and start downward, a steady downward slope in the decline stage, until 0 sales are again reached when the product is discontinued. Managing a product to speed its move into the growth stage, maintain steady sales in the maturity stage, slow the decline stage, and strategically replace it when it is no longer viable is referred to as Product Lifecycle Management or PLM.

Product Line

A group of products with similar chrematistics manufactured by a single company and marketed to a customer base that shares certain related characteristics. Marketing a product line, as opposed to individual products, is a cost effective way to gain maximum exposure for a large product base.

Product Mix

All the products sold by a particular company. A company's product mix can be used to determine if it is targeting a broad market, or a small niche.

Profit

In relation to Balance Sheet, Profit equals Total Sales minus Total Cost. In more general terms, profit is the benefit derived from any activity -- be it financial, business or personal.

Profitability Ratios

Profitability Ratios help show how effective a company is at using its resources to generate earnings (or profit). They reflect the combined effects of a company's Liquidity, Asset management, and debt and operating strategies. Because taxes are not taken into account in these ratios (EBT= Earnings Before Taxes), they are useful in making comparisons between companies with different tax situations.

Proprietary Technology

Any technology -- such as a manufacturing process, software code, or patent -- that is legally owned by a company that has set restrictions on its use.

Proxy Server

In relation to Computer Hardware, a server that sits between a workstation used by an individual and the Internet that transmits requests for information into the Internet and provides the retrieved information. In may companies Proxy Servers are used to intercept requests and block content from individual uses that the company does not want them to have.

Pyramid Scheme

A fraudulent investment scheme in which early Investors are paid with money provided by later Investors. Also known as a Ponzy Scheme and Multi-Level Marketing. These schemes are doomed to fail because eventually there will not be enough new Investors to sustain the pyramid. For more information, see the US SEC article (http://www.404.gov/answers/pyramid.htm)

Q

Quartile

In statistical analysis, one of 4 equal sets of results. The first quartile contains the top portion of results the second quartile those below the top 25% but above the top 50%, the third quartile below the top 50% but above the bottom 25%, and the fourth quartile the bottom 25%.

Quick Ratio

Current Assets minus Inventory divided by Current Liabilities. Also know as the "acid test" it is a measure of whether a company has the Cash and Cash equivalents on hand to meet its near term liabilities. If the number is less than 1, the company has a potential Cash flow problem.

R

RAM

Random Access Memory. The portion of computer memory that is used while the computer is on to run software programs and store data during an operation -- non-persistent computer memory. Typically, the more RAM a computer has installed, the faster it will run.

Ratio Analysis

In relation to financial analysis, used to compare the actual or projected business data from one company with that of its industry peers. To perform a ratio analysis for your company, use the PaySimple Calculator that provides small business comparisons for a number of industries (http://www.paysimple.com/small-business-resource/tools/ratio-analysis.html)

Rebuttal

Associated with chargebacks only. When a merchant’s rebuttal is accepted, the Remedy to the merchant is a Representment. A chargeback that has been remedied is also known as dispositioned.

Receivables

In relation to financial accounting, receivables are money you expect to collect from customers for goods or services that have been delivered.

Relational Database

A Database comprised of multiple tables containing inter-related records that are referenced using a single unique identifier. For example, the PaySimple Solution uses a relational Database containing tables for Credit Card Transaction, ACH Transactions, and invoices for your customers. Each record in these tables contains a reference to a Customer ID that links the Transactions represented in each table to a single person (your customer) so that you can run one report that provides all activity for any given customer.

Remedy

Associated with chargebacks only. When a merchant’s Rebuttal is accepted, the remedy to the merchant is a Representment (the Transaction is presented again for Settlement). A chargeback that has been remedied is also known as dispositioned.

Representment

When a merchant’s Rebuttal is accepted, the Remedy to the merchant is a representment, the process of sending a Chargeback to the association because the acquiring bank believes that the Chargeback is invalid. In a representment the merchant may be debited or sent a pre-note. Then based on the merchant’s response, they are successful in their Rebuttal, the Chargeback is dispositioned as a representment and the merchant would be credited (if they had been debited).

Resell

The practice of purchasing a product from one company that is sold without substantial modification by the purchaser to another company or individual.

Reserve Account

One method that ACH Processors use to mitigate risk, is to require that merchants maintain a Reserve Account at the Processor's Sponsoring Bank. This allows the Processor to issue a Hold on funds in this account when fraud has been detected or an excessively large number of returns is received. Merchants with good credit and history can usually meet the expectations of ACH Processors for covering returns and so are not always required to keep a reserve account. In cases where a reserve is required, the minimum-reserve-balance in the account is set at about 20% of the anticipated processing volume. New merchants are usually allowed to build up their reserve by sending in transactions which are not withdrawn until the minimum reserve balance is achieved; after that, the merchant is allowed to withdraw the excess funds for transfer to their home town bank.

Retail

The sale of goods or services directly to the Consumer. In relation to Price, the cost of an item to the End User or Consumer of that item -- as opposed to the Price paid by a reseller.

Retained Earnings

In relation to financial accounting, Profit made by a company that is not distributed to shareholders as dividends, but rather re-invested into the company's operations.

Return on Equity Ratio

Profit (EBT) / Net Worth (Equity). This "bottom line" ratio reflects how much a company's owners are making on their investment -- whether or not profits are actually distributed. The higher the ratio percentage, the greater the return.

Return Policy

A businesses legal policy regarding when and how it will accept returns. For credit card transactions made via the WEB, a company must display its return policy on the WEB payment form, and the customer must click a box to agree to it before submitting a payment. For help creating a return policy see (http://returnpolicies.net/good_return_policy.htm)

Reverse Stock Split

When a company converts its current stock shares to reduce the number of outstanding shares, and thus raise the per share Price. For example, a 5 to 1 reverse split would mean that for each 5 shares of stock currently owned, the owner would get 1 share of the new stock (A person with 500 shares, would own 100 shares of the converted stock.).

Rewards Card

A credit card issued to a Consumer or business that provides some kind of incentive -- Cash back, airline miles, product discounts -- for use. Because of the added cost involved in providing the incentive, issuers pass a portion of this cost on to the merchant who accepts the rewards card as payment. Typically, a rewards card will result in an additional .7-.9% being added to the Qualified, Mid-Qualified, or Non-Qualified credit card rate.

Right of First Refusal

In relation to contracts, the contractual right of one party to purchase something -- property, stock, art, etc.-- if the other party decides to sell it. Typically, a right of first refusal contract will specify the purchase Price or it will provide the purchasing party a given time frame to match any offer made to the seller by a third party.

Right to Work

22 US States are colloquially known as "right to work states." This means that they have passed laws that make it illegal for an employer and a union to collude in making joining the union and/or paying union dues a condition of employment. In practice, this means that a company can't refuse to hire or subsequently fire a qualified person if they refuse to join the union representing that company's employees, even if every other employee of the company is a member of that union. Likewise, an employer can't fire an employee who decides to become a member of a union.

Road Show

In relation to raising Capital, a "road show" is a presentation to prospective Investors in a company aimed at securing their investment.

S

S Corporation

A type of Incorporation designed for small companies that enables them to take profits that will be taxed as would those from a partnership, but also take advantage of the liability limitations provided to a C corporation.

SaaS

Software as a Service. A software delivery model where the vendor provides the application and the hardware on which it is run, and the customer access that software via the Internet on a pay-as-you go model. See Cloud Computing.

Sales to Net Worth Ratio

Sales / Net Worth (Equity). This ratio measures how effectively the owners' investment in the company is being used to generate revenue. Higher numbers are better here, as they represent "turnover" of investment dollars and show how many times per period the same investment dollar is used to generate new sales.

Sales to Receivables Ratio

Sales/Receivables. This ratio measures the Turnover rate for receivables -- or how quickly a company gets paid, and thus its Liquidity. The best result for this ratio is 0, which indicates that no receivables are found, such as in an all Cash business like a snack bar. For non-zero results, higher is better indicating that accounts receivables are paid more quickly.

Secure Payment Gateway

Secure Payment Gateway companies help other Processors conduct secure business on the internet using Secure Sockets Layer (SSL) technology.

Secure Payment Software/Software Module/Payment Module

In order to conduct secure business on the WEB, the Secure Gateway Provider runs a Secure Host System, and sells/licenses software modules that allow Shopping Carts and other applications to request and receive Credit Card Authorizations via their system using encrypted communications. (This is called Real Time Authorization.)

Security Certificate

An encryption file used as part of the SSL protocol to secure a website for transfer of sensitive information. Any website that accepts online payments via a Shopping Cart of payment page they host must obtain a security certificate to protect its customers. (PaySimple provides a security certificate for all web payment forms hosted for you by our system). See also SSL and HTTPs.

Security Policy

A documents that states exactly how a company will protect the sensitive information provided to it by its customers. For PaySimple's security policy see: http://www.paysimple.com/security.html

Self-Mailer

A Marketing piece (other than a post card) that is sent in the mail without requiring it to be placed into an envelope or other mailing container.

Session

In relation to internet Marketing, a session is the period of time spent by a single browser on a website without clicking away to another site. A session can also be defined as the set of individual pages a browser accesses from the initial entry page to the exit page (the page s/he was on before closing the browser or clicking/entering a link to a different site.).

Settlement

The process of sending a merchant's Batch to the network for processing and payment. For non-bankcards, the issuer pays the merchant directly (less applicable fees) and then bills the Cardholder. For bankcards, the Acquirer pays the merchant (less applicable fees) with funds from Visa/MasterCard. The bankcard issuer then bills the Cardholder for the amount of the sale.

Settlement (Funding) represents all of the transactions paid to a merchant.

Settlement Account

In relation to credit card and ACH transactions, the Settlement account is the bank account owned by the Merchant Account provider into which collected funds are held for a period of time before they are transferred to the merchant who initiated the transaction. For example, Merchant A charges Customer B $50 on January 1. If Merchant A is on 5 day Funding, its merchant provider will collect $50 from Customer B's bank account on January 2 and will hold that money in its Settlement account until January 6 when it sends it to Merchant A's bank account.

Settlement Charges

The amount charged to the merchant for processing transactions.

Sexual Harassment

In legal terms with regard to the work place, any sex or gender related harassment that negatively affects the work environment. For more information, see the US Government Office Of Civil Rights Sexual Harassment Page (http://www.ed.gov/about/offices/list/ocr/sexharassresources.html)

SFTP

Secure File Transfer Protocol. A secure file transfer protocol that uses encryption to secure data and the commands used to transfer it, protecting the data itself as well as passwords. You must use a special program designed for SFTP to transfer files using that protocol, it is not supported using a standard FTP software program. A good free sftp program can be found here (http://winscp.net)

Shareholder

Any individual or company that owns stock in a public or private company.

Shareware

Software that is available for free. It can include limited time trial versions, reduced functionality trial versions, lite versions, or even fully functional programs. Two great sources of shareware that has been tested and proven virus/malware free are Cent (www.download.com) and ZDNet (downloads.zdnet.com).

Shopping Cart

In relation to E-Commerce, software created to provide an online shopping experience where users can browse a site and add items to a "cart" review the "cart" at any time, and then "check out" to pay for the items. If you're looking for a shopping cart to integrate with the PaySimple Solution, try the free Magneto Cart (http://www.magentocommerce.com/extension/277/paysimple.)

Shopping Cart Software

These applications typically provide a means of capturing a client’s Credit Card information, but they rely on the Software Module of the Secure Gateway Provider, in conjunction with the Secure Payment Gateway, in order to conduct secure Credit Card transactions online.

Short Term Debt Ratio

Short Term Debt / Total Assets. The Short Term Debt Ratio reflects the percentage of a company's assets that are provided by current debt -- debt that must be repaid in less than a year. When looking at this ratio, take into account how much short term debt is actual notes due and how much is simply accounts payable carried on favorable terms. The former may drive up the ratio, and suggest a problem; the latter means that a high ratio is simply good Cash flow management.

Simple IRA

A Type of Employer Sponsored IRA that typically has lower fees than the traditional 401(k). Because of the low match requirements and low expenses it is well suited to small businesses with low-head count and/or tight budgets. For more information, see the IRS Website (http://www.irs.gov/retirement/sponsor/article/0,,id=139831,00.html)

SLA

Service Level Agreement. An SLA is a contractual agreement between two parties that details how one party will perform under the contract, and penalties for not meeting those performance level. For example, and SLA for a call center and its customer might be that calls are answered by the 3rd ring 99% of the time. If that rate is not reached in any 30 day period (i.e. over the last 30 days, only 80% of calls were answered by the 3rd ring) the call center pays a penalty of 10% of its monthly fee. One typical SLA often referenced in a "5 nines" SLA for internet hosting services. This means that the hosted system will be up 99.999% of the time.

Social Networking

An internet based activity designed to link individuals with common interests to each other so that they can interact via the WEB. Common social networking sites include FaceBook, MySpace, Twitter, and LinkedIn (Note: insert links to all these, and add your own if you have some good ones.)

Software License

A legal agreement between the end-user and the software company that developed the software granting the end-user specific and restricted rights to use the software (often in exchange for the purchase Price). Typically, each installation of a software program must be individually licensed (meaning that you need to purchase a license for each copy installed on a computer), but some software allows a single license to be used on 2-3 computers.

Sole Proprietorship

A business owned by a single individual. Typically, this type of business will not be issued a Federal Tax ID, but will use the owners Social Security # as its tax ID, as profits are taxable directly to the individual and the individual is personally liable for the business.

Sponsoring Bank

A Sponsoring Bank is a Chartered Bank or S & L that has obtained membership in Visa or MasterCard in order to allow a Processor access to the Visa and MasterCard networks ( in order to process these types of transactions).

SSL

secure socket layer

Stakeholder

In relation to a business, any party that has an interest in or is effected by the way the business operates -- stakeholders include external parties such as shareholders, lenders, customers, vendors, and the community in which the business operates. Internal stakeholders include owners, managers and other employees.

Stock Dilution

In relation to investments, stock dilution occurs when a company issues additional stock to raise money, thereby reducing the value of each share owned by current Investors.

Stock Split

When a company divides its current stock into multiple parts. For example, a 2 for 1 stock split means that each Shareholder would receive 1 additional share of stock for each share owned (If the person owned 50 shares, they would now own 100). Also see Reverse Stock Split.

Strategy

A plan of action designed to achieve a defined goal.

Street Price

The Price a Consumer is likely to pay for a product or service. The street Price typically includes deductions for all common discounts and rebates attached to a purchase, and is thus lower than the MSRP (Manufacturers Suggested Retail Price). For example, a flat screen TV may wholesale to a retailer for $1000, carry a MSRP of $1500, but can commonly be purchased for $1200 -- the street Price (as it is often on sale, discounted, etc.).

Stretching Accounts Payable

The habit of always paying invoices late. Small businesses should be on the look out for this -- often large companies doing business with small companies will attempt to improve their own Cash flow by paying invoices later than the agreed upon terms. The large company thinks that the small one wants its business so badly that it will put up with the late payments.

Supply Curve

A graph that shows the relationship of Price and supply for a particular good or service. The Law of Supply says that, all else being equal, as the Price goes up, the supply of it goes up (as a result of companies wanting to maximize Profit), and the curve (which actually is often a straight line) is used to find the optimal supply/Price combination that will generate the greatest total Profits (without over-supplying demand, which will cause the Price to drop). See also Demand Curve. For an in-depth lesson on supply and demand see: http://www.econweb.com/MacroWelcome/sandd/notes.html

Swipe Machine

In relation to Retail sales, the swipe machine is a piece of hardware that connects to a computer or other Point of Sale System through which a credit card's Magnetic Stripe is scanned into the system.

System Integrator

A company or individual that purchases multiple hardware and software components of a system from their original manufacturers, then combines those components into a single system which it then sells directly to end-users. For example, a company that purchases all the components of a Point of Sale System -- the Cash register, the bar scanner, the credit card swiper, the key pad, and provides the software that runs that system, processes payments, and analyzes sales would be a system integrator.

T

Tactic

A short-term well defined action undertaken as part of a Strategy to reach a goal. For example, if my goal is to sell 100 auto-related items in 30 days, my Strategy might be to offer them for sale in car magazines; my tactics might include an advertisement in Car and Driver.

Tangible Net Worth

In relation to Balance Sheet accounting, Tangible net worth is the value of the company when all Intangible Assets (such as Goodwill, trademarks, and copyrights) are removed.

Target Market

The Market Segment to which a product/service is directed. For example, if I run a day care center, my Target Market may be working parents of children under 4. If my day care center only accepted girls, then my Target Market would be working parents of girls under 4.

Tax Exempt

Something that is not subject to tax, at a Federal, State or Local level. For example, some bonds are tax exempt, meaning that you pay no tax on the interest earned (at the federal/state and/or local level). Some transactions are tax-exempt, meaning that the government does not require that tax be paid on their purchase.

Tax ID

See Federal Tax ID

TCO

Total Cost of Ownership. A financial measurement designed to help business owners calculate the full cost of purchase, use and maintenance of a product or system over its useful lifetime -- not just the up-front purchase Price.

TEL

In relation to ACH Transactions, TEL is the NACHA designation code for an ACH transaction that is authorized via the telephone.

Telemarketing

The practice of selling a product or service via telephone calls (often unsolicited) to prospective customers. Note that there are regulations regarding telemarketing practices, and that people can opt-out of receiving most telemarketing calls. To learn more, see the governments Do Not Call registry (www.donotcall.gov)

Terminal

Equipment used to Capture, transmit and store credit card transactions.

Terminal ID

Unique identifier used to identify the Terminal where the Transaction originally occurred (for example, card swipe, phoned in, and so on).

Terminal Identification Number (TID)

A unique number assigned to each POS terminal.

Terminal Software

Programming that determines the characteristics and features of the Terminal.

Testimonial

Praise for your company, product, or service from a current customer that is published and often presented to potential customers as a recommendation. For example, see PaySimple's Testimonials page (http://www.paysimple.com/testimonials.html)

Third-Party Processor

A Third Party Processor is an independent processor that is contracted with by a Bank or Processor to conduct some part of the Transaction processing process.

Title VII

Title VII refers to Title VII of the 1964 Civil Rights Act, which prohibits an employer from discriminating against an employee or potential employee based on race, color, religion, sex, and national origin.

Total Asset Turnover Ratio

Sales / Total Assets. This ratio measures the Turnover of all of a company's assets to determine whether it is using them effectively. The ratio tells you whether a company is generating sufficient sales given its asset volume. Higher values are better for this ratio.

Total Debt Ratio

Total Debt / Total Assets. The Total Debt Ratio measures the percentage of funds provided to a business that are a result of loans and other debt, as opposed to equity. Creditors typically look for low Debt Ratios, as the lower it is, the less risk they take. Investors may prefer higher Debt Ratios, as that typically means higher earnings, but those earnings come at a higher risk of bankruptcy.

Tracking Cookie

A small piece of text placed on your hard drive, typically in the "cookies" folder, by a website you visit. A first party tracking cookie is typically benign and is used by the site you are visiting to gather information about the pages you access, and in the case of E-Commerce sites, the products you add to your cart so that they will be there on your future visits. More invasive is a third-party tracking cookie, which is placed by an advertiser on a web page you are viewing, and follows you as you browse the internet keeping track of the sites you visit. You can block third party cookies to protect your privacy without impacting web-browsing experience (blocking first party cookies can sometimes cause shopping carts to malfunction.). On Internet Explorer, you can do this by selecting Tools from the main menu, selecting Internet Options, clicking on the Privacy tab, then the Advanced button, and selecting the "block" radio button under Third Party Cookies.

Transaction

There are two meanings of the term. Generally, transaction refers to purchase and return activity taken at a merchant/client site that is sent for processing. However, in regards to Retrieval and Chargeback data, ADRP uses the term transaction to refer to each stage within a case’s lifecycle. For example, a case may go through many stages such as a retrieval stage, a first chargeback stage, and a second chargeback stage. ADRP creates a transaction record for each of these stages. So, cases may contain multiple transactions.

Trojan horse

In relation to Computer Software, a software program designed to look benign that actually does harm to your computer. Unlike a Computer Virus, a Trojan Horse does not self-replicate and use your system to spread to other systems. It can be equally destructive; for example, a program claiming to clean your registry may corrupt it instead. Or a program claiming to speed up your browser, may instead transmit all of your passwords. The potential damage of Trojan Horse programs makes it extremely important for you to make sure that you only download software from reputable sources.

Turnover

In relation to product sales, turnover is the amount of time it takes to sell a set number of items. For example, if production is 50 units a day and it takes two days to sell 50 units, then turnover time for one day's production is 2 days.

TXT (text file)

A text file (or plain text file) is a computer file which contains only ordinary textual characters with essentially no formatting.

U

UCC--Uniform Commercial Code

A guiding set of rules governing commercial law, enacted by each state individually, with some minor modifications by each state. The UCC is designed so that all 50 US states operate under largely similar commerce laws. It largely covers sales of goods rather than services

UI

User Interface. In regard to software applications, the UI, sometimes called GUI (for graphical user interface), is the set of screens on the front end of a software application through which a user interacts with the software. Basically, it’s the part of a software application you see.

Underwriting

The process of examining, assessing, and accepting or rejecting risk. For example, the company providing your ACH or credit card Merchant Account is taking risk on every Transaction it processes for you (if a business processes fraudulent Transactions and then disappears -- it is liable for the money). Thus, before providing you with a credit card or ACH Merchant Account, your business will be assessed to determine the maximum Transaction amount they can process, as well as the total volume of Transactions that can be processed on a daily and monthly basis.

Up Sell

The practice of selling a customer more than they initially thought they wanted buy byy offering a higher-cost alternate model or additional add-on parts and services. Up selling can take place at the time of purchase, or after the customer has used the product for some time. For example, after using the slowest speed internet connection for 6 months, your ISP might attempt to up sell you on a faster connection at a higher Price.

USB port

A socket on a computer device designed for USB (Universal Serial Bus) devices. Typically, USB devices are plug-and-play, meaning that you plug the device (such as a mouse) into the USB port and it works without your having to install any drivers or other software.

V

Value Added Reseller (VAR)

Third-party vendor that enhances or modifies existing hardware or software, adding value to the services provided by the Processor or Acquirer.

Velocity

In relation to Transaction processing, a velocity is the number and dollar volume of Transactions that a company or individual is enabled to process in a given time period. For example, a day or a month -- it is essentially a payment processing limit.

Vertical Market

A market covering a single industry -- for example, Grocery Stores, Cleaning Services or Lawyers. See also Horizontal Market.

Viral Marketing

A form of Marketing designed to self-perpetuate and be passed from one person to another without additional cost to the marketer. For example, an email message containing a code for a large discount at a popular store might be targeted to 1000 people, who in turn each pass the email to 10 others, who pass the email to 10 others and so on, which makes the email "viral." Other popular "viral" Marketing subjects include online games and funny or strange videos.

Virtual Storefront

A business website that offers goods or services for sale, via which a potential customer can browse and/or shop. See Digital Storefront.

Void

In relation to Transaction processing, to cancel a Transaction before it has begun processing -- i.e. for an ACH Transaction, before it has been submitted to the bank; for a Credit Card Transaction, before the Settlement Batch has been submitted.

W

Warranty

A written Guarantee that a product or service will perform to specification for a given time period, along with a Remedy for rectifying non-performance. See also Guarantee.

WEB

In relation to ACH transactions, WEB is the NACHA designation for a one-time transaction authorized via the Internet, or for a recurring transaction for which the schedule was authorized via the Internet.

Web 2.0

The term refers to what is generally recognized as the "second generation" of the WEB, that relies on graphic, interactive, and dynamic WEB pages, as opposed to old static and often text-based pages.

White Label

A product or service that is provided by one company but branded and resold by another company. See Private Label.

Working Capital

The total of a firm's short term assets that can be used to operate and grow the business -- the sum of Cash, marketable securities, Inventory, and accounts receivable.

X

XML

Extensible Markup Language. A computer language used to enable multiple software programs and WEB sites to share information using a common format. For example, the PaySimple API which enables Integration our system with most other business software systems utilizes XML. For more information on XML see (http://www.w3.org/XML/)