Business Glossary

114 terms

A

Ad hoc announcementMarkets

Mandatory disclosure (Ad-hoc-Mitteilung) under Article 17 of the EU Market Abuse Regulation, by which an issuer makes inside information that directly concerns it public without delay.

Advance lump sumInvestments

A minimum taxable return applied each year to investment funds in Germany when distributions fall short of the so-called base return (Vorabpauschale). It is based on the value of the fund unit at the start of the year and 70 per cent of the base interest rate, capped at the actual increase in value during the year.

Advance VAT returnFinance

Electronic return to the German tax office (Umsatzsteuer-Voranmeldung) in which businesses calculate their own VAT minus input VAT. It must be filed and paid by the tenth day after the end of the month or quarter.

AI ActInnovation

Regulation (EU) 2024/1689, the European AI regulation (in German: KI-Verordnung), in force since 1 August 2024. It grades the obligations of providers and deployers of AI systems according to the risk of the application.

AI literacyInnovation

The knowledge and skills needed to use AI systems competently and to assess their opportunities and risks. In the article “Where AI Actually Saves Work in Mid-Sized Companies”

Algorithmic stablecoinCrypto

A token whose price is meant to be kept stable by software that controls the supply, without a full reserve behind it. Such models are considered particularly vulnerable to a loss of confidence.

Annual recurring revenueBusiness

Revenue that recurs every year from ongoing contracts, ARR for short. In simple terms, it is monthly recurring revenue multiplied by twelve.

Asset dealBusiness

A business acquisition through the purchase of individual assets such as machinery, stock, the customer base and rights. In the article “Buy a Business or Start Your Own?”

Asset-referenced tokenCrypto

A crypto-asset under MiCA that is meant to keep its value stable by referring to other values or rights, such as a basket of currencies or commodities. In the article “Stablecoins: How They Work, Their Uses and Risks”

B

Balance sheet dateMarkets

Day to which a balance sheet refers, often 31 December. The balance sheet shows a company’s assets and financing at exactly this point in time.

Basic pensionFinance

Tax-advantaged retirement provision in Germany (Basisrente) with a lifelong monthly pension, whose entitlements cannot be inherited, transferred or used as collateral. In the article “Planning Personal and Business Finances Properly”

Bid-ask spreadMarkets

Difference between the best buy offer (bid) and the best sell offer (ask) for a security, often simply called the spread. In the article “How Does the Stock Exchange Work?”

Block rewardCrypto

Newly created bitcoin that a miner receives for successfully adding a block, in addition to the transaction fees. Since April 2024 it has been 3.125 bitcoin per block.

C

Capitalised earnings methodBusiness

A business valuation method (Ertragswertverfahren) that derives the value of a company from its expected future earnings and discounts them to the valuation date.

Cash flow forecastBusiness

A preview of incoming and outgoing payments that shows whether a company will be able to pay its bills on time in future. In the article “Revenue Is Not Profit: Why Businesses Still Run Short of Cash”

Cash reserveFinance

Freely available money held by a company (Liquiditätsreserve) that bridges short-term gaps between income and expenditure without new loans. In the article “Cash Reserves: The Questions Business Owners Should Answer”

Central counterpartyMarkets

Entity that steps in between buyer and seller in an exchange transaction and takes on the risk that one side fails to meet its obligations.

Central securities depositoryMarkets

Institution that records securities centrally and settles the delivery of securities against cash between the banks involved. In the article “How Does the Stock Exchange Work?”

ChurnBusiness

The cancellation rate, meaning the share of customers or of recurring revenue that is lost in a given period. In the article “Recurring Revenue: The Business Models Behind It”

Cold walletCrypto

A wallet whose keys are kept offline, for example on a hardware wallet. It offers better protection against remote access but requires more effort for every transaction.

Consensus estimateMarkets

Average of analysts’ estimates for a figure such as revenue or earnings per share before it is published. In the article “Why Share Prices Can Fall Despite Good News”

Consumer price indexFinance

Index calculated by the Federal Statistical Office (Verbraucherpreisindex) that measures the average change in the prices of goods and services bought by private households in Germany. In the article “How Inflation Changes Purchasing Power”

Contribution marginBusiness

Revenue minus variable costs, that is the amount that contributes to covering fixed costs and to profit. In the article “Revenue Is Not Profit: Why Businesses Still Run Short of Cash”

Core inflationFinance

Rate of price increase excluding the volatile categories of energy and food. It is intended to reveal the underlying price trend.

CouponInvestments

The fixed interest that the issuer of a bond pays on its nominal value. The actual yield differs from it if the bond is bought above or below its nominal value.

Crypto securityInnovation

An electronic security under the German Electronic Securities Act (eWpG) that is entered in a crypto securities register. In the article “Tokenisation: What It Could Change in the Economy”

Crypto-asset service providerCrypto

A company that provides services such as custody, trading or exchange of crypto-assets for clients on a commercial basis. In the EU this requires authorisation under the Markets in Crypto-Assets Regulation (MiCA).

Crypto-asset white paperCrypto

An information document that must be drawn up under MiCA for many crypto-assets. Among other things, it describes the issuer, the rights of holders, the technology used and the risks.

Customer acquisition costBusiness

Spending on advertising, sales and discounts divided by the number of newly won customers. In German it is called Kundengewinnungskosten.

Customer lifetime valueBusiness

The revenue or contribution margin that a customer is expected to bring in over the entire duration of the business relationship. In the article “Recurring Revenue: The Business Models Behind It”

D

Default interestBusiness

Interest that a debtor has to pay on the outstanding claim once they are in default (Verzugszins). For payment claims between businesses in Germany, it is nine percentage points above the base rate.

Deposit guaranteeFinance

Statutory protection of bank deposits (Einlagensicherung) that, in a compensation event, reimburses up to 100,000 euros per depositor and bank. In the article “Cash Reserves: The Questions Business Owners Should Answer”

Depreciation for wear and tearInvestments

Tax depreciation that spreads acquisition or production costs over the useful life of an asset (Absetzung für Abnutzung, AfA for short). For let property, it applies only to the building, not to the land.

DLT Pilot RegimeInnovation

An EU testing framework under Regulation (EU) 2022/858 that, since 23 March 2023, has allowed trading and settlement systems based on distributed ledgers, subject to conditions and caps.

DrawingsFinance

Money or assets that a sole trader takes out of the business for private purposes (Privatentnahme) and that do not reduce taxable profit. In the article “Planning Personal and Business Finances Properly”

Due diligenceBusiness

A careful examination of a company before purchase, in particular of its figures, contracts, staff and risks. In the article “Buy a Business or Start Your Own?”

E

E-money institutionInnovation

A company authorised by BaFin that issues electronic money and processes payments but does not accept deposits as a bank does. In the article “How Fintechs Are Changing Traditional Banking”

E-money tokenCrypto

A crypto-asset under MiCA whose value is meant to be kept stable by referring to exactly one official currency. In the article “Stablecoins: How They Work, Their Uses and Risks”

Early payment discountBusiness

A price reduction (Skonto) that a supplier grants for payment within a short period, for example 2 per cent for payment within ten days. Anyone who passes it up often effectively pays a high annual interest rate for the extra time to pay.

Embedded financeInnovation

Payments, financing or insurance offered directly within software, online shops or platforms (in German: eingebettete Finanzdienste).

Equity ratioMarkets

Equity as a percentage of the balance sheet total, a measure of a company’s financial independence. In the article “How to Read a Company Balance Sheet”

ETCInvestments

Exchange-traded commodity: an exchange-traded debt security that tracks the performance of a commodity such as gold. In the article “What Role Gold Can Play in a Portfolio”

F

Fixed asset coverageMarkets

Ratio showing the extent to which fixed assets are financed by equity, or additionally by long-term debt capital (Anlagendeckung in German). In the article “How to Read a Company Balance Sheet”

Fixed-rate periodInvestments

The period for which a fixed borrowing rate has been agreed on a loan (Zinsbindung). If it ends before the loan has been fully repaid, the interest rate on the outstanding balance is renegotiated.

Fixed-term deposit ladderFinance

Splitting a sum across several fixed-term deposits with staggered maturities (Festgeldleiter). This makes part of the money available at regular intervals.

Follow-up financingInvestments

New financing of the outstanding balance of a property loan once the agreed fixed-rate period has ended (Anschlussfinanzierung). In the article “Property as an Investment: Costs, Opportunities and Risks”

G

Generative AIInnovation

AI systems that create new content such as text, images, audio or computer code from instructions. In the article “Where AI Actually Saves Work in Mid-Sized Companies”

Gross rental yieldInvestments

The annual basic rent, excluding service charges, divided by the purchase price of a property, without incidental costs or running expenses. It serves as a quick first measure for comparing properties.

Guarantee bankBusiness

A specialist institution operating at the level of the German federal states (Bürgschaftsbank) that provides guarantees or sureties to a company’s bank when the company lacks sufficient collateral.

H

HallucinationInnovation

A plausible-sounding but false or invented statement made by an AI system. It is the main reason for always having AI output checked by people.

HalvingCrypto

The halving of the block reward for miners, which in Bitcoin takes place every 210,000 blocks and therefore roughly every four years. In the article “Bitcoin Explained”

Harmonised Index of Consumer PricesFinance

Price index calculated according to uniform European rules, HICP for short (HVPI in German), which makes the inflation rates of EU countries comparable. The European Central Bank measures its price stability target against the HICP for the euro area.

Hash valueCrypto

A digital fingerprint of fixed length that is calculated from any data. Even the smallest change to the data produces a completely different hash value.

Hot walletCrypto

A wallet whose keys are stored on a device with an internet connection, for example in a smartphone app. It is convenient but more vulnerable to attacks and malware.

I

Income tax advance paymentFinance

Quarterly payment towards expected income tax (Einkommensteuer-Vorauszahlung), which the German tax office generally sets on the basis of the most recent assessment. In the article “Planning Personal and Business Finances Properly”

Indexation clauseFinance

Contract clause (Wertsicherungsklausel) that links a sum of money, such as rent or a recurring payment, to an index like the consumer price index. In Germany, the Price Clause Act (Preisklauselgesetz) sets out when such clauses are permitted.

Instant credit transferInnovation

A euro transfer that is executed around the clock and is usually credited within ten seconds at most. In the article “How Fintechs Are Changing Traditional Banking”

Interest rate riskInvestments

The risk that the price of a bond falls because the general level of interest rates rises. In the article “ETFs, Individual Shares and Bonds Compared”

Interim paymentBusiness

A part payment for work already performed, made before the final invoice (Abschlagszahlung). For contracts for work, section 632a of the German Civil Code (BGB) governs the contractor’s right to it.

InteroperabilityInnovation

The ability of different technical systems to exchange data and assets with one another. For tokenised assets, it determines whether tokens can move between platforms.

Investment goldInvestments

Gold in bars or certain coins whose supply is exempt from VAT under Section 25c of the German VAT Act (Anlagegold). In the article “What Role Gold Can Play in a Portfolio”

L

Language modelInnovation

An AI model trained on large volumes of text that can understand, summarise and generate language. Language models are the basis of many writing and assistant tools.

Limit orderMarkets

Exchange order with a price limit: the buyer pays no more, and the seller accepts no less, than the set price. If the limit is not reached, the order remains unexecuted.

London Good DeliveryInvestments

The London Bullion Market Association's standard for wholesale gold bars, with a specified fineness, weight and set of markings. In the article “What Role Gold Can Play in a Portfolio”

M

Machine visionInnovation

The automatic analysis of camera images by software, used in manufacturing to detect scratches, dimensional deviations or missing parts, for example.

Maintenance reserveInvestments

A sum saved by a German owners' association for future repairs to the jointly owned parts of the building (Erhaltungsrücklage), formerly called Instandhaltungsrücklage. In the article “Property as an Investment: Costs, Opportunities and Risks”

Market makerMarkets

Trading participant that continuously quotes binding buy and sell prices for certain securities, thereby ensuring that they can be traded at any time.

MiningCrypto

The process in which specialised computers bundle transactions into blocks and secure them through computing work. In return, miners receive the block reward and the fees.

MRRBusiness

Monthly recurring revenue: a month’s revenue from regularly recurring contract charges, excluding one-off income. In the article “Recurring Revenue: The Business Models Behind It”

MultisignatureCrypto

A procedure in which a transaction only becomes valid once a set number of several authorised keys have signed it. In the article “Wallets and Custody: Who Controls the Keys?”

N

NeobankInnovation

A bank without its own branch network that offers accounts and other services mainly through an app.

Net rental yieldInvestments

Annual basic rent less non-recoverable costs and reserves, in relation to the purchase price including incidental purchase costs. In the article “Property as an Investment: Costs, Opportunities and Risks”

NodeCrypto

A computer that stores a copy of the blockchain and checks new transactions and blocks against the rules of the network.

O

One-off effectMarkets

Non-recurring income or expense, for example from a sale or a restructuring, that distorts the result of ongoing business. In the article “Why Share Prices Can Fall Despite Good News”

Open bankingInnovation

The opening of payment accounts to authorised third-party providers via interfaces, provided the customer consents. In the article “How Fintechs Are Changing Traditional Banking”

Order bookMarkets

Electronic register of all open buy and sell orders for a security, sorted by price and time of entry. In the article “How Does the Stock Exchange Work?”

Overdraft facilityFinance

A credit limit on the business current account (Kontokorrentkredit) that can be drawn on flexibly up to an agreed ceiling and paid back again. In the article “Cash Reserves: The Questions Business Owners Should Answer”

Owner's salaryFinance

Fixed amount that owners pay themselves regularly from their business (Unternehmerlohn). In a German sole proprietorship it counts for tax purposes as drawings; in a GmbH it is a managing director's salary.

P

Partial exemptionInvestments

The tax-free share of income from investment funds under the German Investment Tax Act (Teilfreistellung): 30 per cent for private investors in equity funds and 15 per cent in mixed funds. It offsets the fact that funds already pay tax themselves on certain income.

Payment initiation serviceInnovation

A service that, at the customer's request, initiates a transfer from their account at another bank, for example when paying in an online shop.

Price-earnings ratioMarkets

Share price divided by earnings per share, showing how many times its annual earnings a company is valued at on the stock exchange. In the article “Why Share Prices Can Fall Despite Good News”

Primary marketMarkets

Market on which securities are issued for the first time, for example in an initial public offering or a capital increase. The proceeds go to the issuing company.

Private keyCrypto

A secret number used to sign transactions digitally, which therefore gives control over crypto-assets. In the article “Wallets and Custody: Who Controls the Keys?”

Profit-takingMarkets

Selling securities after a price rise in order to lock in paper gains. When such sales pile up, they can push the price down temporarily.

Proof of workCrypto

A procedure in which computers solve a computational puzzle through extensive trial and error and thereby earn the right to add a new block to the blockchain. In the article “Bitcoin Explained”

ProvisionsMarkets

Items on the equity and liabilities side for uncertain obligations, for example for pensions or taxes, whose amount or timing is not yet precisely known. In the article “How to Read a Company Balance Sheet”

Public keyCrypto

A value derived from the private key that others can use to verify a digital signature. The address for receiving crypto-assets is formed from it.

Purchasing powerFinance

The quantity of goods and services that a given sum of money can buy at a particular point in time. In the article “How Inflation Changes Purchasing Power”

R

Real estate transfer taxInvestments

A tax on the acquisition of land or a property in Germany (Grunderwerbsteuer), whose rate each federal state sets itself. Depending on the state, it ranges from 3.5 to 6.5 per cent of the purchase price.

Real interest rateFinance

The interest rate after deducting the inflation rate, which shows whether a deposit gains or loses purchasing power. In the article “How Inflation Changes Purchasing Power”

Real wageFinance

Wage after deducting price increases. It shows whether employees can afford more or less with their income than before.

Recovery phraseCrypto

A sequence of usually 12 or 24 words under the BIP-39 standard from which all the keys of a wallet can be recalculated. In the article “Wallets and Custody: Who Controls the Keys?”

REITInvestments

Real estate investment trust: a listed property company with a high distribution requirement. A German REIT stock corporation must distribute at least 90 per cent of its annual net profit and in return is exempt from corporation tax and trade tax.

Retrieval-augmented generationInnovation

A method in which a language model first searches stored documents for relevant passages and bases its answer on them. In the article “Where AI Actually Saves Work in Mid-Sized Companies”

Right of redemptionCrypto

The right of the holders of an e-money token to demand that the issuer repay the equivalent value at par at any time. In the article “Stablecoins: How They Work, Their Uses and Risks”

S

SatoshiCrypto

The smallest unit of Bitcoin, equal to 0.00000001 bitcoin and named after the pseudonym of its inventor. In the article “Bitcoin Explained”

Saver's allowanceInvestments

The amount of investment income that remains tax-free each year in Germany (Sparer-Pauschbetrag): 1,000 euros, or 2,000 euros for married couples assessed jointly. With an exemption order, the bank takes it into account directly when deducting tax.

Secondary marketMarkets

Market on which securities that have already been issued are traded between investors. The company itself receives no money from these transactions.

Segregated fund assetsInvestments

Fund assets held separately from those of the fund management company (Sondervermögen under German law), which are not liable for the company's debts. In the article “ETFs, Individual Shares and Bonds Compared”

Share dealBusiness

A business acquisition through the purchase of the company’s shares, with the company continuing to exist with all its rights and obligations. In the article “Buy a Business or Start Your Own?”

Smart contractInnovation

Code stored in the register that automatically carries out agreed processes such as payments or transfers according to fixed rules. In the article “Tokenisation: What It Could Change in the Economy”

Status determination procedureFinance

Procedure at Deutsche Rentenversicherung Bund, the German federal pension insurance agency (Statusfeststellungsverfahren), that clarifies whether an activity counts as employment or as self-employment. This determines whether social security contributions are compulsory.

Stop-loss orderMarkets

Order that only becomes active once a set price level is reached and is then executed like a market order. It does not ensure a particular execution price.

T

Taxation on agreed considerationBusiness

Calculation of VAT on the basis of the agreed consideration (Sollversteuerung): the tax arises at the end of the advance return period in which the service was performed, regardless of when payment is received.

TERInvestments

The total expense ratio states a fund's ongoing costs as a percentage per year, which are deducted from the fund's assets. In the article “ETFs, Individual Shares and Bonds Compared”

TokenisationInnovation

The representation of a right to an asset as a digital unit in a distributed register. In the article “Tokenisation: What It Could Change in the Economy”

Trading incomeFinance

Basis of assessment for German trade tax (Gewerbeertrag), derived from the profit of the trading business with certain additions and deductions. For sole proprietorships and partnerships it is reduced by an allowance of 24,500 euros.

Trading surveillance officeMarkets

Body of a German stock exchange (Handelsüberwachungsstelle) that monitors trading and the settlement of exchange transactions under the German Stock Exchange Act. It records and evaluates trading data and investigates irregularities.

Transfer of businessBusiness

The transfer of a business or part of a business to a new owner by legal transaction (Betriebsübergang). Under section 613a of the German Civil Code (BGB), the new owner takes over the rights and obligations arising from the existing employment relationships.

Troy ounceInvestments

A unit of weight for precious metals equal to 31.1034768 grams of pure metal (Feinunze, fine ounce). International gold prices are usually quoted in US dollars per troy ounce.

V

Vendor loanBusiness

Part of the purchase price that the previous owner defers for the buyer and receives back in instalments (Verkäuferdarlehen). In a takeover, it reduces the need for bank loans.

Verification of payeeInnovation

A check of the payee's name against the IBAN before a transfer is made, which banks in the euro area have been required to carry out since 9 October 2025 (in German: Empfängerüberprüfung).

W

Weighting patternFinance

The weighting of the individual types of goods and services in the basket of the consumer price index (Wägungsschema), according to their share of private household consumption expenditure. It is usually updated every five years.

Working capitalBusiness

Capital tied up in day-to-day business, in simple terms stock and receivables minus short-term liabilities to suppliers. In the article “Revenue Is Not Profit: Why Businesses Still Run Short of Cash”

No term found. Let us know which term is missing.