Financial Vocabulary #3
In this week’s episode of the Art of Business English we are going to continue with the financial vocabulary mini-series. We are going to look at some vocabulary you might come across when dealing with accountants, financial services, or while running your business.
Some of these terms are very technical and you may not have heard them before, so to help you understand these terms better, I have provided the meaning as well as an example to put things into context.
Let’s start learning.
Amortisation
Meaning:
The process of reducing a cost or total in regular small amounts.
Example:
“Applying amortisation helps companies reduce their taxable incomes.”
Assets
Meaning:
Things you own. These can be cash or something you can convert into cash such as property, vehicles, equipment and inventory.
Example:
“Building up a portfolio of assets is a great way to secure your financial future.”
Intangible assets
Meaning:
Non-physical assets with no fixed value, such as goodwill and intellectual property rights.
Example:
“Sometimes estimating the value of intangible assets, such as intellectual property can be challenging.”
Goodwill
Meaning:
An intangible asset that represents the value of a business's reputation.
Example:
“Building brand awareness and goodwill among your customer base is essential to business longevity.”
Encumbered
Meaning:
An encumbered asset is one that is currently put forward as security or collateral for a loan.
Example:
“Using encumbered assets can be risky, especially when seeking loans for new investments that may not work out.”
Loan to value ratio (LVR)
Meaning:
The value of an asset related to the amount that a bank will lend someone to buy it.
Example:
“Most lenders will restrict the loan-to-value ratio to 60% and will require some amortization.”
Benchmark
Meaning:
A set of conditions against which you can measure a product or business.
Example:
“Average benchmark crude oil and natural gas prices for the second quarter of 2021 and 2022 were high.”
Bootstrapping
Meaning:
Where a business funds its growth purely through personal finances and revenue from the business.
Example:
“The Art of Business English is a 100% bootstrapped business.”
Break-even point
Meaning:
The point at which a business starts to make as much money as it has spent on a particular product, activity, etc.
Example:
“Without public aid the small airports, which have not reached the break-even point, could not survive.”
Overheads
Meaning:
The fixed costs associated with operating a business such as rent, marketing, utilities and administrative costs.
Example:
“Overheads are very high with brick and mortar businesses when compared with online ecommerce ones.”
Drip pricing
Meaning:
Is when one price is presented at the beginning of an online shopping experience and, gradually, incremental fees and charges are added (or 'dripped') as you progress. Drip pricing can result in the customer paying a higher price for a service or product than they first thought.
Example:
“Be aware of misleading drip pricing practices when shopping online for services in the airline, ticketing, accommodation and vehicle rental sectors.”
Fringe benefits
Meaning:
Non-monetary benefits, such as company cars and mobile phones, included as part of a salary package.
Example:
“Many businesses attract talent these days by offering attractive fringe benefit packages.”
Return on investment (ROI)
Meaning:
The profit from an activity for a particular period compared with the amount invested in it. It's a way of thinking about the benefit (return) of the money you invest into the business.
Example:
“They are benefitting from a return on investment due to the premium price paid for the electricity produced.”
Final thoughts
I hope you have enjoyed part 3 of my series on financial vocabulary. I hope there are a lot of new words in there that you have discovered. Make sure you stay posted for future updates. If you haven’t subscribed to the AOBE yet, then now is a great time. You can subscribe here.
Don’t forget to download your copy of my eBook, "500 business English collocations for everyday use" if you want to expand your knowledge of vocabulary. Did you know that it also includes the pronunciation as mp3 files for free?
Click here to grab your copy.
Are you looking to expand your knowledge of English vocabulary and expressions?
Grab your copy of my eBook "500 Business English Collocations for Everyday Use". Includes free download audio of pronunciation
Please feel free to share your financial vocabulary below in the comments section, it would be great to hear from you and learn what words you use on a regular basis.
Thanks for joining me for another episode, see you all next week.
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