Glossary

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3PL — third-party logisticsBusiness

An external provider that stores, picks, packs and ships your stock. Useful once order volume makes doing it yourself a poor use of time, but the cost per order and the service levels need to be modelled before signing.

A

Accounts receivable and payableBusiness

Receivables are what customers owe you; payables are what you owe suppliers. The gap between the two, and the dates on which each fall due, largely determines whether a business is comfortable or permanently under pressure.

Accrual vs cash accountingBusiness

Accrual accounting records income and costs when they are earned or incurred; cash accounting records them when money actually moves. Most reporting uses accrual, while survival depends on cash — which is why both views are needed.

Air waybill / sea waybillTrade

Non-negotiable transport documents under which the named consignee takes delivery on identity rather than by presenting an original. Simpler and faster than a bill of lading, and appropriate when payment does not depend on controlling the goods.

Anti-dumping dutyTrade

An additional duty imposed on imports found to be sold below fair value in the importing market. It is product- and origin-specific, so two visually similar products from different countries can attract very different total rates.

B

Bill of ladingTrade

A transport document issued by the carrier that also functions as a document of title — whoever legally holds the original can claim the goods. That is why banks accept it as security under a letter of credit. Not to be confused with a sea waybill, which is not negotiable.

Break-even pointBusiness

The sales volume at which total contribution equals fixed costs, so neither profit nor loss is made. Calculated as fixed costs ÷ contribution per unit, rounded up. It is a moving target: hiring or a rent increase moves it immediately.

Burn rateBusiness

The rate at which a business consumes cash, normally stated per month. Net burn accounts for incoming revenue; gross burn ignores it. Runway and burn rate are two views of the same question.

C

Caffeine declarationWellness

The requirement in some markets to state caffeine content and carry a warning above defined thresholds. It applies to the finished serving, not to each ingredient, so blends of tea, guarana and yerba mate need the total calculated before the carton is printed.

Cash flowBusiness

The actual movement of money in and out of the business, which is not the same as profit. Timing differences — invoices paid later than costs, stock bought before sales — are why growing and profitable businesses can still run out of money.

Certificate of analysis (CoA)Wellness

A test report describing what a named laboratory found in a named batch. Only meaningful when the batch number matches your invoice and packing list and the laboratory is identifiable and accredited — a generic certificate reused between batches is the most common weakness in a supplier pack.

Certificate of originTrade

A document stating where goods were produced. It matters for two reasons: it can qualify goods for a preferential duty rate under a trade agreement, and some destinations regulate or quota goods by origin. A preferential claim normally requires a specific form or self-declaration with supporting records.

ChargebackConsumer

A reversal of a card payment initiated through the card network after a dispute. It is not a legal right under consumer law but a contractual process with its own deadlines, and it usually requires you to have tried to resolve the issue with the merchant first.

ChurnBusiness

The proportion of customers or recurring revenue lost in a period. In subscription businesses churn compounds quietly: losing 5% per month means losing nearly half of the base within a year.

CIF — Cost, Insurance and FreightTrade

Sea only. The seller pays the freight and a minimum level of marine insurance to the destination port, but risk passes to the buyer once the goods are on board at origin. The insurance grade is the narrowest standard cover, not all-risks.

CIP — Carriage and Insurance Paid ToTrade

Any transport mode. The seller pays carriage and must provide broader all-risks cargo insurance. Like the other C-terms, risk passes at the point of handing over to the first carrier — not at the destination.

Contribution marginBusiness

Price minus variable cost per unit — the amount each sale contributes towards fixed costs, and then to profit. The right number to use when deciding whether a large, lower-priced order is worth accepting.

Cooling-off periodConsumer

A statutory window, in some jurisdictions, during which a consumer can cancel a distance purchase without giving a reason. In the European Union and the United Kingdom it is commonly 14 days from delivery. It generally does not apply to customised goods or to digital content already accessed.

CPNPWellness

The EU Cosmetic Products Notification Portal. A product must be notified before it is placed on the EU market. Notification is not an approval: it confirms a responsible person filed the product, not that a safety assessor's work is correct.

Credit noteBusiness

A document that reduces the amount a customer owes, used for refunds, returns, overcharges or allowances. It is an accounting adjustment rather than a payment — the money still has to move separately.

Customer acquisition cost (CAC)Business

Total sales and marketing spend divided by the number of new customers won in the same period. Meaningful only alongside lifetime value — a low CAC with a lower LTV is not efficient, it is just cheap.

Customs valueTrade

The value customs uses to assess duty. It is normally the transaction value, adjusted as the applicable rules require — often including certain freight, insurance and royalty costs. It should be provable from your records, because it can be assessed after the fact, with penalties.

D

Daily Value (US)Wellness

The US equivalent of the NRV: reference amounts published by the FDA and used on Nutrition Facts and Supplement Facts labels. As with the NRV, a large percentage is not a quality signal and does not mean the product is better.

DAP — Delivered at PlaceTrade

The seller delivers the goods to the named place, ready for unloading, but the buyer handles import clearance and pays duty and import tax. A useful default for a first-time importer: logistics are handled for you, customs stays under your control.

DDP — Delivered Duty PaidTrade

The seller delivers with import cleared and duty and taxes paid. Convenient for the buyer, but the seller may need a tax registration in the destination country, and a tax-registered buyer may be unable to reclaim import tax because the import was recorded in the seller's name.

De minimis thresholdTrade

The value below which imported goods are exempt from duty, tax, or both. Thresholds differ substantially between countries and are regularly revised. For small cross-border e-commerce shipments, this threshold often determines whether the buyer is charged anything at the door.

Demurrage and detentionTrade

Charges levied when containers or vessels overrun their free time at a port or terminal. Demurrage covers time at the terminal, detention covers time outside it. They accumulate quickly and are usually caused by documentation problems rather than by shipping.

Direct and indirect costsBusiness

Direct costs can be attributed to a specific product or order; indirect costs cannot and are allocated across the business. Margin calculations use direct costs, while break-even analysis brings indirect costs back in as fixed costs.

Distance sellingConsumer

A sale concluded without the buyer and seller being physically present, such as online, by phone or by mail order. Many consumer protections attach specifically to distance sales, and they vary considerably between countries.

Documentary collectionPayments

A bank process in which shipping documents are released to the buyer against payment (D/P) or against acceptance of a time draft (D/A). The bank handles paperwork but provides no payment guarantee, so the exporter remains exposed.

DropshippingBusiness

A model where the seller takes the order and a third party ships directly to the customer. It removes inventory risk, and it also removes control over stock accuracy, packaging and delivery times — which is precisely what customers complain about.

E

EBITDABusiness

Earnings before interest, tax, depreciation and amortisation — a rough measure of operating profitability that excludes financing and accounting decisions. Useful for comparing businesses, easy to misuse, and never a substitute for cash flow.

Elemental weightWellness

The amount of the actual mineral in a compound, as opposed to the weight of the compound itself. Magnesium glycinate and magnesium oxide contain very different proportions of elemental magnesium, so the headline numbers on two labels are often not comparable.

EscrowPayments

A neutral third party holds funds until agreed conditions are met, then releases them. Valuable in transactions between parties with no trading history — provided you choose the escrow provider yourself rather than accepting one introduced by the other side.

EXW — Ex WorksTrade

The seller makes the goods available at their own premises and does nothing else. The buyer arranges collection, export clearance, freight and import. Usually a poor choice for importers, because they take on export formalities in a country where they have no registration.

F

FactoringPayments

Selling invoices to a third party at a discount in exchange for earlier cash. Useful when growth is constrained by working capital rather than by demand, and expensive when it is used to fund customers who were never going to pay.

FCA — Free CarrierTrade

The seller clears the goods for export and hands them to a carrier nominated by the buyer. Risk passes at that handover. Often a better fit than FOB for containerised cargo, because FOB is legally tied to loading on board a vessel.

Fixed costsBusiness

Costs that do not change with the number of units sold in a period: rent, salaried labour, insurance, subscriptions, loan repayments. They set the bar that contribution has to clear.

FOB — Free On BoardTrade

Sea and inland waterway only. The seller delivers the goods on board the vessel at the named port of shipment; risk passes at that moment. Frequently used by mistake for air and road freight, where it does not formally apply.

Freight forwarderTrade

A company that arranges transportation and often the associated customs documentation on behalf of a shipper. A good forwarder is worth more than a cheap one: the difference tends to show up in how problems are resolved rather than in the headline rate.

G

Gross marginBusiness

Gross profit as a percentage of revenue: (price − cost) ÷ price. It shows what is left from each sale to cover fixed costs and profit. Confusing margin with markup is one of the most common small business pricing errors.

Gross profitBusiness

Revenue minus the direct cost of the goods or services sold, before fixed costs. It measures the profitability of what you sell, separate from the cost of running the business that sells it.

GuaranteeConsumer

A broader commitment, often with no time limit or with a satisfaction-based condition. Also used to mean a statutory guarantee in some jurisdictions, which is confusing: statutory rights exist regardless of the label a seller uses.

H

Heavy metal limitsWellness

Legal limits for lead, cadmium, arsenic and mercury in food and supplements. Tea plants accumulate soil metals, and turmeric, rice protein and cocoa are higher-risk raw materials, so metal testing belongs in the finished-product release specification.

HS codeTrade

A code from the Harmonized System that classifies goods for customs purposes and determines the duty rate. Six digits are standard internationally; individual countries add further digits. Classification is a legal determination and should be documented, because the same product can attract different rates under different classifications.

Hydroxyanthracene derivativesWellness

The active compounds in senna, cascara, aloe latex and rhubarb root that make them stimulant laxatives. Restricted in food in the European Union with a daily intake limit, and treated as medicines in several countries — which is why a senna-based 'detox tea' can be a medicine authorisation problem rather than a labelling one.

I

Importer of recordTrade

The party named on the customs entry who is legally responsible for the accuracy of the declaration, for paying duty and tax, and for record keeping. It is not always the party who pays the invoice, which is a common and unwelcome discovery.

INCIWellness

The International Nomenclature of Cosmetic Ingredients — the standard naming system used for cosmetic ingredient lists. Ingredient names must follow INCI for the label to be compliant, whatever the supplier calls the raw material internally.

IncotermsTrade

Three-letter rules published by the International Chamber of Commerce that set out where a seller's responsibility for cost and risk ends and the buyer's begins. They must be named in the contract with a place and a version — for example “CIF Hamburg, Incoterms 2020” — or they do not clearly apply. They do not cover ownership, payment, warranties or liability.

L

Landed costTrade

The total cost of getting one unit to your door, including the supplier price, freight, insurance, customs duty, import tax you cannot recover, and clearing fees. Landed cost — not supplier price — is the correct basis for pricing decisions. Work it out with our landed cost calculator.

Lead timeTrade

The time between placing an order and receiving it, usually quoted as production time plus transit. Always ask for both components separately: production time is yours to negotiate, while transit time is largely fixed by the route.

Letter of credit (L/C)Payments

A bank undertaking to pay the seller against complying documents. The bank deals in documents, not goods: it does not inspect quality or resolve commercial disputes. A discrepancy in the paperwork gives the buyer leverage until it is waived.

Lifetime value (LTV)Business

The total gross profit expected from a customer over the whole relationship. Compared against the cost of acquiring that customer (CAC), it shows whether growth is building a business or buying revenue at a loss.

Liquidity and solvencyBusiness

Liquidity is having enough cash to pay what is due now. Solvency is having more assets than liabilities overall. A business can be solvent and illiquid at the same time, and it is illiquidity that closes companies.

Listed medicine (AUST L)Wellness

An Australian therapeutic goods listing for lower-risk complementary medicines, largely self-assessed against permitted ingredients and indications. The sponsor carries the responsibility for the evidence; the TGA has not assessed it.

M

Marketplace (seller of record)Consumer

A platform that hosts third-party sellers. The important question is who the seller of record is — that is the party your contract is with, and the party you must pursue if something goes wrong. Your dispute route usually depends on whether you paid through the platform's own checkout.

MarkupBusiness

Profit as a percentage of cost: (price − cost) ÷ cost. Always a larger number than the equivalent margin, which is why a “40% markup” produces only a 28.6% margin.

Medical device classificationWellness

The regulatory status of a product whose intended purpose is to diagnose, measure, monitor, treat or prevent a condition. The same hardware can be consumer electronics or a regulated device depending on the claims made for it — which is why classification is settled before tooling.

MOQ — minimum order quantityTrade

The smallest quantity a supplier will accept in one order. A high MOQ is usually about their production setup rather than your needs, so it is often negotiable — especially across a repeat order, a pilot batch, or shared production with another buyer.

MRL (maximum residue level)Wellness

The legal limit for a pesticide residue in a food. Tea is tested as a brewed product in many markets, and the EU, UK, US and Japanese lists differ — so a pass certificate for one market does not transfer to another.

N

NDI notificationWellness

A US notification required for a dietary ingredient not marketed in the United States before 15 October 1994. Filing it is not approval — the FDA publishes objection letters, and reading them is the fastest way to see whether an ingredient has a problem.

Net profitBusiness

What remains after all costs, including fixed costs, interest and tax. A business can have healthy gross profit and no net profit — usually because fixed costs are set for a larger scale than current revenue.

Novel foodWellness

In the EU and UK, a food ingredient without a significant history of consumption before 1997 that requires an authorisation before it can be sold. It is the most common trap for newer botanicals, including adaptogens used in teas and capsules.

NRV (Nutrient Reference Value)Wellness

The EU reference intakes used on food and supplement labels, set out in Regulation (EU) No 1169/2011 Annex XIII. The percentage on a pack tells you what share of that reference one serving provides. It is a labelling reference, not a personal target and not an upper limit.

O

OEM and ODMBusiness

OEM means you supply the specification and the manufacturer makes it. ODM means the manufacturer has a formula or design library and you adapt one with your own branding. The distinction decides who owns the formula, how long development takes and what you pay for.

Open accountPayments

Trading on invoice with payment due after delivery, typically in 30, 60 or 90 days. Convenient and cheap per transaction, but the seller is financing the buyer's working capital and carries the full credit risk.

Organic certificationWellness

A certificate of organic operation covering a specific operation and product, issued by an accredited certifier. It applies to producers and products rather than to brands, and 'made with organic ingredients' is a materially weaker claim than 'organic'.

P

Packing listTrade

A document describing how the shipment is packed: number and type of packages, contents per package, gross and net weight, dimensions and marks. It must agree with the transport document and the invoice, because customs checks the three against each other.

Pre-orderConsumer

Payment or partial payment for goods before they exist or before stock arrives. Legitimate for small producers, and also a common fraud pattern. Treat a pre-order as a deposit: the delivery date and the refund condition should both be in writing.

Preservative efficacy testWellness

Also called a challenge test: a microbiology study that confirms a preserved formula resists microbial growth. For water-containing cosmetics it is the core safety test, and it must be run on the finished formula in the final packaging.

Private labelBusiness

Selling a manufacturer's existing formula or design under your own brand. The lowest cost and shortest route to market, and the least differentiated product — which is why it is usually the right way to test demand.

Pro forma invoiceTrade

A quotation in invoice format, issued before the sale is concluded. It is not a demand for payment and not a customs document for a completed sale, but it is commonly used to open a letter of credit, arrange a deposit, or support an import permit application.

Proprietary blendWellness

A label format that declares one total weight for several ingredients without disclosing individual amounts. Lawful in many markets, and the most common way a label hides a very small dose of the ingredient you are buying it for.

Purchase order (PO)Business

A buyer's formal document committing to purchase specified goods or services at an agreed price and terms. It becomes the reference point for delivery, payment and disputes, so it should be as specific as the quotation you accepted.

Q

Quality agreementBusiness

A document separate from the purchase order that sets out specifications, test methods, acceptance criteria, change control and the remedy for non-conforming goods. A purchase order alone rarely survives a dispute about quality.

R

Responsible PersonWellness

The entity legally responsible for a cosmetic product in the EU or UK: it holds the safety report and product information file and must be established in that market. It carries real duties and liability, so a forwarding address is not one.

RFQ — request for quotationBusiness

A structured request asking suppliers to quote for a defined scope. The quality of an RFQ determines the usefulness of the quotes: specifications, quantities, delivery requirements, payment terms and the Incoterm should all be stated before you send it.

RunwayBusiness

How long the business can keep operating at its current rate of spending before the money runs out, usually expressed in months: cash available ÷ net monthly cash burn. The single most useful number for a business that is not yet profitable.

S

Serving sizeWellness

The quantity the whole label is calculated against — and frequently more than one capsule, tablet or scoop. A 60-capsule bottle with a two-capsule serving is a 30-day supply, not a 60-day one.

Shelf life and best-beforeWellness

The period during which the product is expected to remain within specification — and, on a label, the point by which stated amounts must still be accurate. Buying near the end of shelf life means the potency claim is close to expiring on the day it arrives.

SKUBusiness

A stock keeping unit — a unique identifier for one specific sellable variant, such as a particular size and colour. SKU count drives complexity, storage cost and error rates, which is why trimming it is often a cheaper win than selling more.

Slimming tea / detox teaWellness

A marketing category with no legal definition. Where the product has a noticeable effect it usually contains a stimulant laxative such as senna, and the claims made about it would make the product a medicine rather than a food in the EU, UK and several other markets.

Stability testingWellness

Testing that shows how a product's potency, appearance and microbiology change over time at defined temperature and humidity. Real-time data supports the shelf life claim; accelerated data is a development tool rather than a substitute.

Substitute tea (代用茶)Wellness

The Chinese food category covering infusions made from non-Camellia botanical material — chrysanthemum, goji, jujube and similar. It has its own national food standard, and the material must sit on the approved lists for the category.

T

Trade creditPayments

Credit extended by one business to another in the normal course of trade — effectively what open account terms are. It is a real cost of doing business even when it is not written down as interest.

V

Variable costsBusiness

Costs that move with each unit sold: materials or landed cost, payment processing, packaging, outbound shipping, platform commission. Getting these right is what makes margin and break-even figures trustworthy.

W

Walk-away priceBusiness

The price below which you decline a piece of work regardless of how much you want it. Deciding it in advance is what prevents negotiating against yourself in a live conversation.

WarrantyConsumer

A promise, usually written into the terms, about what the seller will do if the product fails within a stated period and under stated conditions. Read the exclusions: most warranty disputes are about what was excluded, not about how long the period was.

Wellness tea (functional tea)Wellness

A tea or infusion sold for a physiological effect rather than only for taste — sleep, calm, digestion, energy. The commercial framing is beverage, but the claimed effect is what decides whether it is regulated as a food or as a medicine in your market.

Working capitalBusiness

Current assets minus current liabilities — roughly, the money tied up in stock and unpaid invoices that has not yet been funded by suppliers. Growth usually consumes working capital before it generates it.