Business operations
glossary.

A formal document sent to potential suppliers to gather information about their capabilities and services. Used in early procurement stages to build a shortlist before issuing a request for proposal or request for quotation.

A request for proposal (RFP) is a formal document an organization issues to invite suppliers or contractors to submit detailed proposals for a project or service. Unlike a request for quotation, it evaluates approach and methodology alongside price.

A request for quotation (RFQ) is a document sent to suppliers asking them to price a requirement that is already fully defined, so that the prices returned can be compared line for line rather than interpreted.

The process of assigning people, equipment, and vehicles to specific jobs based on availability, skills, and location - ensuring the right resource reaches the right job at the right time.

A charge applied by a supplier when a customer cancels or changes an order after production or procurement has already been committed. Covers the supplier's costs for stopping production, holding goods, or reselling custom items.

A retainer is a pre-agreed, recurring fee paid to a service provider to secure ongoing access to their services over a defined period. It differs from a deposit in that it covers ongoing availability rather than prepayment toward a specific project.

Retention is a proportion of each payment withheld from a contractor or sub-contractor under a construction contract as security against defective or incomplete work, customarily released in two halves: one at completion and one after the defects liability period.

A retention bond is a financial guarantee issued by a surety company that replaces cash retention withheld from contractor payments in construction contracts, protecting the client against defects while freeing the contractor's working capital.

Return on investment (ROI) is a financial ratio that measures the profit generated by an investment relative to its cost. Expressed as a percentage, it is one of the most widely used metrics for evaluating and comparing business spending decisions.

Revenue recognition is the accounting principle that determines when a business records income in its accounts. Revenue is recognized when earned through delivering goods or services, not simply when payment is received.

A UK VAT accounting rule for construction businesses in the CIS. Sub-contractors issue invoices without VAT; the main contractor accounts for and pays the VAT directly to HMRC instead.

A risk register is a structured document used on projects to record identified risks, rate their likelihood and potential impact, and track the actions in place to prevent or reduce them. It is updated throughout the project lifecycle.

A per-unit charge applied for each additional color or imprint location when decorating a promotional product. Separate from the one-time setup fee and accumulates across every unit in the order.

An estimate of annual revenue or costs created by annualizing figures from a shorter period - typically a month or quarter - assuming current trading conditions continue unchanged.

Extra inventory held above expected working stock to protect against demand spikes and supplier delays, acting as a buffer that prevents stockouts without requiring permanent excess stock.

The complete sequence of stages a business follows from first identifying a prospect through to closing a deal. Includes lead generation, qualification, proposal, negotiation, and close, with length varying by deal size and buyer complexity.

A projection of future revenue based on current open quotes, historical win rates, and known repeat orders - used to plan capacity, manage cash flow, and set realistic revenue targets.

The accounting record that tracks every customer invoice, credit note, and payment individually, with one account per customer. The total of all customer balances equals the accounts receivable figure on the balance sheet.

A sales pipeline is the structured sequence of stages a business uses to track and manage prospective deals from initial enquiry through to a won or lost outcome, giving visibility over where each active opportunity currently sits.

A sales quota is the measurable target - a revenue figure, number of deals, or activities completed - that a salesperson or team must achieve within a set time period, most commonly monthly or quarterly.

A metric that measures how fast a business converts pipeline opportunities into revenue, calculated by multiplying deal count, average deal value, and win rate, then dividing by average sales cycle length in days.

A priced list of individual work items - expressed per unit of measurement - agreed between a contractor and client before work begins. Unit rates are then applied to actual measured quantities, common in maintenance contracts and framework agreements.

A contractor's itemized breakdown of the total contract sum, dividing it into scopes of work each with an assigned value. Used as the basis for payment applications, allowing certifiers to check progress against the agreed breakdown and release payment accordingly.

A schedule of works is a construction contract document that lists every task required to complete a project. Unlike a bill of quantities, it does not include measured quantities - contractors calculate their own quantities when pricing each line item.

Scope creep is the gradual expansion of a project's agreed work without formal approval or price adjustment. It occurs through informal additions and verbal instructions that are actioned without a written change order, eroding project margin over time.

A written document that defines the specific tasks, deliverables, and boundaries of a project or contract, establishing what is included in the agreed price and what is explicitly excluded. Used by contractors, AV integrators, and installers to prevent scope creep and support variation orders.

The second phase of trade installation work, completed after walls are plastered and decorating begins. Electricians fit sockets, switches, and luminaires; plumbers connect taps and radiators; carpenters hang doors and fix skirtings. Second fix ends with testing and commissioning.

Sectional completion is a construction contract provision allowing different parts of a project to be formally handed over at separate dates, each with its own completion certificate, retention release, and start of the defects rectification period.

A payment arrangement in which the buyer prepares and issues the invoice on behalf of the supplier. Both parties sign a formal agreement, and the supplier agrees not to raise its own invoice for the same supply.

A formal agreement between a service provider and customer that defines the expected standard of service, including response times, performance metrics, and remedies if those standards are not met.

A one-time charge applied by a supplier to prepare decoration equipment or tooling for a specific design. Charged per method, per color, or per location, and appears on the supplier invoice separately from the per-unit run charge.

A daily record maintained on a construction site documenting work activities, labour on-site, materials received, weather conditions, and any instructions or events affecting progress.

A pre-installation visit to a customer's premises to assess physical conditions, take measurements, identify access constraints, and gather the information needed to produce an accurate quote.

A UK government-backed scheme requiring licensed electricity suppliers to pay small-scale renewable energy generators for surplus electricity exported to the National Grid. Launched in 2020 to replace the Feed-in Tariff.

A document listing outstanding defects, incomplete work, or minor failures identified at the end of a project before formal handover. Used in construction, AV installation, and furniture fitting to define what must be resolved before final payment is released.

A specification is the written record of exactly what is being supplied: product codes, dimensions, materials, finishes and the performance standards the goods must meet. It defines the things, where a scope of works defines the work.

A one-off unplanned purchase made outside established supplier agreements, typically on the open market to fulfil an urgent need when preferred suppliers cannot deliver in time.

A stage payment is an agreed amount invoiced when a project reaches a defined milestone rather than at job completion. Stage payments help project-based businesses manage cash flow across jobs that span weeks or months.

A documented, step-by-step set of instructions for carrying out a routine business task the same way every time. SOPs reduce errors, accelerate staff onboarding, and maintain consistent quality as a business grows.

A statement of account is a document a business sends a credit customer summarizing the invoices raised, payments received and credit notes applied over a period, ending in the balance owed. It is a reminder and a reconciliation tool, not a request for payment.

Stock allocation is the process of reserving inventory units against a specific order, project, or customer account before dispatch, removing them from available stock so they cannot be committed to another order.

The number of days or weeks that current inventory will last at the existing rate of demand, calculated by dividing stock on hand by average daily or weekly sales.

A unique alphanumeric code assigned to a specific product variant - defined by its combination of type, size, color, or specification - used to track and manage that item individually in inventory.

A measure of how many times a business sells and replaces its stock within a set period, typically a year. Calculated by dividing cost of goods sold by average inventory value. A higher ratio indicates efficient stock management; a lower ratio points to slow-moving inventory.

A stockout occurs when a business has no remaining inventory of a specific item and cannot fulfill customer demand. The immediate result is lost sales, possible emergency purchase costs, and customer dissatisfaction.

A stocktake is a full physical count of every item held in stock at a specific point in time, used to verify that inventory records match what is actually on hand and to identify any discrepancies.

A sub-contractor is a business or self-employed individual engaged by a contractor to carry out a defined part of a job under its own commercial terms, invoicing for the work rather than being paid through payroll. In UK construction, payments to them fall under the Construction Industry Scheme.

A sunk cost is a cost that has already been incurred and cannot be recovered, regardless of future action taken. Because the amount is irrecoverable, rational decision-making requires excluding sunk costs when evaluating whether to continue or stop an activity.