Techlish – ever wondered what on earth your accountant is talking about?

Posted by Michael Foudy on September 7, 2017
  • “Techlish” according to the urban dictionary is defined as a very technical conversation in English.

  • Accountants, as with most other technical professions get into the habit of using specialised words and phrases, especially when we are in the professional zone and conversing with our colleagues and peers or intimating to our customers we know what we are talking about! at times this can be to the detriment of the customer as they wonder what on earth their accountant is talking about, therefore at Laxmi we would like to break down some accountancy techlish for you in a way that you will hopefully understand.

  • Profit margin

    What this is: the gross profit earned as a proportion of sales achieved, excluding general overheads such as rent, rates and administration costs

    Why this is important: This can be used to set financial targets eg. to ensure your business breaks even or generates the profits that you need. You can also measure the % margin against your business peers to see if you are competitive.

  • EBITDA

    What this is: the profit of your business excluding depreciation, interest and tax.

    Why this is important: This measures the underlying operational performance of your business. As different businesses will have different debt and investment levels this enables investors in your business to assess your ‘true’ financial performance.

  • Auto-Enrolment

    What this is: Mandatory workplace pension scheme for employers

    Why this is important: This is great for your employees but comes at a cost to your business. With contribution rates set to rise significantly from April 2018 the business owner will need to budget for this as this impacts the ‘bottom line’

  • Compound Interest

    What this is: Interest added to the initial loan value, or in other words interest on interest

    Why this is important: the headline interest rate for a loan may not be as enticing as initially expected.

  • Deferred Tax

    What this is and why is it important: We know what this is but it’s unlikely you need to know. We live in an information overloaded world, so why would we waste your time telling you about it?

    If there are any accountancy acronyms/terms that you do not understand or need further clarification in a way you can understand, please let us know.

    #domoreofwhatyoulovewithlaxmi

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