Procurement glossary: Costs & finance
94 terms on Costs & finance.
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- Account assignmentKontierungsfelder · account assignment · cost assignmentAccount assignment refers to the allocation of a business transaction – such as a purchase order, goods receipt or incoming invoice – to the correct G/L account
- Alloy Surchargealloy surcharge · ALZ · material surchargeThe Alloy Surcharge is a variable price component that passes fluctuations in alloying metal costs – such as nickel, chromium, molybdenum or cobalt – between th
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- Bank GuaranteeBank suretyship · Guarantee · Advance Payment GuaranteeThe bank guarantee (Bank Guarantee) is an instrument by which a bank independently undertakes to pay, or to ensure contractual performance, to a third party on
- Bank Guarantee/SuretyshipBank guarantee · Guarantee on first demand · Performance GuaranteeA bank guarantee or suretyship is a liability-covering instrument whereby a bank or insurer, on behalf of its customer, assures the fulfilment of a contractual
- Bank statement reconciliation (AP)Accounts Payable Reconciliation · AP reconciliation · Supplier account reconciliationBank statement reconciliation in Accounts Payable (AP) is the systematic reconciliation of payments posted on the bank account with open and settled liabilities
- BIC/SWIFTSWIFT code · SWIFT BIC · Bank Identifier CodeBIC/SWIFT is the international Bank Identifier Code used to uniquely address banks worldwide. For buyers and supply chain managers, the correct BIC is particula
- BudgetingBudgeting · Budgeting process · Zero-base budgetingBudgeting refers to the process of planning, allocating and controlling financial resources in terms of volume and value for defined periods, organisational uni
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- Capital binding periodKapitalbindung · Capital Binding Period · Cash Conversion CycleThe capital binding period describes how long capital is tied up on average until it flows back as means of payment after an investment or procurement. In procu
- Cash Against Documents (CAD)Cash Against Documents · CAD · Documents Against PaymentCash Against Documents (CAD) is a payment and security instrument in foreign trade in which payment to the supplier is tied to the presentation of defined trade
- Cash discount calculationCash discount deduction · Supplier cash discount · Payment discountCash discount calculation assesses a supplier's discount offer for early payment in relation to your own financing costs. It determines whether taking a cash di
- Cash discount processcash discount deduction · payment-term discount · Cash Discount ProcessThe cash discount process covers all steps from the purchase order to payment within the discount deadline: verification of payment terms, invoice approval, sch
- Cash Discount Utilisation RateEarly Payment Discount Rate · Cash Discount Utilization Rate · SkontonutzungsquoteThe cash discount utilisation rate indicates what proportion of procurement volumes is paid while taking advantage of cash discount. It is one of the most impor
- Cash Flow Impact of Payment TermsPayment Terms Impact on Cash Flow · Payment Period Effect · Payables Term EffectThe cash flow impact of payment terms describes how agreed payment periods towards suppliers and customers steer a company's liquidity. Cash inflows and outflow
- Cash-to-Cash CycleCash Conversion Cycle · CCC · Cash-to-Cash CycleThe cash-to-cash cycle (also cash conversion cycle, CCC) describes the period between paying money out to suppliers and the inflow of payments from customer sal
- Commodity Price VolatilityRohstoffpreisvolatilität · Commodity Price Volatility · MaterialpreisvolatilitätCommodity price volatility refers to fluctuations in the market prices of commodities such as metals, plastics, electronic components or energy sources over sho
- Cost BreakdownCost Breakdown · Cost Structure Breakdown · Cost DecompositionThe cost breakdown, also known in German as Kostenaufschlüsselung or Kostenstrukturaufstellung, is the detailed breakdown of the price of a service or component
- Cost-Benefit AnalysisCost-Benefit-Analyse · Nutzwertanalyse · TCO-AnalyseThe cost-benefit analysis is a systematic method for evaluating measures, projects or procurement decisions in which all identifiable costs and benefits are com
- Cost-markup calculationAufschlagsrechnung · Aufschlagskalkulation · ZuschlagsrechnungThe cost-markup calculation is a product costing method in which the selling price of a product or service is determined by applying a percentage profit and ris
- Credit checksBonitätsanalyse · Kreditwürdigkeitsprüfung · Credit CheckA credit check is the systematic assessment of the financial performance capability of a business partner, in particular its ability to meet contractual obligat
- Credit NoteCredit Note · Kreditbeleg · RechnungskorrekturbelegA credit note is a commercial document by which a seller or supplier reduces a receivable in full or in part or refunds money to the customer. In industrial pro
- Credit Note Procedure (ERS)ERS · Evaluated Receipt Settlement · Pay from ReceiptThe credit note procedure, internationally also known as Evaluated Receipt Settlement (ERS), is a method for processing supplier payments in which the invoice i
- Currency hedging (FX)FX Hedging · Devisenabsicherung · Currency HedgingCurrency hedging (foreign exchange hedging, FX) refers to the protection of cash flows and contract values against fluctuations in exchange rates. In industrial
- Currency Risk in ProcurementExchange rate risk in procurement · Foreign currency risk · Currency RiskCurrency risk in procurement refers to the danger that exchange rate fluctuations between the purchasing currency and the reporting currency negatively affect p
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- Days Sales Outstanding (DSO)Receivables days · Debtor days · DSODays Sales Outstanding (DSO) is a business KPI that indicates how many days, on average, elapse between invoicing and payment receipt from the customer. For buy
- Down PaymentDown Payment Guarantee · Advance Payment · Advance PaymentThe down payment is a partial payment made by the buyer to the supplier before full performance has been rendered. It secures the binding nature of a contract,
- DPO Impact SimulationDays Payable Outstanding Simulation · DPO Simulation · Payment Term SimulationThe DPO impact simulation is a quantitative planning method with which buyers and finance functions simulate the effects of changed payment terms on Days Payabl
- Dynamic discountingvariable discount terms · tiered discount · dynamic discountingDynamic discounting is a variant of the early payment discount in which the deduction amount or period is agreed flexibly rather than fixed. Unlike classic disc
- Dynamic DiscountingDD · dynamic early payment discount · flexible discountingDynamic discounting denotes a method of supplier financing management in which payment terms and early payment discounts are not fixed rigidly but negotiated an
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- Early payment discount (Skonto)Zahlungsskonto · Bargeldrabatt · Cash discountAn early payment discount (Skonto) is a price reduction granted by a supplier if the invoice amount is settled within a short period, typically 8 to 14 days. Fo
- Early Payment Discount InvoicesSkonto · cash discount · early payment discountAn invoice with early payment discount (Skontorechnung) is an invoice on which the supplier grants the buyer a price reduction for payment within a short period
- Early payment programmeEarly Payment · Early payment · Discount programmeAn early payment programme is an agreed procedure whereby a buyer settles supplier invoices before the actual payment term – typically in return for a discount
- Energy price surchargeEnergiezuschlag · Energy surcharge · EnergiekostenzuschlagThe energy price surcharge is a contractually agreed or unilaterally announced price increase by which suppliers pass on increased costs for electricity, gas or
- Evaluated Receipt Settlement (ERS)ERS · Self-billing · Invoice deductionEvaluated Receipt Settlement (ERS) is a supplier settlement method in which payment is generated not on the basis of a supplier invoice, but automatically from
- Exchange rate clauseWährungsklausel · Währungssicherungsklausel · Currency ClauseThe exchange rate clause is a contractual provision governing how fluctuations between the currencies involved affect prices, price adjustments or the performan
- Exchange Rate FixingFixed-rate agreement · Rate fixing · Currency HedgingExchange rate fixing is a contractual or financial arrangement by which buyers and suppliers fix the conversion rate for future payments for a defined period. I
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- Factoringsale of receivables · reverse factoring · supply chain financeFactoring is the ongoing sale of outstanding customer receivables to a factoring company, which in return pays out the receivables value immediately, less fees.
- Factoring in procurementSupply Chain Finance · Reverse Factoring · Supplier FinancingFactoring in procurement refers to the deliberate use of factoring arrangements to optimise payment flows between companies and suppliers. While classic factori
- ForfaitingForfaiting · Non-recourse purchase of receivables · Non-recourse receivables saleForfaiting refers to the sale of receivables from goods and services – typically export receivables – to a forfaiting company, whereby the seller is fully relea
- Forwards & SwapsForward Contract · Commodity Swap · Currency ForwardForwards and swaps are financial instruments that allow buyers to hedge commodity, energy and currency risks. They make it possible to bindingly fix prices or i
- Functional cost accountingfunctional cost accounting · funktionsbezogene Kostenrechnung · FunktionserfolgsrechnungFunctional cost accounting is a form of cost accounting that assigns costs not by cost centre or cost object but by operational functions such as procurement, m
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- IBAN verificationIBAN validation · IBAN check · International Bank Account NumberIBAN verification is the systematic check of international bank account numbers for formal correctness and plausibility before a payment is executed. In B2B pro
- Incoming invoiceKreditorenrechnung · Vendor Invoice · EingangsrechnungsprüfungThe incoming invoice is the invoice that a supplier issues to the procuring company once the service has been rendered. It documents the financial claim arising
- Interim paymentsAbschlagsrechnung · Teilzahlung · Milestone PaymentAn interim payment is a part payment on a delivery or contract for work not yet fully rendered, usually made after measurable project progress or agreed milesto
- Internal Transfer PricesTransferpreise · Transfer Prices · interne LeistungsverrechnungInternal transfer prices are the prices at which services and goods are charged between group-affiliated entities. They steer the economic collaboration between
- Invoice Approval WorkflowInvoice approval process · Invoice Approval Workflow · Accounts payable invoice workflowThe invoice approval workflow describes the structured process by which incoming supplier invoices are checked, posted and approved by authorised parties within
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- Letter of Credit BusinessLetter of Credit · L/C · Documentary CreditLetter of credit business is a payment and safeguarding instrument in foreign trade whereby a bank, on behalf of the buyer, undertakes to pay the seller provide
- Life Cycle CostingLife Cycle Costing · LCC · life cycle cost analysisLife cycle costing (LCC) captures all costs of a product, plant or service over its entire life cycle – from procurement through operation and maintenance to di
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- Netnet 30 · payment term · payment termsIn procurement, net refers to the agreement to pay an invoice net – i.e. without any deduction of early payment discount – within a defined period, typically ex
- NettingBilateral Netting · Multilateral Netting · Balance SettlementNetting refers to the mutual offsetting of receivables and payables between business partners, so that only the balance is paid. In industrial procurement, this
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- On-Time Payment RateOTPR · punctual payment ratio · payment reliabilityThe On-Time Payment Rate (OTPR) measures the proportion of supplier invoices paid on time by the agreed payment due date. It is a key financial and supplier met
- Order-to-CashO2C · Order to Cash · order processing processOrder-to-Cash (O2C) refers to the end-to-end process chain that begins with order acceptance and ends with receipt of payment. In DACH industry, O2C connects sa
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- Payment RunPayment Run · Payment Run Process · Creditors Payment RunA payment run refers to the bundled, scheduled process of executing payments to suppliers, typically in fixed cycles within a company's finance or procurement f
- Payment ScheduleZahlungsplanung · Payment Schedule · LiquiditätsplanA payment schedule is the structured scheduling of all incoming and outgoing payments over a defined planning period. In industrial procurement, it determines w
- Payment Term AdherencePayment Term Compliance · Payment Terms Compliance · Term AdherencePayment Term Adherence describes the extent to which the procurement organisation and suppliers actually comply with the contractually agreed payment terms. The
- Payment Termspayment period · early payment discount · payment termsPayment terms govern when and in what form a buyer is to settle the supplier's invoice. They cover the payment period, early payment discounts, payment method a
- Payment TermsTerms of payment · payment deadline · payment conditionsPayment terms are the contractually agreed terms of payment between buyer and supplier, in particular the payment deadline, payment method and any discounts suc
- Payment Terms OptimisationDays Payable Outstanding · DPO · Supplier Payment TermsPayment terms optimisation refers to the systematic design and extension of payment terms towards suppliers without jeopardising their liquidity and delivery re
- Performance BondPerformance Guarantee · Contract Bond · Contract Performance SuretyA Performance Bond is a guarantee or surety through which a contractor secures due contractual performance towards the contracting party. In industrial procurem
- PrepaymentPrepayment · Advance Payment · Down PaymentPrepayment is a payment term under which the buyer pays the purchase price or a down payment before the supplier ships the goods or delivers the service. It shi
- Price deviation workflowPrice Deviation Workflow · Preistoleranzprüfung · PreisabweichungsprozessThe price deviation workflow is a defined review and approval process by which deviating prices between purchase order, delivery schedule and incoming invoice a
- Price FormationPrice Formation · Pricing · Price FindingPrice formation refers to the overall process by which market prices for goods and services emerge – through supply and demand, cost structures, the competitive
- Price index linkageIndexation · Price adjustment clause · Escalation ClausePrice index linkage is a contractual agreement under which the price of a good or component automatically adjusts to the development of a defined price index. F
- Price IndexationIndex clause · Price adjustment clause · Price escalation clausePrice indexation refers to the contractual linking of purchase prices to objective reference values such as commodity exchange prices, consumer price indices or
- Process costingActivity-Based Costing · ABC costing · process costingProcess costing is a cost and performance accounting method that allocates overheads to products, customers or functions on the basis of activities and process
- Process costsProzesskostenrechnung · Transaktionskosten · Process CostsProcess costs are the costs incurred in companies from carrying out recurring workflows – from the purchase requisition through the purchase order to invoice ve
- Procurement budgetBeschaffungsbudget · Procurement Budget · EinkaufsetatThe procurement budget is the planned financial framework for all procurement expenditure of a company within a defined period, typically a financial year. It c
- Product cost calculationCalculation · Cost Breakdown · Should-Cost AnalysisProduct cost calculation is the systematic determination of all costs incurred in manufacturing a product – from material and labour to machinery and tooling th
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- Raw Material IndexationPrice escalation clause · Indexation clause · Price escalationRaw material indexation refers to the contractual linking of purchase prices to the movement of defined raw material or reference indices. It creates transparen
- Raw Material SurchargeRohstoffzuschlag · Materialzuschlag · Raw Material Surcharge ClauseRaw material surcharge refers to a price surcharge itemised separately by the supplier that passes fluctuations in raw material costs through to the end product
- Rebatesdiscount · reimbursement · retro bonusA rebate refers to contractually agreed discounts or reimbursements that suppliers grant to buyers depending on call-off volumes, turnover development or other
- RetentionRetention · Payment holdback · WithholdingRetention refers to a portion of the agreed remuneration that the client withholds from invoice payments and releases only once defined conditions have been met
- Return on investmentROI · return on capital · return on investment ratioReturn on investment (ROI) is a metric that expresses the ratio of profit or benefit to the invested capital costs. In industrial procurement, it is used to eva
- Reverse FactoringSupply Chain Finance · SCF · Confirmed PayablesReverse factoring, also known as supply chain finance (SCF) or confirmed payables, is a financing instrument in which a buyer has the invoices of its suppliers
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- Self-BillingSelbstabrechnung · Selbstfakturierung · KundenrechnungSelf-billing refers to a process in which the customer creates the invoice for delivered goods and services themselves and submits it to the supplier for confir
- Set-OffOffset · Aufrechnung · VerrechnungSet-Off refers to the offsetting of receivables, whereby two companies offset mutual payment claims against each other so that only the balance needs to be sett
- Substantive Invoice Verificationfachliche Rechnungsprüfung · inhaltliche Rechnungsprüfung · Invoice VerificationSubstantive invoice verification is the professional check of whether a delivery or service has actually been rendered in full and in accordance with the contra
- Supplier bank data verificationBank data verification of suppliers · Supplier Bank Account Verification · IBAN validationSupplier bank data verification is a control process in which the procurement and finance departments verify suppliers' bank details before payments are made. I
- Supplier Credit LimitLieferantenkreditlimit · Supplier Credit Limit · Lieferanten-Credit-LimitThe supplier credit limit is the maximum permitted open financing or goods value that a company allows towards a single supplier. It caps the default risk, e.g.
- Supplier financial riskSupplier Financial Risk · Lieferantenausfallrisiko · Financial Risk of SupplierSupplier financial risk describes the danger that a supplier, due to its financial situation, cannot fulfil its contractual delivery obligations, or can only do
- Supply Chain FinanceSCF · supply chain financing · reverse factoringSupply Chain Finance (SCF) refers to financing solutions that optimise payment flows between buyer and supplier. At its core, it is about enabling suppliers to
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- Target costingTarget Costing · Target Costing Process · Design-to-CostTarget costing is a method in which the permissible cost frame for a product or component is derived from the price achievable in the market – and not, the othe
- Target costingTarget cost calculation · Target cost management · Target Costing SystemTarget costing is a market-oriented method of cost planning in which the permissible price of a product is dictated by the market and the permissible costs are
- Technical Invoice Verificationsubstantive invoice verification · invoice verification · technical invoice checkTechnical invoice verification is the substantive reconciliation of an incoming invoice against the purchase order and the receipt of goods or services. It ensu
- Three-Way Match3-way match · three-way match · 3-Way MatchThe three-way match is a verification procedure in the procurement process in which the purchase order, goods receipt and invoice are systematically checked for
- Tooling DepositWerkzeugbürgschaft · Werkzeugsicherheit · Tool DepositA tooling deposit is a financial security that a commissioning party provides to a toolmaker or supplier for tools it has financed, or conversely demands from t
- Total Cost of OwnershipTotal Cost of Ownership · TCO · Life Cycle CostsTotal cost of ownership (TCO) captures all costs incurred by a procured item over its entire life cycle – from acquisition through operation, maintenance and en
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- Vendor Master DataLieferantenstammdaten · Creditor Master Data · Vendor Master DataVendor master data are the master records of all suppliers in a company's ERP or financial system. They include address data, bank details, payment terms, tax i
- Volume price breakTiered price · Volume discount · Block priceA volume price break is a tiered pricing model in which the unit price falls as the order quantity increases. For technical buyers it is one of the central inst
- Volume rebateMengenrabatt · Volume Discount · JahresbonusA volume rebate refers to contractually agreed discounts granted by a supplier when the buyer reaches a defined purchase quantity or turnover threshold within a