Invoice & Freelance Glossary
Essential terms defined simply — from Payment Terms to Tax, Contracts, and Business Operations.
Payment Terms
12 termsNet-30
Full payment due within 30 days.
Net-15
Full payment due within 15 days.
Net-45
Full payment due within 45 days.
Net-60
Full payment due within 60 days.
Net-90
Full payment due within 90 days.
Net-7
Full payment due within 7 days.
Net-14
Full payment due within 14 days.
2/10 Net 30
2% discount if paid within 10 days; full amount due in 30.
Due on Receipt
Immediate payment required upon receipt of invoice.
Partial Payment
A payment covering only part of the invoice total.
Due Date
The deadline for payment on an invoice.
Balance Due
The remaining amount owed after partial payments.
Invoice Types
18 termsProforma Invoice
A preliminary invoice sent before delivery.
Invoice vs. Receipt
Key differences between an invoice and a receipt.
Invoice Number
A unique identifier for each invoice.
Billing Cycle
The recurring interval at which a business invoices clients.
Deposit Invoice
An invoice requesting upfront payment before work begins.
Recurring Invoice
An invoice automatically generated at regular intervals.
Milestone Invoice
An invoice issued at the completion of a project phase.
Retainer Invoice
An invoice billing in advance for reserved time.
Advance Invoice
An invoice requesting payment before goods or services are rendered.
Debit Note
A document notifying a buyer of additional invoice charges.
Tax Invoice
An invoice that includes applicable tax charges.
Delivery Note
A document confirming goods have been dispatched.
Final Invoice
The last invoice sent upon project completion.
Past Due Invoice
An invoice that has passed its due date.
Progress Payment
Payment made in stages as milestones are achieved.
Credit Note
A document to cancel or reduce an existing invoice.
Remittance Advice
A notice that a payment has been made.
Late Payment Fee
A charge applied to overdue invoices.
Accounting
17 termsBookkeeping
The systematic recording of all financial transactions.
Cash Basis Accounting
Revenue recorded when received; expenses when paid.
Accrual Accounting
Revenue recorded when earned; expenses when incurred.
Balance Sheet
A snapshot of assets, liabilities, and equity at a point in time.
Profit & Loss (P&L)
A summary of revenues, costs, and expenses over a period.
Cash Flow
The net money moving in and out of a business.
Cash Flow Forecast
A projection of future cash inflows and outflows.
Bad Debt
Money owed that is unlikely to be collected.
Break-Even Point
The revenue level where income equals expenses.
Cost of Goods Sold
Direct costs of producing goods sold.
Depreciation
Spreading the cost of a long-term asset over its useful life.
Deferred Revenue
Revenue received before work is performed.
Equity
The net worth of a business — assets minus liabilities.
Gross Amount
The total before deductions.
Net Amount
The amount remaining after all deductions.
Write-Off
Reducing an asset or revenue value on financial records.
Cleared Payment
A payment fully processed and transferred.
Freelancer Basics
11 termsHourly Rate
A fixed amount charged per hour of work.
Flat Rate
A fixed project price regardless of time spent.
Rush Fee
An extra charge for expedited work.
Freelance Contract
A formal agreement defining engagement terms.
Independent Contractor
A self-employed person providing services to clients.
1099 Contractor
An independent contractor receiving a 1099-NEC.
Scope of Work
The specific tasks and deliverables for a project.
Statement of Work
A document defining scope, deliverables, and compensation.
Work for Hire
A doctrine where the client owns the IP created.
NDA
A contract keeping specified information confidential.
Intellectual Property
Legal rights over creations of the mind.
Tax
10 termsSelf-Employment Tax
Social Security and Medicare tax for self-employed individuals.
Sales Tax
A consumption tax on the sale of goods and some services.
Tax Exempt
A status where certain taxes do not apply.
W-9 Form
An IRS form collecting taxpayer identification info.
Estimated Tax
Quarterly tax payments when no withholding applies.
Quarterly Taxes
Four annual estimated tax payments by freelancers.
Business Expense
A cost incurred in running a business.
Tax Deduction
An expense that reduces taxable income.
Fiscal Year
A 12-month period used for accounting and tax.
1099 Form
IRS form reporting non-employment income.
Contracts
5 termsWork Order
An authorization to begin specific work.
Purchase Order
A document authorizing a purchase from a seller.
Purchase Requisition
An internal request for approval to make a purchase.
Change Order
An approval for additional or modified work.
Kill Fee
Compensation when a client cancels an engagement.
Payments
9 termsACH Payment
An electronic bank-to-bank transfer.
Wire Transfer
An electronic same-day or next-day bank transfer.
Stripe Payment
A payment processed through the Stripe platform.
Payment Link
A URL allowing clients to pay an invoice online.
Chargeback
A card payment reversal initiated by the cardholder.
Payment Dispute
A formal disagreement over payment owed.
Escrow
A third party holds funds until conditions are met.
Overdue Invoice
An invoice past its due date without payment.
Invoice Factoring
Selling invoices to a factor for immediate cash.
Business Operations
11 termsBurn Rate
The rate at which cash reserves are spent.
Overhead
Ongoing costs not directly tied to a project.
Markup
An amount added to cost to arrive at a selling price.
Net Profit
Revenue minus all expenses.
Gross Profit
Revenue minus the direct cost of goods or services.
Operating Expense
Day-to-day costs of running a business.
Revenue
Total income before expenses are deducted.
Discount
A reduction in price to incentivize behavior.
Payment Terms
The conditions under which payment is expected.
Accounts Receivable
Money owed by clients on invoiced work.
Accounts Payable
Money owed to vendors for goods or services.
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