Financial English: 13 Key Words and Phrases you Need to Know

financial English

Financial English is a particular branch of the English language with a huge number of specific words and phrases. Although you may have come across some of the terms in general English, there are many that are unique to the area of finance and banking.

If you work in the finance sector or have regular interaction with finance departments in English, then this post is for you! To help you expand your financial English vocabulary, here are 13 of the most commonly used finance terms in English.

1. Accounts Payable

You may see this abbreviated to A/P in some financial communications. Accounts Payable is a term used to refer to the amount due for a service or product which was bought on ‘credit’ — which means buying without paying up-front but the amount is due by a certain date.

The majority of us have ‘accounts payable’ when we consume electricity or internet connection, we use the service and pay later for the set period. Companies can do the same thing with other services, materials or goods.

Example: The accounts payable to the suppliers make up a fraction of our unpaid bills.

2. Audit

An audit is an official examination and report of the company accounts, usually conducted by an external and independent auditing body. The process is to ensure that all transactions are recorded and the financial statements of the organisation are accurate.

Example: Our department will have an audit at the end of the financial year.

3. Cash Cow

A cash cow could be seen as the financial world’s answer to the ‘piggy bank’! A cash cow is a business and financial idiom used to describe a service, business or product which makes a considerable amount of money over a long period of time with little input or effort.

The cash steadily coming in from the ‘cash cow’ is usually used to support other business activities. The metaphor is used as the business produces money like a cow produces milk.

Example: The property purchased last year turned out to be a real cash cow.

4. Interest Rate

The interest rate is the amount a bank or money-lender will charge when money is borrowed from them. The interest rate is usually shown as a percentage. When an individual or a company takes out a loan, you must repay the loan amount plus the interest. 

Example: We decided to go with the other bank as their interest rate was much lower.

5. Break Even

Break-even is a phrase referring to the point in a business venture where the investment costs and the profit are equal to each other. It can also be used as an adjective to describe an investment which has seen no profit, but also no loss.

Example: We will be lucky to break even this year.

6. In Good Shape

You may hear the phrase ‘in good shape’ used to describe the company’s financial state or budget. It basically means that the numbers are looking good, that the financial situation is strong and healthy.

Example: The budget is in good shape, for now, so we can afford to take on new staff.

7. Balance Sheet

A balance sheet is a document which details the company accounts, usually at the end of the financial year. It is a list of the company’s assets, what it owes and what’s left after the debts are paid. It gives a general overview of the financial situation of a company.

Example: The rise in interest rates this year is really going to hit our balance sheet hard.

8. The Bottom Line

The bottom line can be used in a few different ways. It can refer to the literal ‘bottom line’ or final figure in the balance sheet or a bank statement. 

Example: How will the rise in interest rates affect our bottom line?

It can also mean the most important factor in a situation that must be considered when making a decision.

Example: The bottom line is, that it’s just not cost effective.

Or, it can refer to the lowest price that someone will accept for payment of goods or services.

Example: Absolutely not, our bottom line is fixed at $15,000.

9. To Be In the Red

If the business bank accounts are ‘in the red’, then they are ‘overdrawn’. This means that they have taken out more money than they had in the bank. The account has gone below zero into minus figures and the company owes money to the bank.

Example: We’ve been operating in the red for the past year, but things are improving.

10. Quarter

If you happen to be in a meeting to discuss the performance of the company over the course of a year, then you are very likely to hear the term ‘quarter’. The word ‘quarter’ means a period of 3 months, as companies tend to divide their financial year into four quarters. 

Example: Figures for this quarter have been excellent, keep up the good work!

11. Profit

Profit is what every company wants to have! Profit describes the amount of money a company has after all the costs, such as expenses, taxes, and staffing have been deducted and the bills paid.  

Example: The new product has seen our company’s profits increase by 20%.

12. Loss

The opposite of profit (money made) is ‘loss’…money that is obviously, lost! It’s not a word you want to hear in your financial business, but one you’re likely to encounter at some point in your career. 

Example: Since stopped advertising, our sales revenue has suffered a loss of 15%.

13. Forecast

No, we’re not talking about the weather this time! In the finance world, the forecast is the prediction of a business’s future based on its current situation. There are different types of business forecasts including profit and loss forecasts, and sales forecasts. The basic purpose of a forecast is to help businesses plan for the future and to avoid running out of money!

Example: The forecast indicates an increase in sales for the next year at least.

Improve Your Financial English Vocabulary

Adding more words and phrases to your vocabulary bank is a great way to boost confidence in your language abilities. Vocabulary makes it easier to understand and be understood in your business communication.

Do you know any other financial English phrases? Share them with the community in the comments box below!

If you would like to discover more ways to improve your business English, then check out the FREE audiobook or sign up to the Business English Community for even more resources.

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