The Accounts Payable Network

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Glossary

Accounting and Accounts Payable Terms

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Term	Definition
Abatement	A reduction or cancellation of an assessed tax, penalties or interest.

Abatement Letter	A letter written to the IRS proposing that all penalties or interest be waived.

Accessorial Charges	Fees charged for additional services performed beyond regular pickup and delivery, e.g., inside delivery, storage, heating, etc.

Account	A collection of financial information grouped according to customer or purpose, including all a customer's purchases, payments, and debts. A written record of an account is called a statement.

Account Classification	The summation or grouping of like items into categories such as revenue accounts, liability accounts and expense accounts.

Accounting	The overall process of identifying, measuring, recording, interpreting, and communicating the results of economic activity; tracking business income and expenses and using these numbers to answer specific questions about the financial and tax status of the business.

Accounting Equation	The basic accounting equation is Assets = Liabilities + Owners' Equity

Accounting Period	A term covered by an income statement. A fiscal year is any 12-month accounting period that a business chooses to adopt as opposed to the calendar year, which runs from January 1 to December 31.

Accounts Payable	A type of short-term debt, accounts payable are amounts a business owes - bills from suppliers for goods or services purchased on credit. Accounts Payable is classified as a Current Liability because the obligation is generally due within 12 months from the initial transaction date.

Accounts Receivable	Amounts owed to a business that it expects to receive; includes sales made on credit. See The Accounts Receivable Network

Accrual	Accrual accounting has to do with the timing of recording income and expenses. In accrual accounting, income is recognized when a sale occurs and expenses are recognized when incurred (goods or services are received), rather than when cash is actually received or payment actually made (cash accounting). By recording income when it is truly earned and expenses when truly incurred, the income of a period is accurately matched to expenses of the period, giving a more accurate picture of net profits for the period than cash accounting.

ACFE	Association of Certified Fraud Examiners. A professional organization that provides anti-fraud training and education; more than 37,000 members worldwide. The ACFE certifies and governs Certified Fraud Examiners, which investigate business fraud around the world.

ACH	Automated Clearing House (ACH) is a secure payment transfer system that connects all U.S. financial institutions. The ACH network acts as the central clearing facility for all Electronic Fund Transfer (EFT) transactions that occur nationwide, representing a crucial link in the national banking system. ACH payment is a type of electronic funds transfer (EFT). ACH is faster than a check but slower than wire. ACH cost is typically between $0.10 - $0.25 per transaction (compared to typically $10.00 - $30.00 for wire).

Additional Paid In Capital	An equity account classification in the stockholders' equity section of the balance sheet that represents a portion of contributed capital. It is the difference between the par value of the common stock issued to owners and the total cash or other consideration contributed in exchange for their ownership interest.

ADF	"After deducting freight" – in an early payment discount offer, ADF means apply the discount after deducting the freight charge, which is not discounted.

AICPA	The American Institute of Certified Public Accountants is a national association for the accounting industry where part of its mission is to provide accounting professionals with uniform certification and licensing standards, establishing professional standards, and enforcing current requirements. See www.aicpa.org for further information.

Allowance	An allocation of money between contractual partners as a reimbursement for expenses from one to the other.

Analogous Article	An article that is not found in freight classification but is comparable to an article that is in the classification.

Annotation	An attached note or graphic on an imaged document made after scanning.

ANSI	American National Standards Institute. A non-profit organization which coordinates the development and use of voluntary standards for products, services, processes, systems and personnel in the United States. ANSI developed the standards for EDI.
APIC	A term used to reference Additional Paid In Capital.
APM	Accredited Payables Manager. Title awarded to accounts payable managers who have completed certification exams provided by The Accounts Payable Network and The Institute of Management & Administration. Accredited Payables Managers certification demonstrates that the individual has mastered the basics of accounts payable and has the skills required to manage an AP department.
APS	Accredited Payables Specialist. Title awarded to accounts payable employees who have completed certification exams provided by The Accounts Payable Network and The Institute of Management & Administration. Accredited Payables Specialist certification states that the individual has demonstrated the knowledge and skill to excel in accounts payable.
AP On-Hold	Instance when an invoice has been received and entered but further processing for payment is delayed until an issue is resolved.

Archive	Imaged documents on magnetic or optical media in long-term storage for possible future access.

Arrival Notice	Notification by a carrier to the consignee of the arrival of a shipment.
ASCII	American Standard Code for Information Interchange. ASCII is character encoding technology based on the English Alphabet. ASCII is capable of understanding and communicating letters, numbers and some symbols between digital devices; it is a commonly used system in entering data into a computer system for accounting software, document management, audit and other purposes.
ASN	Advanced Shipping Notice. A notice of a pending delivery sent by the shipper of a supply to the recipient. The ASN is based on information in the purchase order or a contract. When using an ASN, the price of the goods has already been determined.
ASP	Application Service Provider. A business that provides computer-based services to customers over the Internet. Customers can access the services, which can include Web invoicing, automatic purchasing and expense management applications, online any time. ASPs are often referred to as on-demand software.

Asset	An economic resource belonging to a company or entity, an item owned by the company or entity; an asset has future economic benefit and is the result of past financial transaction.
Audit	An internal or external examination of financial accounts and records in order to assure compliance with accounting rules and regulations, catch fraudulent activity and to review efficiency of financial operations.
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B2B	A term used in reference to 'business-to-business'; generally used when referring to a business which sells its products or services to another business.

B2C	A term used in reference to 'business-to-consumer'; generally used when referring a business which sells its products or services to a consumer.

B-Notice	Notification from the IRS that a payee name and TIN combination are incorrect. Backup withholding must be done on any further payments until a corrected Form W-9 from the payee or a TIN validation form from the IRS has been received.
Back-end Imaging	Imaging invoices for archival purposes once they have been processed on paper, allowing for fast document retrieval and requiring no physical storage space.

Backup Withholding	A percentage that is withheld from any payment made to a payee that has not provided a correct TIN or where the IRS has issued a notice to backup withhold on payments to that individual. Backup withholding is also required on payments made to nonresident aliens without a signed Form W-8 or W-8BEN certifying foreign status. (See Backup Withholding Summary and Rates )

Balance Sheet	The listing of assets (items owned), liabilities (obligations owed), and owners' equity (the difference between assets and liabilities), prepared at a specific point in time.

Base Rating Table (BRT)	A rate table published by a carrier for LTL shipments.

Bilateral contract	A contract where both parties have promised obligations to each other.

Bill Consolidator	In EIPP, a Bill Service Provider that consolidates bills from other Bill Service Providers or Billers and delivers them for presentment to the Customer Service Provider

Biller	A company or organization that issues a bill or invoice requesting payment for a product or service rendered to a customer or client.

Bill to Address	The address to which the freight bill is to be sent.

Bill of Lading (BOL)	A document issued by a carrier to a shipper acknowledging receipt of goods for transport and specifying terms of delivery, the contract for transport services.

Bookkeeping	The task of recording amounts, dates and sources of all business revenue, gain, expense and loss transactions; the starting point of the accounting process.

BPO	Business Process Outsourcing - hiring a vendor to take responsibility for a business process.
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Cargo Insurance	A policy to protect part or all of the freight in a shipment.

Carrier	A company that offers services to transport freight.

Carrier Discount	A reduction off the base rate that a carrier offers a shipper.

Cash Discount	A deduction that a vendor allows on the invoice amount to encourage prompt payment. For example, terms of sale might include 2/10, n/30, meaning that the customer can pay 2% less than the invoice amount if the bill is paid within 10 days. The full amount must be paid within 30 days.

Cash Flow Statement	Summary of a company's cash receipts and cash disbursements over a period of time; Lists cash to and cash from operating, investing, and financing activities, along with the net increase or decrease in cash for the period.

CCD	Cash Concentration or Disbursement. One of three formats used to make business-to-business automated clearing house payments. Since the CCD format cannot carry remittance data about the payment, it is often only used to pay a single invoice.

CCD+	Cash Concentration or Disbursement Plus. One of three formats used to make business-to-business automated clearing house payments. Unlike CCD, CCD+ can transmit up to 80 characters of remittance data entered in an ANSI ASC X12 data segment along with payments. CCD+ can also be used to pay multiple invoices.

Certified Public Accountant	A designation (CPA) certifying that an accounting professional practicing in the United States has obtained a license to practice as a public accountant in their state.

Certificate of Weight	A statement of authority of the weight of a shipment of freight prepared by a weigh master.

Chart of Accounts	A listing of Accounts in a financial system generally using alpha numeric characters to designate the transactions that comprise the Balance Sheet and Income Statement. The chart of accounts is used as the basis for preparing financial reports from an accounting system.

Chartered Accountant	The equivalent designation in Canada and United Kingdom of an accounting professional who has obtained their CPA.

CHIPS	Clearing House Inter-Bank Payment System. The main privately held clearing house for large-value transactions in the United States. Along with government-owned Fedwire, CHIPS is the primary network for large-value domestic and international bank transactions.

Collect on Delivery(COD)	The shipper requests the carrier of the goods to collect the payment for the delivery from the consignee.

COD Fees	A service charge made to the shipper ("prepaid") or consignee ("collect") by the carrier for collecting the consignee's payment for the goods delivered.

Collect	The consignee is responsible for payment for the freight or delivery charges.

Commodity	Description of type of goods shipped, used to determine LTL classification.

Common Stock	A class of contributed capital in the equity section of the balance sheet that represents the residual ownership interest in a company by a person or organization. Often referred to as 'ordinary shares', common stock shares are ownership units issued in the form of a stock certificate(s) to a person in exchange for the certificate gave the company cash or other consideration.

Computer Readable Data	Data in a format — such as ASCII — that a computer can understand.

Consignee	The receiver of the shipment.

Consolidation (Freight)	Putting together several consignments that are headed in the same direction.
COST	: Council on State Taxation. A non-profit trade association of about 570 multi-state corporations active in interstate and international business. COST seeks to establish favorable state and local taxes for businesses that deal in multiple jurisdictions.


Contributed Capital	Contributed Capital is the value of funds or other consideration contributed to a company in return for an ownership interest. For instance, contributed capital increases when a person invests money in a company and receives a stock certificate recognizing their right to share in the profits and losses of a company and increases or decreases in the equity value of the company. Owners of a company are often referred to as stockholders. Contributed capital is located in the stockholders equity section of the balance sheet.

Corporate Card	A credit card issued to an individual under a corporate account, used for business expenses; the individual cardholder is the liable party. A corporate card simplifies processing of expense reports, as most items are noted on the card statement. The statement can serve as the report and most cards offer online processing capabilities.

Credit Balance	A balance that represents a liability or income to the company. In accounts payable general ledger account, a credit balance represents money owed to the company's vendors.

CTX	Corporate Trade Exchange. One of three formats used to make business-to-business automated clearing house payments. Unlike CCD and CCD+, CTX is capable of transmitting extensive remittance data along with transactions. CTX payments can include up to 9,999 individual records made up of up to 80 characters each formatted either as an ANSI ASC X12 data segment or as a payment-related UN/EDIFACT transaction.

Cubic Capacity Rule	If an LTL shipment exceeds a designated number of cubic feet in a trailer (typically 750 cubic feet), it triggers a rate increase.

Current Asset	An asset expected to provide an economic benefit to the company within 12 months from the date of the initial transaction that generated the asset.

Current Liability	An amount owed by a company as an obligation expected to be settled within 12 months from the date of the initial transaction that resulted in the liability.

Cwt	Abbreviation for "per 100 pounds weight"
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Dashboard	A reporting tool that organizes and presents key information or metrics to provide the status or condition of a project, process or business.

Days Payable Outstanding	(DPO) A number representing the number of days on average that a business takes to settle its trade payables. Click here for an explanation and link to TAPN's DPO calculator.

DBA	Abbreviation for “Doing Business As” when using a trade name, i.e. a name that is less or other than the full legal business name. Typically, the DBA name is the name seen by the public. In the U.S., a company must register its DBA at the county or sometimes state level. In the U.K., the similar term is T/A - trading as.
Debit Balance	A balance that represents an asset or an expense of the company. In accounts payable general ledger account, a debit balance represents an amount owed by the vendor to the company; it can occur as a result of product returns, allowances, rebates, and chargebacks.
Deficit Weight	Weight that is added to a shipment to bring the weight up to the "bill-as" weight, to reduce the total charge (taking advantage of rate reductions for higher weights).
Delivery Receipt	Document dated and signed by consignee or its agent at the time of delivery stating the condition of the goods at delivery.
De Minimis	Any benefit given to an employee that is so low in value that accounting for it would be unreasonable. Cash benefits are never excludable as a de minimis benefit. Benefits that may be excluded as de minimis include: transportation fare, meals, copy machine use, holiday gifts with a low fair market value, occasional parties and entertainment.
Delivery Note	A written document from the seller to the buyer that accompanies a delivery of goods and specifies type of goods and quantity.
Depreciation	A reduction in the value of a tangible asset over time due to wear, age or obsolescence; the allocation of the cost of an asset over time for accounting and tax purposes - an annual depreciation charge in accounts represents the amount of capital assets used up in the accounting period; also, a decrease in the value of a currency in relation to the value of another.
Disbursement	Paying out in the discharge of a debt or expense; actual payment made for product or service to a contractor or vendor.
Dividends	Dividends are generally payments made to owners of a company. These payments can be in the form of cash or the issuance of additional Stock. Dividends are generally used as a way to allow the owners to participate in the profits generated by the company.

Document	Generic term for any piece of paper with important data such as an invoice, inventory sheet, application, etc.

DPO	Days payable outstanding. A number representing the number of days on average that a business takes to settle its trade payables. Click here for an explanation and link to TAPN's DPO calculator.

Due Diligence	In AP, typically refers to efforts made by a business to find the owner of unclaimed property. Performing due diligence usually includes sending a search letter to the owner’s last known address within 60 to 120 days before the end of the dormancy period. However, rules tend to vary by state. Due diligence can also refer to efforts to verify vendor legitimacy when doing business with a new vendor.
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Earnings	Earnings is the sum of all revenues, gains, expenses and losses during a specified period of time. It most often referred to when a company makes a profit and, therefore, the sum of all revenues and gains exceeds the sum of all expenses and losses.

EBPP	Electronic Bill Presentment and Payment generally refers to the billing and payment process for consumers or B2C applications.

EBT	Electronic Benefit Transfer. A form of electronic funds transfer in which state governments credit money to a pseudo account belonging to a low-income individual, who is given a plastic EBT debit card. EBT funds can only be used to purchase specific items, such as food and other necessities.

EDI	Electronic Data Interchange - computer-to-computer transmission of information between two companies, including such documents as purchase orders and invoices. Also see EDI Glossary

EDM	Electronic Document Management refers to software that allows specific imaged documents to be retrieved based on queries about data on the images.

EFT	Electronic Funds Transfer: Any process of electronically transferring funds to or from an account; EFT does not involve the exchanging of hard currency. A Federal law to allow the transfer of funds electronically was passed in the United States in 1978. In the U.S., common forms of EFT are ACH and Wire transactions.

EIN	Employer Identification Number: A nine digit number assigned to all business entities by the IRS for taxation purposes. An EIN is required on all business tax returns, documents and statements.

EIPP	Electronic Invoice Presentment and Payment (EIPP). EIPP refers to the invoicing and payment process between businesses, or B2B applications, over the Internet and typically via a third-party EIPP vendor. See EIPP under Technology in the Main Topics section.

Equity	The ownership interest in the assets of a company or entity; funds from owners or creditors provided for acquiring assets; the difference between the amount owned (Asset) and the amount owed (Liability) by a company or entity.

ERM	Electronic Records Management. A company's strategy for maintaining digital copies of important documents and information. An ERM might include scanning and indexing invoices, receipts and purchase orders into a computer system.

ERP	Enterprise Resource Plan - software that integrates departments and functions across a company into one computer system. ERP runs off a single database, enabling various departments to share information and communicate with each other. ERP systems comprise function-specific modules designed to interact with the other modules, e.g. Accounts Receivable, Accounts Payable, Purchasing, etc.

ERS	Evaluated Receipt Settlement. ERS eliminates the supplier invoice from the procurement and disbursement process. It determines disbursement based on Purchase Orders and Receiving information. Price information is found in the PO, and quantity information in the Receipt.

Escheatment	Remittance of unclaimed property to the state in compliance with unclaimed property law. Abandoned or unclaimed property (of all kinds) becomes the property of the state, which protects the property on behalf of the owner. For AP departments, this would be, for instance, a check never cashed. Unclaimed property laws in each state set dormancy periods, requirements for due diligence in seeking the owner, and reporting and escheat requirements for the state. Owners can claim escheated property held by the state, though only a small percentage ultimately do.

Excise Tax	A tax levied on the manufacture, sale, or consumption of certain (particular) non-essential goods or services, e.g. airline tickets, gasoline, alcohol, tobacco, etc. An excise tax is levied on a particular product in contrast to sales and use taxes, which are levied because sales occurred, rather than on the product purchased.

Exercise	A term often referred to when a person decides to purchase their company's stock through the contractual right granted to them in a stock option. A person 'exercises' their right to purchase company stock from the right granted in a stock option.

Exercise Price	Generally refers to the fixed price documented in a stock option from which a person can exercise their right to purchase a company's stock.

Expenses	Decreases in economic resources or assets resulting from activities undertaken to generate revenue. Expenses decrease Equity.
Eyeball Test	A clear, readily perceived indication that a payee is exempt from Form 1099 reporting. Such indications can be: an incorporated entity ("Corp." "Inc.") as seen on an invoice, a signed W-9 stating the company is a domestic corporation or the payee is a government organization.
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Factor, factoring	A factor is one who acts or transacts business for another. Typically, a factor buys a company's accounts receivable at a percentage of face value. Recourse factoring means the bad debt risk remains with the company. Non-recourse factoring is when the bad debt risk is transferred to the factor, protecting you from companies that don't pay. Non-recourse factoring fees are therefore higher than recourse factoring.
FASB	Financial Accounting Standards Board. A private, non-profit organization whose primary purpose is to develop Generally Accepted Accounting Principles (GAAP) in the United States. The standards established by FASB are intended to educate issuers, auditors and users of financial information as well as the general public.

Fixed Assets	Tangible, relatively long-lived resources. The business has acquired these assets ordinarily in order to use them in the production of other goods and services. These assets will wear out and be replaced over the long run; therefore, each year they are depreciated (a paper loss in the value of fixed assets).

FLSA	Fair Labor Standards Act. Enacted by Congress in 1938, the act established rules in the United States governing workplace practices, including establishing a national minimum wage, guaranteed time-and-a-half overtime pay for certain jobs and outlawed most child labor. In addition, the FLSA also protects employees' rights to make workplace complaints without fear of reprisal.


F.O.B.	"Free on Board," a term of sale which in general means the seller provides for loading goods onto the shipment vessel (shipping point), at which ownership transfers to the buyer; seller does not cover cost of shipment unless otherwise specified (see below).

F.O.B. Delivered/ Freight Collect	A term of sale in which the buyer takes ownership of the goods on delivery and pays the freight charges, and the seller files any claims.

F.O.B. Delivered/ Freight Collect and Allowed	A term of sale in which the buyer takes ownership of the goods on delivery and pays the freight charges but then deducts them from the seller's invoice, and the seller files any claims.

F.O.B. Delivered/ Freight Prepaid	A term of sale in which the buyer takes ownership of the goods on delivery, and the seller pays the freight charges and files any claims.

F.O.B. Origin/ Freight Collect	A term of sale in which the buyer takes ownership of the goods at the shipping point, pays the freight charges, and files any claims.

F.O.B. Origin/ Freight Prepaid	A term of sale in which the buyer takes ownership of the goods at the shipping point and seller pays the freight charges and files any claims.

F.O.B. Origin/ Freight Prepaid and Add	A term of sale in which the buyer takes ownership of the goods at the shipping point and files any claims, and the seller pays the freight charges but is then reimbursed by the buyer.
Form 1099	IRS Forms 1099 are used for reporting income other than wages, tips and salaries for one calendar year to the IRS; Form 1099-MISC as it relates to accounts payable activity most commonly reports payments for *services, and payments to independent contractors*. See these related articles: Form 1099-MISC Request Forms for 1099 Reporting 1099 Planning Calendar

Forms Processing	The ability for software to "read" a scanned document and extract the data into computer-readable format, eliminating the need to enter the data manually.

Freight All Kinds (FAK)	When shipped products are classified as single freight class despite comprising various commodities.

Front-end Imaging	Imaging invoices once they arrive in accounts payable and using an automated workflow solution to process. It eliminates the need for paper documents at the start of the process.

Full Cost Accounting	An accounting method that seeks to identify, quantify and allocate all costs associated with a process or product, including environmental and other social costs. It typically includes direct costs, hidden costs, contingent liability costs and less tangible costs. The term may be used to refer to full private or bottom line costs to an enterprise, which is common, or include the full social costs including externalities that are difficult to quantify.
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GAAP	Generally Accepted Accounting Principles are accounting guidelines accepted by accounting professionals and businesses on a set of practices that provide guidance for preparing and reporting financial information. There are also two other sources that provide the basis for establishing accounting standards: 1) APB Opinions are accounting guidelines issued by the AICPA Accounting Principles Board and 2) ETIF abstracts are issued by FASB Emerging Task Force for guidance on new accounting issues. GAAP helps to create conformity when reporting financial results across all businesses and industries in the United States. Financial Reporting methodologies in accordance with GAAP provides comparable data and common principles when a company prepares and reports financial information.

Gain	Increase in equity as a result of business activities not a part of normal operations (e.g. a cruise company selling an asset such as its dining room chairs); reported on a net basis.

General Ledger	A record of business transactions by account.

Ghost Card or Supplier Card	The ghost card refers to a single account number that is assigned to an entity and typically resides with the entity's vendor for high volume purchases. The ghost "card" can be used by multiple users, typically for a single vendor or limited number of specific vendors. No actual card is produced. Responsibility for monitoring and reconciliation of the account usually rests with the department using the account, rather than with AP or p-card administrator. A ghost card account resembles a charge account.

Hazardous Material (HazMat)	Any substance that represents a health or safety risk to people, property or the environment as determined by the U.S. Department of Transportation; a HazMat shipment requires special handling and documentation.

HIPAA	Health Insurance Portability and Accountability Act. Enacted by Congress in 1996, the act protects health insurance coverage for workers and their families when they change or lose their jobs and creates standards for health care transactions. The law also protects patient privacy records.

Household Goods Carriers Bureau (HGCB or HGB)	Part of the American Moving and Storage Association and the authority behind tariffs and The Official Transportation Mileage Guide (published by Rand McNally).

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IBAN	International Bank Account Number; used for international payments, primarily in Europe.
ICR	Intelligent Character Recognition refers to the ability of software to recognize hand-printed characters from a scanned document and turn them into computer-readable data.

IFX	Interactive Financial Exchange - A standard for the exchange of financial data and instructions independent of a particular platform or technology. See http://www.ifxforum.org

Imaging	Turning human-readable images — documents, invoices, photos, etc. — into computer-readable images such as TIFF, JPG or MPEG files.

Imaging system	A collection of hardware and software that work together to capture, store and retrieve images. A sample system includes a scanner, management software and a storage device such as a CD, hard drive, etc.

Inbound Freight	Direction of freight concerning the consignee. Inbound freight is traveling to the consignee from the shipper. The direction of freight plays a part in carrier contracts. Inbound contracts typically mean the consignee is paying for the shipment.

Income	A term used to refer to the calculated result of adding the revenue, gain, expense and loss transactions generated by a company. If revenue plus gains less expenses and losses results in a positive number, then the company has generated income during the specified period.

Income Statement	Also Statement of Earnings or Statement of Operations - Listing of sources and monetary amounts of a company's revenues and expenses, gains and losses for a particular period, e.g. quarter or year. A company's profitability is calculated from revenues and gains less expenses and losses.

Index	A descriptive piece of data associated with an image for retrieving that specific image from storage.

Intangible Assets	Two examples of intangible assets are goodwill and the value of patents.

Intangible Property	Property that a person or company can own, but has no physical substance. Intangible property represents value, but is not itself valuable. Examples include stocks, bonds and copyrights.

Interactive Voice Response (IVR)	A system to automatically manage incoming calls, IVR can link phone callers (voice and/or touchtone) with a computer database. It can accept a question, access the company's database and provide a caller with the information they are seeking. It can also take information from the caller, convert it to data and input that data to the database. (See also: A Glossary of IVR/IWR Terms and Acronyms.)

Interactive Web Response (IWR)	Similar to IVR, IWR is a Web-based system that allows customers or vendors to find information online, such as invoice status or scheduled payment date. It also can allow data input to a database, or send e-mail via the site. (See also: A Glossary of IVR/IWR Terms and Acronyms.)

Intermediate-term liabilities	Claims of outsiders that come due in one to ten years.

Invoice	A formal request for payment; a written record of a transaction submitted to customer or client when requesting payment for services or goods delivered; includes taxes where applicable; also called bill, and sometimes statement, though the term "statement" has a different meaning that does not include a formal request for payment.

IOCR	Intelligent Optical Character Recognition. The ability, like standard OCR, of software to recognize machine-printed (or typed) alphanumerics and turn them into computer-readable data. IOCR software, however, can recognize most common text fonts without needing to be trained to read them.

IRD	Image Replacement Document. Also referred to as substitute checks, IRDs are paper copies of checks that have been scanned to produce digital images (truncated) to facilitate electronic transmission between banks. An IRD is produced when a party involved in the transaction requires physical documentation. The image of the paper check in an IRD is smaller than the original check and contains some different information (See Check 21)

IRS	Internal Revenue Service. The United States government agency that collects taxes and enforces internal revenue laws. The IRS is a bureau of the Department of Treasury.
ITIN	Individual Taxpayer Identification Number. A nine digit taxpayer identification number given to nonresident aliens who are not eligible for a social security number. This includes nonresident spouses and dependents listed on a U.S. tax return.

Journal	A chronological record of daily transactions of a business. For each transaction, the journal shows the debits and credits to be entered in specific ledger accounts and a description of the transaction.
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Key Performance Indicators (KPI)	A short list of important financial or operational metrics that provide a measurement for results.

Knocked Down(KD)	Indicates a disassembled article, which facilitates packing and shipping.

Landed Cost	The cost of goods including freight charges, taxes and all other applicable fees.

LC	Letter of Credit. A document issued by a bank or other financial institution on behalf of one of its clients, called the "applicant." The letter is effectively a guarantee of payment to another party, called the "beneficiary," which is named in the LC.

Ledger	A collection of related financial information such as revenues, expenses, accounts receivable and accounts payable.

Less-than-Truckload(LTL)	A shipment that does not qualify for full (lower) truckload rate because it does not require the full use of a trailer; a shipment that weighs less than the full truckload weight, typically 10,000 lbs.

Liability	An amount owed; an obligation of a company or entity that must be settled in the future by transfer of assets, provision of services, or assignment of future economic benefit, it is the result of a past transaction.

Linear Foot Rule	If an LTL shipment exceeds a designated number of floor feet in a trailer, it triggers a rate increase.

Long-term liabilities	Mortgages and other liabilities that are expected to be held on the books for more than ten years.


Loss	Decrease in equity as a result of business activities not a part of normal operations; reported on a net basis.

Manifest Bill of Lading	A summary list of the bills of lading for goods being transported by a LTL or parcel services carrier.

Master Bill of Lading	A summary list of bills of lading aggregated for a multiple-stopoff truckload carrier.

MCC	Merchant Category Code. A universal four-digit classification code describing whether a particular business predominantly provides goods or predominantly provides services. P-card providers furnish these codes to businesses as a way to help them know which p-card purchases should be reported on a 1099. Purchases made to vendors with MCCs labeling them service providers are reportable while purchases made to goods providers are not (See IRS MCC Table).

MICR	Magnetic Ink Character Recognition. A technology developed by the American banking industry to facilitate timely processing of checks. MICR characters on the bottoms of checks are made with specially designed ink with a magnetic signature that makes it easy for quick scanning and processing.

Mode	Method of transportation, e.g., rail, highway, air, and water.

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