Business operations
glossary.

The amount by which actual project costs exceed the original approved budget. A cost overrun reduces profit margin on the affected job and, if left unmanaged, can convert a contract that was expected to be profitable into a financial loss.

Cost value reconciliation, or CVR, is the monthly report that compares what a construction project has earned in value against what it has cost to deliver. The difference is the margin to date, and the same report forecasts where the job will finish.

The total direct costs incurred to deliver a product or complete a job, including materials, direct labor, and sub-contractor costs. Revenue minus COGS equals gross profit - the measure of whether the work itself is profitable.

The estimated cost still needed to finish a project from its current state. Calculated by subtracting actual costs incurred to date from the projected total cost at completion.

A pricing arrangement where the customer pays all verified project costs - labour, materials, subcontractors - plus an agreed fee or percentage for the contractor's overhead and profit. Total price is not fixed in advance but builds from actual expenditure.

The process of managing customer credit to minimize overdue debt and bad debt losses. Includes setting payment terms, monitoring invoice aging, and running a structured chase sequence for outstanding invoices.

The maximum outstanding balance a supplier agrees to carry for a customer at any one time. When a customer reaches their limit, new orders are paused until invoices are paid down.

A credit note is a document issued by a seller to reduce or cancel a previously raised invoice, recording an agreed reduction in the amount a customer owes for returned goods, pricing errors, or partial refunds.

The average number of days a business takes to pay its suppliers, calculated as trade payables divided by cost of sales, multiplied by 365. Also called days payable outstanding.

The longest sequence of dependent tasks in a project that determines the earliest possible completion date. Any delay to a critical path task delays the whole project by the same amount. Tasks off the critical path have float - time buffer before their delay affects the end date.

A sales technique where a seller recommends complementary or related products to a customer already making a purchase, with the aim of increasing the total transaction value and deepening the customer relationship.

The total amount a business spends on sales and marketing to win one new customer, calculated by dividing total acquisition spend by the number of new customers gained in the same period.

The total revenue a business can expect from a single customer across the full length of their relationship, calculated by multiplying average order value by purchase frequency and customer lifespan.

The percentage of existing customers who place at least one repeat order in a defined period. Calculated as: (customers at end of period minus new customers acquired) divided by customers at start, multiplied by 100.

A cycle count is an inventory management process where a rotating portion of stock is counted on a scheduled basis rather than everything at once, allowing businesses to maintain accurate records throughout the year without a full operational shutdown.

A day rate is a fixed daily charge for a contractor, tradesperson, or freelancer's labor - either agreed as a standalone daily fee or calculated from an hourly rate multiplied by the standard working day length.

A daywork sheet is the site record of the labor hours, materials and plant used on work instructed and paid at daywork rates. Signed on site by the client's representative, it is the evidence behind a time-and-materials variation claim.

A quotation that has expired, been replaced by a revised version, or where the prospect has stopped engaging. Dead quotes represent conversion opportunities that did not materialize and should be removed from the active sales pipeline.

A document raised by a buyer against a supplier to formally claim a reduction in the amount owed, typically due to returned goods, a pricing discrepancy, or a quality dispute, reducing the outstanding balance without waiting for a supplier credit note.

The average number of days it takes a business to collect payment from customers after issuing an invoice. Calculated from outstanding trade receivables and annual credit sales. A key indicator of cash collection speed and credit control effectiveness.

The technique used to apply a logo, text, or design to a promotional product. The chosen method directly affects cost per unit, minimum order quantity, lead time, and the artwork format required.

A contractual period after practical completion - typically 6 to 24 months - during which the contractor must return and fix defects in their workmanship or materials at no charge. The second half of retention is withheld until the DLP ends and defects are certified as made good.

Deferred revenue is money received from a customer before the related work or goods have been delivered. It is recorded as a current liability on the balance sheet until the business fulfills its obligation, at which point it becomes recognized revenue.

A delivery note is a document sent with a supplier shipment that lists the goods included. It lets the buyer check what was received against what was ordered before approving the supplier's invoice for payment.

The systematic allocation of a fixed asset's cost over its useful life, recognizing that physical assets - such as vehicles, equipment, and machinery - lose value as they age, wear out, or become obsolete.

A cost directly and specifically attributable to a single job, order, or project - such as materials, site labour, or bought-in goods - as distinct from overhead costs that are shared across the business.

A distribution network operator (DNO) is the company that owns and runs the local electricity network in a UK region, moving power from the transmission network to homes and businesses. It is not the supplier you buy electricity from, and it does not bill you for energy.

An arrangement where a supplier delivers goods directly to the end customer on behalf of the buying business. The buyer handles pricing and customer invoicing; the supplier handles physical fulfillment from their own stock or warehouse.

Rental of equipment without an operator or crew. The customer supplies their own technicians to operate and return the kit. Most common in AV and live events hire. Contrasts with wet hire, which includes a qualified operator in the rate.

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It measures a business's core operating profitability by removing financing costs, tax obligations, and non-cash accounting charges to show what the operation itself earns.

ERP stands for enterprise resource planning: a category of business software that runs finance, procurement, sales and operations from a single shared database, so every department reads and writes the same records rather than keeping its own.

An early payment discount is a percentage reduction in an invoice amount offered by a supplier to a buyer who pays before the standard due date. It incentivizes prompt payment in exchange for a lower total amount received.

Economic Order Quantity (EOQ) is the calculated order size that minimizes total inventory costs by balancing how much each order costs to place against how much it costs to store the goods. It helps businesses avoid both overstocking and ordering too frequently.

A contract provision allowing a job or contract price to be adjusted if specified input costs - materials, labour, or freight - rise beyond a defined threshold after the contract is signed.

A contractual mechanism that grants a contractor additional time to complete a project beyond the original completion date, without liability for liquidated damages, when delays occur due to qualifying events specified in the contract.

FF&E (Furniture, Fixtures, and Equipment) is the procurement category covering all movable, non-structural items used to furnish and equip a commercial space - including furniture, light fittings, AV equipment, and specialist machinery.

A financing arrangement where a business sells its unpaid invoices to a specialist finance company at a discount in exchange for immediate cash. The finance company then collects payment directly from the customer.

The final financial reconciliation at the end of a construction contract, agreeing all adjustments to the original contract sum including variations, provisional sums, and outstanding retention before the final certificate is issued.

The initial stage of electrical, plumbing, or mechanical installation work, carried out before walls and ceilings are enclosed. First fix covers all concealed elements - cables, conduit, back boxes, and pipe runs - built into the building structure before finishing trades begin.

A fixed cost is a business expense that stays the same each period regardless of how much you sell or produce. Common examples include rent, salaries, insurance, and loan repayments.

The time a task can be delayed without pushing back the project's overall completion date. Tasks on the critical path have zero float. Near-critical tasks with low float require close monitoring.

The minimum selling price at which a sales representative can quote a product or service without management approval. It protects gross margin by setting a hard lower limit on how far discounts can go.

A contractual clause that excuses one or both parties from performing their obligations when an extraordinary event beyond their reasonable control prevents or delays performance. Must be explicitly written into the contract - under English law it carries no implied legal status.

A long-term procurement arrangement setting agreed prices, terms, and conditions between a buyer and one or more suppliers. Individual orders placed within the agreement are called call-offs, and the framework itself does not guarantee any minimum purchase volume.

Free issue materials are construction materials or components supplied by a main contractor or client to a subcontractor at no charge, excluded from the subcontractor's contract price but incorporated into the finished works.

Free on Board (FOB) is a shipping trade term defining the point at which ownership and risk of goods transfers from seller to buyer - typically when goods are loaded onto a vessel at the named port of shipment.

Fulfilment is the complete process of receiving a customer order, picking and packing the items, and dispatching them for delivery. In B2B contexts it also includes supplier coordination, decoration or kitting, and managing returns or defect claims.

The formal approval required from a Distribution Network Operator before connecting any UK power generation system above 16A per phase to the electricity grid. Required for most commercial solar PV, battery storage, and other renewable generation installations above approximately 3.7kWp on a single-phase supply.