Business document glossary
37 terms you meet on invoices, quotes, receipts, contracts and shipping documents, explained in plain English. Where a free generator or calculator helps, it is linked under the definition.
0–9
- 2/10 Net 30
- Payment terms offering an early-payment discount: the buyer may deduct 2% if it pays within 10 days of the invoice date; otherwise the full amount is due within 30 days. The discount speeds up cash flow for the seller, but it is costly, roughly equal to a 37% annual interest rate for 20 days of early payment.Due date calculator →
B
- Bill of lading
- A document issued by a carrier to the shipper that lists the goods being shipped, their quantity and condition, the origin and the destination. It serves three purposes: a receipt for the goods, evidence of the contract of carriage and, in its negotiable form, a document of title that lets the holder claim the cargo at the destination.Bill of lading template →
C
- Certificate of origin
- A document declaring the country where exported goods were manufactured or obtained. Customs authorities use it to decide which duties apply and whether the goods qualify for a lower rate under a trade agreement. Depending on the destination, it is signed by the exporter or certified by a chamber of commerce, and it travels with the commercial invoice and bill of lading.
- CIF (Cost, Insurance and Freight)
- An Incoterms rule for sea and inland waterway shipments. The seller pays the cost of the goods, the freight to the named destination port and minimum insurance cover, but the risk passes to the buyer once the goods are loaded on the ship at the port of origin. The buyer handles import clearance, duties and delivery from the destination port.
- Consignee
- The person or company to whom a shipment is delivered, named on the bill of lading. The consignee is often the buyer, but it can also be an agent, a warehouse or a bank holding the goods until payment. The consignor or shipper is the party sending the goods. Getting the consignee details right avoids delays at delivery and customs.Bill of lading template →
- Corporate resolution
- A written record of a decision made by a corporation's board of directors or shareholders, such as opening a bank account, approving a loan, appointing officers or authorizing someone to sign contracts. Banks, lenders and landlords often ask for a copy as proof that the person signing has authority to act for the company. LLCs use a similar document, often called a member resolution.Corporate resolution template →
- Credit note
- A document a seller issues to reduce or cancel the amount of an invoice already sent, for example after a return, an overcharge or a discount agreed after billing. It references the original invoice number and shows the amount credited, including any tax. Issuing a credit note keeps records accurate instead of editing or deleting an invoice that was already issued.Invoice generator →
D
- DDP (Delivered Duty Paid)
- The Incoterms rule that places the most responsibility on the seller. The seller delivers the goods to the buyer's named place, cleared for import, and pays all transport costs, import duties and taxes along the way. Risk passes when the goods are ready for unloading at the destination. Sellers should check they can register for and pay taxes in the buyer's country.
- Deposit
- A partial payment made before work starts or goods are delivered, typically 25% to 50% of the total. It secures the booking and covers the seller's upfront costs. The deposit is deducted from the final invoice, which then shows the balance due. Say in the quote or contract whether the deposit is refundable if the customer cancels.Invoice generator →
- Due on receipt
- Payment terms meaning the invoice should be paid as soon as the customer receives it, with no credit period. They suit small one-off jobs, new customers and consumer sales. In practice, many clients still take a few days to pay, so some businesses prefer a short fixed period such as Net 7, which gives a clear date for follow-up.Due date calculator →
E
- E-invoice
- An invoice issued, sent and received in a structured data format that accounting software can read automatically, not just a PDF sent by email. Several countries now require e-invoices for business-to-business or government sales, using formats such as UBL, Factur-X or ZUGFeRD, and often a network such as Peppol. The European standard for their content is EN 16931.
- EXW (Ex Works)
- The Incoterms rule that places the least responsibility on the seller. The seller makes the goods available at its own premises, and the buyer arranges and pays for loading, export clearance, transport, insurance and import. Risk passes as soon as the goods are made available. It is simple for the seller but can cause problems when the buyer cannot handle export formalities.
F
- Factur-X
- A hybrid e-invoice format used mainly in France and Germany, where it is identical to ZUGFeRD. It is a PDF/A-3 file that people can read like any PDF, with an XML file embedded inside that software can process automatically. It follows the European e-invoicing standard EN 16931 and is one of the formats accepted for French business-to-business e-invoicing.
- FOB (Free On Board)
- An Incoterms rule for sea shipments: the seller delivers the goods on board the vessel named by the buyer at the port of shipment, and risk passes once they are on board. The buyer pays the main freight, insurance and import costs. In US domestic trade, FOB origin and FOB destination have a different meaning, defined by the Uniform Commercial Code.
- Force majeure
- A contract clause that excuses a party from performing, or delays its obligations, when events beyond its control make performance impossible, such as natural disasters, war, epidemics or government orders. A good clause lists the covered events, requires prompt notice and says what happens if the event lasts a long time, for example a right to end the contract.Payment agreement template →
G
- Governing law
- A contract clause naming the state or country whose laws will be used to interpret the agreement and settle disputes, for example "the laws of the State of Texas". It is often paired with a venue or jurisdiction clause that says where a lawsuit must be filed. Without one, a court decides which law applies, which adds cost and uncertainty.Business proposal template →
I
- Incoterms
- A set of eleven standard trade terms published by the International Chamber of Commerce, currently in the 2020 edition. Each three-letter rule, such as EXW, FOB, CIF or DDP, defines which party pays for transport, insurance and customs clearance, and at what point the risk of loss passes from seller to buyer. Write the rule, a named place and the edition on contracts.Bill of lading template →
- Indemnification
- A contract clause in which one party agrees to cover the other's losses, legal costs and damages arising from specific events, such as third-party claims caused by its work, its breach of the contract or its negligence. The clause should define what is covered, any limits or caps, and the steps for notifying the other party when a claim is made.Room rental agreement template →
- Invoice
- A document a seller sends to request payment for goods or services delivered. It shows the seller and buyer, a unique invoice number, the issue date, line items with quantities and prices, any tax, the total, the payment terms and the due date. It is also a record for both parties' bookkeeping and, where VAT or sales tax applies, for tax purposes.Invoice generator →
L
- Late fee
- A charge added when an invoice is paid after its due date. It can be a flat amount, interest on the overdue balance (for example 1.5% per month), or both. A late fee is easier to collect when the customer agreed to it beforehand, in the contract, the quote or the invoice terms. Many US states limit the rate a business may charge.Late fee calculator →
N
- Net 30
- Payment terms meaning the full invoice amount is due 30 calendar days after the invoice date. Variants such as Net 15, Net 45 and Net 60 work the same way with a different number of days. Writing the exact due date on the invoice, not only the terms, avoids disagreement about when the 30 days start and makes reminders easier to send.Due date calculator →
O
- Option fee (rent-to-own)
- An upfront payment a tenant makes in a rent-to-own agreement for the exclusive right to buy the property later at an agreed price. It is usually 1% to 5% of the purchase price and is often credited toward the purchase. If the tenant decides not to buy, the option fee is normally not refunded, so the contract should state this clearly.Rent-to-own contract template →
P
- Payment terms
- The conditions of payment agreed between a seller and a buyer: when payment is due, accepted payment methods, any deposit or installments, early-payment discounts and late fees. Common examples are due on receipt, Net 30 and 2/10 Net 30. Agree on terms before the work starts and repeat them on every quote and invoice so there is no surprise later.Payment agreement template →
- Peppol
- An international network and set of specifications for exchanging e-invoices and other business documents between organizations. Businesses connect through a certified access point provider and can then send invoices to any other participant, whatever software they use. Peppol is used for public-sector invoicing in many European countries and in places such as Australia, New Zealand and Singapore.
- Proforma invoice
- A preliminary invoice sent before goods are shipped or work is done. It shows what the final invoice will look like, including prices, quantities, shipping and taxes, so the buyer can arrange payment, approve a purchase or apply for an import license. It is not a request for payment in the accounting sense and is not recorded as a sale.Quote generator →
- Purchase order
- A document a buyer sends to a seller to order goods or services, listing items, quantities, agreed prices, delivery dates and terms. Once the seller accepts it, it forms a binding agreement. The purchase order number should then appear on the seller's invoice so the buyer's accounts payable team can match the two documents and approve payment quickly.Invoice generator →
Q
- Quorum
- The minimum number of directors, shareholders or members who must be present for a meeting to make valid decisions. The bylaws or operating agreement set the number, often a majority. Minutes and resolutions should note that a quorum was present, because a decision taken without one can be challenged later. Written consent in lieu of a meeting follows its own rules.Corporate resolution template →
- Quote
- A document that offers a fixed price for specific goods or services, usually valid for a limited period such as 30 days. Once the customer accepts it, the price should not change unless the scope changes. An estimate, by contrast, is an approximate price that may vary. Quotes help customers compare suppliers and reduce disputes about what was agreed.Quote generator →
R
- Receipt
- A document confirming that a payment was received. It shows who paid, who received the money, the date, the amount, the payment method and what the payment was for. An invoice requests payment; a receipt proves it was made. Customers keep receipts for their records, warranty claims, expense reports and taxes, so issue one for every payment received.Receipt generator →
- Retainer
- An upfront payment to secure a professional's availability or to prepay future work. In a deposit-style retainer, work is billed against the balance and the client tops it up when it runs low. In a monthly retainer, the client pays a fixed fee each month for a set amount of time or service. The agreement should say whether unused amounts are refunded.Payment agreement template →
- Reverse charge
- A VAT rule under which the buyer, not the seller, accounts for the VAT on a purchase. It applies mainly to business-to-business services and goods sold across EU borders. The seller invoices without VAT, shows both parties' VAT numbers and adds a note such as "Reverse charge". The buyer then declares the VAT in its own return, usually deducting it at the same time.Sales tax and VAT calculator →
S
- Sales tax vs VAT
- US sales tax is collected once, at the final sale to the consumer, at rates set by states and localities; there is no federal sales tax. Value-added tax (VAT), used in the EU, the UK and over 170 countries, is charged at each stage of production and sale, and businesses reclaim the VAT they paid on purchases. GST works like VAT.Sales tax and VAT calculator →
- Security deposit
- Money a tenant pays a landlord at the start of a lease to cover unpaid rent or damage beyond normal wear and tear. Many states limit the amount, require it to be kept in a separate account, and set a deadline for returning it with an itemized list of deductions after the tenant moves out. The lease should state the amount and conditions.Room rental agreement template →
- Severability
- A contract clause stating that if a court finds one provision invalid or unenforceable, the rest of the contract remains in effect. Some clauses also allow the court to narrow the invalid provision instead of removing it. Without a severability clause, there is a risk that a single defective term could put the whole agreement in question.Rent-to-own contract template →
- Shipper
- The person or company that sends goods and hands them to a carrier for transport, also called the consignor. The shipper is named on the bill of lading, describes the goods and their packaging, and is usually responsible for the accuracy of that description. The shipper is often the seller, but it may be a manufacturer or freight forwarder acting for it.Bill of lading template →
U
- UBL (Universal Business Language)
- An open XML standard, maintained by the OASIS consortium, for business documents such as invoices, credit notes, orders and despatch advice. Peppol's invoice format is based on UBL, and several European e-invoicing systems accept it. A UBL invoice contains the same data as a paper invoice, structured so that the buyer's software can import it without retyping.
V
- VAT number
- The identification number a tax authority gives to a business registered for value-added tax. In the EU it starts with a two-letter country code, such as DE or FR. It must appear on VAT invoices, and for cross-border business sales the customer's number is needed as well. EU numbers can be checked with the European Commission's free VIES service.Invoice generator →
Definitions are general information, not legal or tax advice; rules differ by state and country. See also the business calculators and the document guides.