Accounting glossary

Master the financial language of B2B businesses: from Net Cash Flow to Direct Labor.

The language of corporate planning

To get the most out of Cord’s master budgeting engine, it’s crucial that you and your team speak the same financial language. Below, we explain the key accounting terms in a technical reference table:

Net Cash Flow

It is the actual difference between the money entering your bank account and the money leaving it in a specific month.

Importance: A company can be profitable on paper but go bankrupt if its net flow is negative (because they sold everything on 90-day credit and today they can’t make payroll).

Direct Labor

The cost of personnel who are directly involved in producing the good or delivering the service. It is usually costed in “Man/Hours”.

Example: The salary of the developer writing the app code, or the factory worker assembling the part. The CEO’s salary is not Direct Labor.

Overhead

Indirect Manufacturing or Operational Costs. These are the expenses necessary to keep the business alive, but which cannot be traced back to a single project.

Example: Office rent, administrative salaries, electricity bills, and monthly subscriptions. They must be “prorated” in the budgets.

Budget vs. Actual (BvA)

The ultimate financial control module. It compares the plan you drew up (“I thought I would sell $50,000 in January”) against what actually happened by connecting to the bank account or Stripe transactions.

Deviation Formula: (Actual - Budget) / Budget

Starting / Ending Inventory

Cord’s production schedules are planning tools, not live inventory systems (ERP).

Therefore, the Starting Inventory is not read from a warehouse, but is an assumption you type in as a starting point so the engine calculates how many extra units you must manufacture to reach your goal.

NPV and IRR

Net Present Value and Internal Rate of Return. Metrics used to evaluate if an investment is worthwhile. NPV discounts the time value of money; if it is greater than zero, the project is profitable.

Discount Rate: The minimum yield % you demand from the project (usually the cost of your debt or the yield of a safe investment).

Payback Period

The exact time (in years and months) it will take for the project to generate enough cash flow to return your initial out-of-pocket investment.

Economic Order Quantity (EOQ)

The perfect mathematical order size that minimizes total inventory costs (balancing what it costs to order freight vs. what it costs to store boxes).

Flexible Budget (Variances)

A tool that analyzes why you spent more than planned, dividing the problem into two variances:

Price Variance: You bought materials at a higher price than planned.
Efficiency Variance: You wasted more materials than planned to produce the same amount of units.