Australian business and finance glossary

Plain-English definitions of the business, tax, accounting and lending terms you will come across, each linked to a guide that explains it in more depth.

ABN: Australian Business Number, a unique 11-digit number that identifies your business to the government, other businesses and the public. Registering is free, but you need to be running a business or other enterprise to get one. Learn more · Official source
ABN age: How long your Australian Business Number has been active. Many lenders set a minimum ABN age.
ABRS: Australian Business Registry Services, the government service that administers the ABN law and director IDs. Its Registrar is also the Commissioner of Taxation. Learn more · Official source
ACN: Australian Company Number, the unique number ASIC gives your company when it is registered on the Australian companies register. If you do not choose a company name, the ACN becomes the company's name. Learn more · Official source
ASIC: The Australian Securities and Investments Commission, Australia's corporate, markets, financial services and consumer credit regulator. It manages the Australian companies register. Learn more · Official source
Asset finance: Finance used to buy business assets such as vehicles, equipment or machinery, where the asset usually acts as security. Chattel mortgages and finance leases are common types. Learn more
Asset-backed finance: Lending assessed mainly on the value of an asset offered as security, such as property or equipment, rather than on trading figures. Learn more
ATO: The Australian Taxation Office, which collects tax so the government can deliver services for the community. Businesses report and pay GST, PAYG and other taxes to the ATO. Learn more · Official source
Balance sheet: A snapshot of what your business owns (assets), what it owes (liabilities) and the owners' equity on a particular date. Learn more
Balloon payment: A lump sum due at the end of a loan term that lowers regular repayments. Common in equipment and vehicle finance. Learn more
BAS: Business activity statement, the form businesses lodge with the ATO to report and pay taxes such as GST, PAYG withholding and PAYG instalments. Learn more · Official source
Break-even point: The level of sales at which your income exactly covers your costs, so you make neither a profit nor a loss. Learn more
Bridging loan: Short-term finance that covers a gap until a sale, refinance or other payment arrives. Learn more
Cash conversion cycle: The number of days between paying for stock or other inputs and collecting cash from customers. A shorter cycle means less money is tied up in running the business. Learn more
Cash flow: The money coming into and going out of your business over a period. A business can be profitable on paper and still run short of cash. Learn more
Cashflow lending: Lending assessed mainly on how money moves through your business account, usually using bank statements. Learn more
Caveat loan: A short-term loan where the lender lodges a caveat on a property title as security. Usually quick to settle and priced above mortgage lending. Learn more
Chattel mortgage: A loan to buy an asset where you own the asset from the start and the lender takes security over it. Learn more
Creditor: A person or business that is owed money, such as a supplier you have not yet paid. Learn more · Official source
Creditor days: The average number of days your business takes to pay its suppliers. Learn more
Debtor: A person or business that owes money, such as a customer who has not yet paid your invoice. Learn more · Official source
Debtor days: The average number of days your customers take to pay you after you invoice them. Learn more
Debtor finance: A facility secured by your receivables ledger. Available funds rise as you invoice and fall as customers pay. Learn more
Director guarantee: A personal promise by a company director to repay the loan if the business cannot. Common with unsecured business loans.
Director ID: A unique 15-digit identifier given to a company director after they verify their identity, which the law requires. You keep the same director ID for life, even if you change companies or stop being a director. Learn more · Official source
Director penalty notice (DPN): A notice the ATO must give before recovering director penalties, which can make directors personally liable for their company's unpaid PAYG withholding, GST or super guarantee charge. Directors have 21 days from when the notice is posted or left at their ASIC-registered address to act. Learn more · Official source
EBITDA: Earnings before interest, tax, depreciation and amortisation. It shows the profit your operations generate before financing costs, tax and non-cash charges for wear on assets. Learn more
Establishment fee: A one-off fee charged when a loan is set up. Compare it alongside the rate to understand the total cost.
Exit strategy: How a short-term loan will be repaid, such as a refinance, property sale or incoming payment.
Factor rate: A pricing method that multiplies the amount borrowed by a fixed figure to set the total repayable. It is not the same as an annual interest rate.
Factoring: Invoice finance where the provider advances funds against invoices and usually collects directly from your customers. Learn more
Finance lease: An arrangement where the lender owns an asset and leases it to your business, usually with a residual payment at the end. Learn more
First mortgage: The primary registered mortgage over a property, repaid first if the property is sold.
Full doc: Lending assessed on complete financial records, such as tax returns and financial statements prepared by an accountant. Learn more
General interest charge (GIC): Interest the ATO charges on overdue tax. Not tax deductible for income years starting on or after 1 July 2025. Learn more
General security agreement (GSA): Security over all of a business's present and future assets, often registered on the PPSR.
Gross margin: Gross profit shown as a percentage of sales. It tells you how much of each dollar of sales is left after paying for what you sold. Learn more
Gross profit: Sales minus the direct cost of the goods or services you sold, before overheads such as rent and wages for administration. Learn more
GST: Goods and services tax, a broad-based tax of 10% on most goods, services and other items sold or consumed in Australia. You must register once your GST turnover is $75,000 or more ($150,000 for non-profit organisations), or if you provide taxi or limousine travel for passengers, including ride-sourcing, regardless of turnover. Learn more · Official source
Invoice discounting: Confidential invoice finance where you keep control of collections. Learn more
Invoice finance: Funding advanced against your unpaid customer invoices, so you can access cash before customers pay. Factoring and invoice discounting are common types. Learn more
Line of credit: An approved limit you can draw, repay and redraw. Interest is often charged only on the amount used. Learn more
Loan-to-value ratio (LVR): The loan amount as a percentage of the security's value. Lenders set maximum LVRs by property type and documentation.
Low doc: Lending that accepts alternative income evidence, such as BAS or an accountant's letter, instead of full financials. Learn more
Net margin: Net profit, after all expenses, shown as a percentage of sales. Learn more
Overdraft: A limit attached to your business transaction account that lets the balance go below zero, up to an agreed amount. Interest is usually charged only on the overdrawn balance. Learn more
PAYG: Pay as you go. PAYG withholding is tax you withhold from payments such as wages and pay to the ATO, and PAYG instalments are regular prepayments of the expected tax on your business and investment income. Learn more · Official source
PPSR: The Personal Property Securities Register, where lenders register security interests over assets other than land.
Profit and loss statement: A report showing your income, expenses and resulting profit or loss over a period, such as a month or a financial year. Also called a P&L or income statement. Learn more
Refinance: Replacing an existing loan with a new one, for example to change the term, repayments or security, or to combine several debts. Learn more
Residual value: The amount payable at the end of a lease to own the asset or settle the agreement.
Second mortgage: A mortgage registered behind an existing first mortgage. The second lender is repaid after the first.
Serviceability: Whether the business can comfortably afford the repayments on top of existing commitments.
Statutory demand: A formal demand for payment served on a company that owes a debt. When the ATO issues one, the company must pay in full or enter a payment plan within 21 days, or the ATO may apply to the Federal Court to wind the company up. Learn more · Official source
Tax debt: Tax or super you owe the ATO that was not paid by the due date. General interest charge keeps accruing on it, even on a payment plan. Learn more · Official source
Term loan: A lump sum repaid over a set term with regular repayments. Learn more
Trade finance: Finance that pays suppliers so you can buy stock, repaid over an agreed trade cycle. Learn more
Working capital: Your current assets, such as cash, stock and money owed by customers, minus your current liabilities, such as bills due soon. It shows how much you have to fund day-to-day operations. Learn more