Glossary
Cashflow, in plain English.
The terms you’ll meet in Lucid and in our guides, explained in a sentence or two.
- Cashflow forecast
- An estimate of the money coming into and going out of your bank account over a future period, showing the balance you’ll have at each point.
- 13-week cashflow forecast
- A week-by-week forecast covering the next quarter. Long enough to see VAT, payroll and quarterly bills coming; short enough to be accurate.
- Cash runway
- How long your current cash would last at your current rate of spending, if nothing else came in.
- Lowest point
- The smallest balance your forecast shows over the period. The single most useful number in any cashflow forecast.
- Cash buffer
- The minimum balance you choose to keep for safety. Many owners aim for at least one month of fixed costs.
- Direct method
- Building a forecast from the actual receipts and payments you expect, rather than adjusting profit figures. Best for short-term forecasts.
- Aged debtors
- A list of unpaid customer invoices grouped by how overdue they are, for example 0–30, 31–60 and 61–90 days.
- Debtor days
- The average number of days customers take to pay you. Lucid works this out for each customer separately.
- Working capital
- Your current assets (cash, money owed to you, stock) minus your current liabilities (bills, tax and short-term debt due within a year).
- PAYE
- Income tax and National Insurance deducted from wages. Usually due to HMRC by the 22nd of the following tax month if you pay electronically.
- VAT quarter
- The three-month period a VAT return covers. Payment is normally due one calendar month and seven days after the period ends.
- Time to Pay
- An arrangement with HMRC to pay a tax bill in instalments. Ask before the payment is due.
- Invoice finance
- Borrowing against unpaid customer invoices, so you get most of the money before the customer pays.
- Statutory interest on late payment
- Interest a business can claim on late business-to-business invoices under UK late payment law, currently 8% above the Bank of England base rate.
- Payroll Safety Light
- Lucid’s at-a-glance signal showing whether your next payroll, and the PAYE and pension that follow it, are covered.
- Verdict
- Lucid’s plain-English daily answer: nothing to do, or act this week, with the reason and the amount.
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