Glossary

Financial glossary

Financial metrics in plain language. Every term explained as if you didn't have an accountant in the room.

DSO — Days Sales Outstanding

Definition: The average number of days between delivering a service and receiving the matching payment.
In practice: If your DSO is 45 days, the money you earned today lands in your account 45 days from now.
Why it matters: A high DSO forces you to fund your operations out of your own pocket while you wait to get paid.

DPO — Days Payable Outstanding

Definition: The average number of days you take to pay your suppliers after receiving their invoices.
In practice: A DPO of 30 days means you hold the money owed to suppliers for 30 days before paying.
Why it matters: Extending your DPO (legitimately, through negotiated terms) improves your cash flow without touching revenue.

DIO — Days Inventory Outstanding

Definition: The average number of days your materials or inventory sit in stock before being used.
In practice: Goods sitting in a warehouse or a truck are cash tied up that isn't working for you.
Why it matters: Ordering just what you need, when you need it, frees up capital without changing your revenue.

CCC — Cash Conversion Cycle

Definition: DSO + DIO − DPO. The number of days between spending money and getting it back.
In practice: A negative CCC means your clients pay you before you have to pay your suppliers — the ideal position.
Why it matters: A long CCC is the number-one reason a profitable business runs out of cash.

Gross Margin / Marge brute

Definition: Revenue minus the direct costs of doing the work (materials, direct labour, subcontractors).
In practice: If you do $100,000 in revenue and your jobs cost $65,000 to deliver, your gross margin is 35%.
Why it matters: It's the starting point — if your gross margin is weak, nothing downstream can make up for it.

Net Margin / Marge nette

Definition: What's left after paying absolutely everything — direct costs, overhead, salaries, taxes, interest.
In practice: It's the percentage of every revenue dollar that actually ends up in your pocket at year end.
Why it matters: Most owners confuse gross and net margin — the gap between the two is where real performance hides.

EBITDA

Definition: Earnings before interest, taxes, depreciation and amortization. Operating profitability without the effect of financing and accounting.
In practice: It's the first number a buyer or a bank looks at to gauge a business's health.
Why it matters: Useful for comparisons and financing — but careful, it hides the real need to reinvest in equipment.

Contribution Margin / Marge sur coûts variables

Definition: Revenue from a job, client or segment minus the variable costs specific to it — what's left to cover your fixed costs.
In practice: Two jobs at the same price can have very different contribution margins depending on drive time, materials and the crew involved.
Why it matters: It's the tool that reveals which jobs, clients or regions actually make you money versus the ones that just keep you busy.

LTV — Lifetime Value

Definition: Total revenue a client generates over the whole life of their relationship with your business.
In practice: A $500 client who comes back every year for 7 years is worth $3,500 — not $500.
Why it matters: Knowing who your most valuable clients are lets you focus your effort where it pays off most.

CAC — Customer Acquisition Cost

Definition: The total cost to win a new client — advertising, sales time, travel, everything included.
In practice: If you spend $200 in time and travel to sign a $500 client, your CAC is $200.
Why it matters: Your LTV:CAC ratio should be at least 3:1 — below that, you're buying clients at a loss.

AR Aging / Vieillissement des créances

Definition: Sorting all your unpaid invoices by age — 0–30 days, 31–60, 61–90, 90+.
In practice: An invoice unpaid for 90 days is far less likely to be collected than one that's 15 days old.
Why it matters: Very old receivables look like assets on a balance sheet but are often lost money no one has formally written off yet.

Revenue Concentration / Concentration des revenus

Definition: The percentage of your total revenue coming from a small number of clients or contracts.
In practice: If a single client is 40% of your revenue, losing them cuts your top line by 40% overnight.
Why it matters: High concentration is a silent existential risk — everything's fine until the day it isn't.

Revenue per Employee / Chiffre d'affaires par employé

Definition: Total annualized revenue divided by the number of active employees.
In practice: If you do $600,000 a year with 4 employees, your revenue per employee is $150,000.
Why it matters: A low number signals either a productivity problem or under-pricing — often both.