Glossary of Terms

Learn all the terms you need to master your finances and grow your business.



A 1099 is a tax form used in the US. It is a record that an entity or person (not your employer) paid you money. For example, freelancers and contractors receive 1099 forms from their clients that reflect the money a client has paid to a freelancer.



ACH stands for Automated Clearing House. ACH is an electronic funds transfer system that facilitates payments within the US. These payments are always sent within the United States. ACH can be thought of as the American equivalent to the EFT system in countries like Canada or the SEPA system within the EU.


Accounts payable (AP):

Accounts Payable, or AP, is an accounting term that denotes the internal process of recording the money a business owes. It represents a company’s obligation to pay off a short term debt to its suppliers, creditors, or partners.


Accounts receivable (AR):

Accounts Receivable, or AR, is an accounting term that represents the money a business can expect to receive from their customers or partners. AR dues are usually requested in the form of an invoice.



AML stands for Anti-Money Laundering. AML laws require certain financial businesses (and their employees) to implement certain procedures and policies to prevent money laundering, fraud, and other financial crimes from occurring.



API stands for Application Programming Interface. APIs are used in software development to allow multiple applications to obtain data and interact with each other. In our case, Veem’s API allows users to implement Veem as a payments option for their business partners, without having to leave their platform.



Authentication is the process of  proving a person’s online identity. One way to validate a user’s identity is with a password and username. When further security measures are required, organizations may administer 2FA, or two-factor authentication. With this, a service requesting a user to authenticate their identity will do so by sending a passcode and instructions to the user’s associated device.



The “balance” of an account is the total amount of funds available to the account holder.



BIC stands for Bank Identifier Code. Like a physical address, BIC numbers provide financial institutions with instructions about where money should be directed when making an international transfer. A BIC defines where a specific financial institution is located around the world. BIC codes can be found by reviewing account statements, Googling the financial institution’s name, city, and “bic code,” or searching an online database.



Billing is defined as the process of making and sending invoices. Billing is how companies account for and charge accurately for work completed.



Bitcoin is the world’s most popular cryptocurrency.  Bitcoin, like other cryptocurrencies, is a digitally-traded currency not tied to the economy of a nation-state, as traditional (fiat) currencies are.



A blockchain is a peer-to-peer network of computers and servers known as nodes that both participate and monitor asset transfers. Every transfer is recorded by each node, generating a platform of trust based on several identical copies of the ledger. What makes blockchain technology so valuable is that it removes the need for a centralized third party, which improves efficiency, security and reliability for countless industries. Aside from cryptocurrency exchange, blockchain is used in diverse industries such as healthcare, marketing, and law.



B2B stands for business-to-business. It refers to any transaction that occurs between two or more businesses, whether large, small, or a sole proprietorship. For example, a business paying a supplier would be a B2B payment. Although technically one business exists as a customer, paying another business for products or services, the relationship differs from a business-to-consumer interaction in terms of logistics, marketing, and accounting.



B2C refers to business-to-consumer. It denotes any transaction that occurs between an individual consumer and a business. For example, when you purchase chips at the grocery store, that is a B2C payment.


Cash flow:

Cash flow is the net amount of money that moves through a business in a set period of time. In accounting, cash flow is calculated using the following equation: Cash from operating activities +(-) cash from investing activities + cash from financing activities = cash flow. Basically, cash flow is determined by subtracting what businesses pay for from what businesses get paid.



In finance, capital refers to wealth in the form of money or other assets that are available for a particular purpose, for example, starting a company. Capital can take the form of monetary loans, equipment, or expertise.


Certified check:

A certified check means both the signature of the account holder and the funds in the account have been certified by the bank. Therefore, certified checks can’t bounce due to insufficient funds, because the funds are ‘certified’ by the bank and have been designated for the beneficiary. Certified checks, similar to cashier’s checks, provide an additional layer of security and are often used for large purchases.



A check is a piece of paper issued by a bank on behalf of an individual or business that authorizes access to the recipient of the check to a specified amount of funds. Often used to purchase large items, checks are considerably slower than modern electronic payment  methods.



COGS stands for cost of goods sold. COGS refers to the direct costs of producing the goods sold by a company. COGS includes the cost of materials and labor directly used to create the good, but doesn’t include indirect expenses such as distribution, sales, or marketing.


Credit Risk:

Credit risk refers to the possible consequences resulting from a borrower’s failure to repay a loan or meet contractual obligations.



A cryptocurrency is a digital or virtual currency that is securely encrypted. A cryptocurrency is decentralized and thus a global digital currency, opposed to government-backed, legal tender known as fiat currencies. Popular cryptocurrencies include Bitcoin, Ether, and Ripple.



C2C or P2P refers to Consumer to Consumer or Person to Person. This acronym refers to any transaction that occurs between two individuals unrelated to a business transaction.



Disintermediation can be simply described as eliminating a “middle man,” or intermediary. This can add value to existing products or speed up services. An example of disintermediation is to invest directly in the securities market, rather than using the services of a bank, investment broker, or other intermediary.



Disruption occurs when new technology directly impacts the traditional processes of businesses and consumers. Disruptive technologies are technological advances that cause disruption, whereas disruptive innovation occurs when existing technologies are used in an innovative or different way. Historic examples of disruption include the popularity of the automobile, the rise of the television and its industry, and the proliferation of electricity. Modern disruptive technologies include artificial intelligence, GPS, facial recognition, and fintech, or financial technology. These technologies are considered ‘disruptive’ because they interrupted the status quo, spawned new products, or noticeably changed or created an industry.


Domestic Payment:

A domestic payment is a transfer of funds within the same country or region. For example, a payment from New York to Los Angeles would be considered domestic, because both cities are located in the United States.



Ecommerce refers to any business or commercial transaction conducted electronically through the internet.



EFT simply stands for Electronic Funds Transfer. An EFT is any computerized money transfer that doesn’t require direct contact with banking staff. An EFT can occur between two individuals or many, within a single financial institution or across multiple institutions within the same jurisdiction or banking zone, sent domestically or internationally. EFTs have many different names across different banking systems: in the US, they are commonly called electronic checks or e-checks, in the UK, the term “bank transfer” or “bank payment” is common. In Canada, “electronic transfer” or “e-transfer” is used, and many EU nations use the term “giro transfer.”



Encryption is the process of converting information into a code. Encryption is used to prevent unauthorized access to sensitive information. For example, Veem uses encryption to protect user’s banking information.



Escrow is a financial arrangement where a third party holds and regulates funds in a transaction between two parties. It protects both parties, since the funds are only released when the independent third party is satisfied that both parties have met the agreed upon conditions. When a payment is “in escrow,” it is being held and/or verified by an independent third party before being released to the transacting parties.



FI stands for Financial Institution. FIs include traditional banks, as well as other ‘nonbanks’ such as Western Union, Moneygram, and Veem.



Fintech is short for “financial technology.” Fintech refers to any technology that provides improved, automated, or new financial services. While fintech has become popular among modern businesses, it has actually been used for a long time and includes innovations such as ABMs (automated banking machines), credit cards, and wire transfers. Examples of recent fintech innovations include mobile banking apps, crowdfunding websites, and domestic and international payment providers like Venmo, PayPal, and Veem.



Float has many different definitions in business. In finance, a float is basically monetary purgatory. It occurs in the banking system when money briefly appears in both the sender and receiver’s accounts. This is due to time gaps a deposit or withdrawal and time delays in processing paper checks during weekends or holidays.



In law, fraud is an intentional financial deception for unfair or unlawful gain or interference with a person’s legal rights. Financial fraud occurs when money or other assets are taken from a victim through deception or criminal activity and is also known as a ‘scam’. Common types of fraud include wire transfer fraud, check fraud, tax fraud, or credit card fraud.



Freelancers, also known as gig workers or contractors, are independent workers who sell their services directly to other companies or consumers. Examples of common freelance jobs include copyediting, website design, graphics and videos, and IT. Freelancers are also known as outsourced workers or remote workers.


FX rate:

FX, forex, or foreign exchange rate is a measurement of the worth of one currency against another. For example, if the FX rate between EUR (euro) and USD (US dollar) is 1.3, then 1 US dollar is worth 1.3 Euros. FX rates are often quoted against EUR, USD, and the Swiss franc, as they are generally regarded as some of the most stable currencies worldwide. However, due to shifts in the global market, the value of a specific currency is nearly always fluctuating. Veem’s Locked Exchange Rates eliminates this currency exchange risk by allowing businesses to guarantee their rate up to 92 days in advance.



Generally speaking, a fee is the amount of money a company charges to perform a service or action for a customer.


Gig economy:

The gig economy is defined by short term projects or contracts. While rideshare drivers for companies like Uber or Lyft are popular examples of gig workers, the gig economy encompasses a wide range of workers, including freelancers, independent contractors, and part time staff. The rise of the gig economy can bring greater flexibility to workers, but it can also increase job instability and wage inequality.



IBAN stands for ‘International Bank Account Number.’ These centralized routing numbers identify the location of the receiver’s bank as well as their individual account. IBANs are used in over 69 countries, mainly in the Eurozone, Carribean, and the Middle East. While the United States and Canada are two major countries that do not issue IBANs, banks in these countries can recognize and process payments with the IBAN system.



An invoice is an official statement of goods or services that one business has sold to another, with the sum total due and the due date of payment. Invoices are also called bills or a statement of charge.


Interbank rate:

Interbank rate is the exchange rate used by banks, transfer services, and financial institutions when trading foreign currencies amongst themselves. The interbank rate is synonymous with the mid market rate.


Intermediary bank:

An intermediary bank is a bank that acts as a bridge between two other banks or financial institutions. When the SWIFT network processes a wire transfer, funds are sent from the payer’s bank to an intermediary bank (or multiple intermediary banks) and then to the payee’s bank if there is no direct relationship between both banks.


Intermediary fee:

An intermediary fee is any money charged by an intermediary bank during a transfer. Generally, these fees are known as “processing fees.”


International Payment:

An international payment is a transfer of funds where the payer and payee do not reside in the same country of region. International payments are often more expensive and slower than domestic payments, depending on the method or platform used, and due to the process of exchanging multiple currencies.



In finance, interest is a recurring charge for money borrowed. Interest builds as the repayment of debts is delayed.



KYC stands for Know Your Customer, a method of security measurement whereby analysts gain as much information about an individual as possible in order to determine the risk of offering services to said individual. KYC regulations were introduced to combat money laundering and other criminal activities. These rules require banks and other financial institutions to gather information about their customers, and to report certain types of suspicious activity.



Lending (also known as financing) is the action of allowing a person or organization the use of a sum of money under an agreement to repay it later. If you’re looking to add some working capital, check out Veem Capital.


Line of Credit:

A line of credit (LOC) is a form of lending that allows a user to access funds on demand, within a preset limit. A line of credit is commonly “revolving,” meaning that as long as the funds are repaid, a borrower can continue to access the same loan amount without having to reapply.


Mid market rate:

The mid market rate, sometimes called the interbank rate, is simply the midpoint between the buy and sell prices of two currencies. Institutions like banks use the mid market rate to determine their spread. When you Google “EUR to USD,” the mid market rate will appear.


Money order:

A money order is like a certified check, but instead of the bank guaranteeing the funds, the issuer prepays the amount. Money orders are like personalized cash, or cash that can only be used by the recipient. Because the issuer prepays the amount of the money order, banks do not require either the issuer or the recipient to have a bank account. Money orders often have a maximum dollar value limit, so they aren’t always suitable for large purchases or B2B payments.



Multi-rail technology is what Veem uses to determine the best method to transfer funds. We merged traditional systems with modern technology to offer customers better speeds, better tracking, and lower costs.


Net Terms:

In accounting, Net Terms refer to the amount of time a customer or client has to pay an invoice or bill. “Net” signifies that the full amount is due for payment. For example, if an invoice has “net 30” or “n 30,” the complete payment is due within 30 days.


Network effect:

A network effect is a phenomenon where each additional user of a network increases the overall value of the network itself. An example of a positive network effect would be telephones. The value of having a telephone increases with each additional telephone user. The 200th telephone purchased provided more value to its owner than the second, thanks to the added value of the network.



NSF stands for not sufficient funds. NSF occurs when an account has less money than the amount of the money requested. For example, if you have an account balance of $100.00 and attempt to make a payment for $101.00, the payment will fail due to NSF.



Outsourcing is a strategy whereby a business obtains goods or services from an outside or foreign supplier (as opposed to an internal supplier or ‘in-house’ employee). Processes like manufacturing, development, or customer service are often outsourced to save time, reduce costs, and take advantage of foreign expertise. With the rise of freelancers and the popularity of the gig economy, outsourcing has become a common strategy for global businesses.



During a monetary transfer, the payee is an individual who is receiving the funds. The payee accepts money from the payer.



During a monetary transfer, the payer is an individual who is sending the funds. The payer sends money to the payee.



In accounting, reconciliation is the process of ensuring the consistency and agreement of two sets of records. Reconciliation is used to ensure that the money leaving an account matches the actual money spent. Similar to ‘double checking your work,’ reconciliation can help prevent accounting errors and discover fraudulent or criminal activity.


Relationship-based payments:

Relationship-based payments are a model of asset transfer whereby the relationship between payer and payee is at the centre of the process. This model refutes traditional banking models of transfer, whereby intermediaries are placed between the payer and payee. Relationship-based payments use the strength of network effects to bring security, transparency, and disintermediation to the payment process. Veem’s relationship-based payment network is the first of its kind to place business relationships at the heart of the payment process.



Under American law, a remittance transfer is any transfer made by a consumer in the United States to another country. They are also known as international wire transfers, international money transfers, or simply remittances.



In business, revenue is the income that generates from normal business activities, usually from the sale of goods and services. Revenue is also known as sales or turnover, and can also be collected through interest, royalties, or other fees.


Risk assessment:

Risk assessment is the process of identifying and analyzing potential events that may negatively impact a business’ profitability, viability, or revenue. It is an essential part of risk management.


Risk management:

In business, a risk is anything that could potentially disrupt or damage your profitability or viability. Risk management is the process of identifying and preparing for these risks to better protect against threats, both internal and external.


Routing number:

A routing numbers is a unique numeric code used during money transfers to identify the payee’s bank and state. There are two different types of routing numbers, ACH routing numbers and wire routing numbers.



SEPA stands for the Single Euro Payments Area. It is an electronic funds transfer system that facilitates payments within the Eurozone. It is similar to the American ACH or the Canadian EFT.



SMB stands for small to medium-sized business. Small businesses are usually defined as having 1 to 100 employees, and medium sized businesses typically have 101 to 999 employees.



SPEI is used in Mexico to facilitate interbank electronic payments. SPEI stands for SISTEMA DE PAGOS ELECTRÓNICOS INTERBANCARIOS, or Interbank Electronic Payment System in English.



SWIFT stands for ‘Society for Worldwide Interbank Financial Telecommunication’. Unlike an IBAN, SWIFT codes do not identify a specific account, just the bank itself. For this reason, SWIFT codes are used to identify the receiver’s bank and IBAN codes are used to identify the receiver’s account during international money transfers. Note: SWIFT codes are also occasionally called BIC codes. These terms are synonymous.



A tariff is a tax or duty placed on a certain category of imported or exported goods. They are often shifted to exert political influence over other trading partner countries around the world.


Two-factor authentication:

Two-factor authentication (commonly abbreviated to 2FA) is a security process that requires a user to prove their identity twice. When logging in to a 2FA-enabled account, the user must not only enter the correct password, but also enter a unique passcode sent to a separate device. For example, when a Veem account has 2FA enabled, the user must log in to the account and then enter a unique passcode sent to an associated device. 2FA increases the security of an account and helps prevent unauthorized access from foreign parties.


Wire transfer:

A wire transfer is a method of sending funds electronically, typically used for international transactions. To send a wire transfer, you will need the SWIFT code, IBAN, and the name of your desired recipient. Depending on the platform, whether bank or payments processor, wire transfers can take up to a week to arrive, and can include costly fees for both the sender and the receiver. Wire transfers are also known simply as ‘wires’ or ‘bank wires.’


Working capital:

Working capital is a financial metric that represents the capital of a business used in day-to-day operations. To calculate working capital, subtract current liabilities from the business’ current assets.


Veem Capital:

Veem Capital provides SMBs with access to the funding they need. Businesses can get paid upfront, plan future cash flow, pay bills, and expand their business.


Veem Wallet:

The Veem Wallet is a way for users to receive, hold, or send payments without a traditional bank account. Just like a physical wallet, the Veem Wallet can be used to accept or send payments, or to simply hold funds until a later date.

This glossary provides general information and discussion about global business payments and related subjects. The content provided in this glossary (“Content”), should not be construed as and is not intended to constitute financial, legal or tax advice. You should seek the advice of professionals prior to acting upon any information contained in the Content. All Content is provided strictly “as is” and we make no warranty or representation of any kind regarding the Content.