GLOSSARY

Glossary of company administration.

The terms an Italian business owner meets every week, explained without jargon.

Account interest: The interest the bank pays on sums left in the account. For business accounts it is often close to zero.
Accounting entries: The records by which every transaction enters the company's books, under double entry. Financial statements and tax returns derive from them.
ATECO code: The numeric code that classifies a business activity in Italy, assigned when the VAT number is opened. It drives tax regimes, contributions and obligations.
Attachment (pignoramento): The act by which a creditor holding an enforceable title freezes a debtor's assets or sums, such as a bank account, to get paid.

B2B: Business to business: sales between companies. In Italy the electronic invoice between companies is mandatory and goes through the Sistema di Interscambio.
B2C: Business to consumer: a company's sales to private individuals. An electronic invoice is still issued, with a courtesy copy for the customer.
Balance sheet: The part of the financial statements that pictures what the company owns and owes at a given date: assets, liabilities and equity.
Bancomat: The Italian debit and cash-withdrawal card network. By extension, the everyday name of the debit card and the cash machine.
Bank current account: The account the company collects and pays from. Companies must keep it separate from the partners' personal accounts.
Bank fees: What the bank keeps for its services: account keeping, transfers, cards, collections. They are booked as costs and reconciled with the statement.
Bank reconciliation: Comparing the statement's transactions with the books to find what is missing or does not add up. Every transaction needs its document.
Bank statement: The list of an account's transactions over a period, with balances. It is the basis of bank reconciliation.
Bank transfer (bonifico): Money moved from one account to another, ordered by the payer. Within SEPA it arrives in one business day; an instant transfer in seconds.
BIC code: The code that identifies a bank in international payments, also called SWIFT. It goes with the IBAN in transfers outside SEPA.
Billing cycle: An invoice's path from order to collection: issue, delivery, due date, reminder if needed, payment. The shorter it is, the sooner the cash comes in.
Book balance and available balance: The book balance counts every transaction recorded; the available balance removes sums not yet usable, such as pending cheques or reserved debits.
Bootstrapping: Growing a company on the founders' money and customers' revenue, without outside investors. It demands cost discipline from day one.
Budget: The plan of expected revenue and costs for a period, usually the year. Every month it is compared with what actually happened.
Business angel: A private individual who invests their own money in very young companies in exchange for a stake, often bringing experience and contacts too.
Business plan: The document that describes a venture: what it sells, to whom, at what costs and with what revenue expected over the coming years. It serves partners, banks and investors.
Business risk: The chance that the activity does not cover its costs or repay the capital invested. It is borne by whoever puts in the capital and decides.
Buy Now Pay Later: Paying a purchase in instalments, interest-free for the buyer, offered by an intermediary at the point of sale. The seller is paid at once, minus a fee.
Bylaws (statuto): The company's operating rules: bodies, powers, decisions, shares. Attached to the deed of incorporation and amendable by the partners' resolution.

Cash flow: Money coming in and going out over a period. A company can be profitable and still run out of cash if it collects late and pays early.
Cash withdrawal: Taking banknotes out of the account at a cash machine. For companies it is tracked and the cash has to be accounted for.
Cashback: The return of a small share of what was spent with a card or service. It is a commercial incentive, not a discount on the invoice.
CEO: Whoever runs the company and answers for its results to the board and the shareholders. In an SMB it is often the owner.
CFO: The chief financial officer: cash, financial statements, banks, management control. In SMBs the role is often split between the owner and the accountant.
Chart of accounts: The ordered list of accounts a company books every transaction to: cash, bank, customers, suppliers, revenue, costs. It is the skeleton of the books.
Chief operating officer: Keeps the machine running every day, from production to delivery. Answers for timing, quality and operating costs.
Company name (ragione sociale): The company's official name. Ragione sociale for partnerships, denominazione for companies limited by shares: it is what goes on the invoice.
Company registration report (visura camerale): The Business Register document with a company's official data: seat, partners, directors, capital, activity. Used to check customers and suppliers.
Contactless: Paying by holding the card or phone near the terminal, without inserting it. Under 50 euro no PIN is asked.
Cost centre: A department, project or site that costs are assigned to, to know how much each one spends. It is the basis of management control.
Credit card: A card that pays out of a limit the bank advances. The spending is settled in one go the following month, or in instalments with interest.
Credit note: The document that corrects or cancels, wholly or in part, an invoice already issued: wrong amounts, returns, discounts agreed later. It reduces VAT due.
Creditworthiness: The judgement banks and suppliers form on a company's ability to pay on time. It rests on financial statements, payment history and credit-bureau records.

Debit card: A card that charges the current account at once for every payment or withdrawal. You cannot spend more than the account holds.
Deed of incorporation: The document with which the partners found a company before a notary: name, seat, purpose, capital and shares. With the bylaws, it is the company's identity card.
Depreciation: Spreading the cost of a long-lived asset, such as a machine or software, over the years it is used. Each year a share enters the income statement as a cost.
Digital preservation: The legally compliant archiving of tax documents, electronic invoices included, for at least ten years. Files must stay intact and readable.
Digital wallet: The app that keeps cards and payment instruments on the phone and lets you pay by holding it near the terminal or online.
Direct debit mandate: The authorisation by which a company lets a creditor take the amounts due from its account, such as utilities. It underlies SEPA direct debit.
DSO (Days Sales Outstanding): The average days between invoice and collection. A high DSO means slow customers and cash locked in receivables.

Electronic invoicing: The obligation to issue and receive invoices as XML files through the Sistema di Interscambio. In Italy it applies to nearly every transaction between VAT-registered parties.
Equity crowdfunding: Raising capital from many small investors through an authorised online platform, in exchange for shares in the company.
Exchange rate: The price of one currency in another. Whoever invoices or pays in foreign currency sees the euro value move with the market.
Expense receipts (giustificativi): The documents that prove an expense: invoice, till receipt, receipt. Without one the cost is not deductible and the expense report is not reimbursed.
Expense report: The statement of expenses a collaborator advanced for the company, with the receipts attached. It serves reimbursement and cost deduction.

F24: The single Italian form for paying taxes and contributions: VAT, IRES, IRAP, social security, withholdings. Filed electronically, often through the accountant.
Financial statements (bilancio d'esercizio): The yearly document that tells the company's situation: balance sheet, income statement and notes. Companies limited by shares file it with the Business Register.
Fiscal year: The twelve-month period over which taxes are computed and the accounts are closed. For most Italian companies it matches the calendar year.
Flat-rate regime (regime forfettario): The simplified tax regime for individual VAT numbers under 85,000 euro of revenue: a 15 percent substitute tax, or 5 for the first years, and no VAT on invoices.
Funding requirement: The money a company needs to cover the gap between paying its costs and collecting its revenue. Covered with capital, credit or faster collections.
Fundraising: Raising capital from investors to finance growth, usually in successive rounds. In exchange the founders give up shares.

Income statement: The part of the financial statements that lines up the year's revenue and costs and arrives at the profit or loss. It answers: how much did we earn.
Insolvency: The state of no longer being able to pay debts regularly as they fall due. For a company it can lead to judicial liquidation.
Instalment plan: Splitting a debt into several dated payments. The tax authority grants it on tax bills and notices, with interest.
Interest rate: The yearly percentage paid on a loan or earned on a deposit. On financing, look at the APR, which includes fees.
Internet banking: Access to the account and payments through the web and an app. With open banking, authorised third-party services can read the account's data too.
Intra-EU purchases: Purchases of goods from suppliers in other EU countries. The invoice arrives without VAT and the Italian company adds the Italian tax under the reverse charge.
Intrastat: The summary list of sales and purchases of goods and services with other EU countries, filed with the Customs Agency monthly or quarterly.
IRAP: The Italian regional tax on productive activities, generally 3.9 percent of net production value. Paid by companies and entities, with regional rules.
IRES: The Italian corporate income tax, 24 percent of taxable profit. Paid in advance and balance through the F24.
IRPEF: The Italian personal income tax, in progressive brackets. It applies to sole proprietors, partners in partnerships and employees.

Leasing: Using an asset for a periodic fee, with the option to buy it at the end. The asset stays with the leasing company until it is redeemed.
Legal form: The kind of entity a business is run through: sole proprietorship, partnership or company limited by shares. It changes liability, taxes and obligations.
Limited liability (autonomia patrimoniale): The separation between the company's assets and the partners' own. In companies limited by shares it is complete: only the company answers for its debts.
Liquidity: Money available at once: cash and current accounts. It is what pays salaries, suppliers and taxes when they fall due.
Loan: Financing the bank pays out in one sum and that is repaid in instalments with interest over a set period.

Management control: The measures and comparisons by which a company sees where it earns and where it loses: margins by client, costs by department, variances from budget.
Mastercard: One of the two international card networks. It connects the payer's bank and the payee's bank anywhere in the world.
Medium-sized enterprise: Under the EU definition, an enterprise with fewer than 250 employees and turnover up to 50 million or assets up to 43 million.
Micro enterprise: Under the EU definition, an enterprise with fewer than 10 employees and turnover or assets up to 2 million.
Money laundering: Bringing money from crime into the legal circuit. Banks must run anti-money-laundering checks and report suspicious transactions.

Net profit: What is left of revenue after every cost and tax. It is the last line of the income statement and the basis for paying dividends.
NFC technology: Near field communication: the short-range link by which a card or phone talks to the terminal in contactless payments.

Online bank: A bank that offers accounts and payments only through the web and an app, with no branches. It often has lower fees and tools built around the account's data.
Open banking / PSD2: The European rules that let an authorised service read an account's transactions and order payments, with the holder's consent.
Organisation chart: The diagram of roles and responsibilities in a company and who reports to whom. It makes clear who decides and who approves.
Overdraft facility (fido): The credit line the bank grants on the account: the balance may go below zero up to an agreed amount, with interest on what is used.

Partner (socio): Whoever owns a share of the company and shares its profits and risks. In companies limited by shares, liable only for what was contributed.
Payment link: A link sent to the customer to pay by card online, without a terminal. The money reaches the account minus the service's fee.
Payment reminder: The message that reminds a customer of an overdue invoice. A prompt, courteous reminder shortens collection times.
Payment schedule (scadenzario): The list of invoices to pay and to collect, ordered by date. It says what goes out and what comes in over the coming days and weeks.
Payment terms: The time granted to a customer to pay after the invoice, such as 30 or 60 days. The longer it is, the more working capital has to be financed.
PEC (certified email): Email with the legal value of registered mail. Companies must have one and use it for taxes, courts and, instead of the SDI code, to receive invoices.
Phishing: A scam by email or message that imitates a bank or supplier to obtain passwords and codes. No bank asks for credentials by message.
POS terminal: The device that accepts card payments. In Italy anyone selling to the public must have one.
Prepaid card: A card loaded in advance that only lets you spend the amount loaded. Useful to give a collaborator a closed budget.
Prima nota (cash book): The chronological record of every movement of money, in and out, day by day. It is the first step of bookkeeping.
Profitability coefficient: The percentage, set by ATECO code, that the flat-rate regime applies to revenue to obtain taxable income. The rest counts as a flat cost.

Quote: The written offer with prices, quantities and terms for a job or supply. Once accepted by the customer it becomes the basis of the order and the invoice.

Receipt: The document that attests a payment received. It does not replace the invoice but can go with it as proof of collection.
Reversal (storno): Cancelling an accounting entry or a transaction with an entry of opposite sign, without deleting the history.
Reverse charge: The buyer books the VAT, not the seller. It applies to construction, some services and purchases from foreign suppliers.
RIBA: The Italian bank receipt: the creditor asks its bank to collect at the due date and the debtor pays through its own. Widely used between Italian companies.

Sales director: Whoever leads sales: targets, sales force, pricing and key accounts. Answers for revenue.
SAS (limited partnership): A partnership with two kinds of partners: general partners, who manage and answer without limit, and limited partners, who answer only for their share.
Scaleup: A startup that has found its market and grows fast, often with new capital. The problem shifts from the product to the organisation.
SDD: SEPA Direct Debit: the European direct debit. The creditor takes the money from the debtor's account under a mandate signed beforehand.
SDI (Sistema di Interscambio): The Revenue Agency system that receives, checks and delivers every Italian electronic invoice. Every invoice issued or received passes through it.
SDI code: The seven-character code that tells the Sistema di Interscambio where to deliver an electronic invoice. Each company gives it to its suppliers, or a PEC address instead.
SEPA: The single euro payments area: 36 countries where transfers and direct debits follow the same rules and timing.
Share capital: The value the partners contribute at incorporation, written in the deed. An SRL needs one euro, an SPA at least 50,000 euro.
Small enterprise: Under the EU definition, an enterprise with fewer than 50 employees and turnover or assets up to 10 million.
SNC (general partnership): The Italian general partnership: every partner answers for the company's debts with their personal assets too.
Società semplice: The most basic Italian partnership, reserved for non-commercial activities such as farming or asset holding.
Software POS: A terminal with no dedicated device: an app that turns the phone into a terminal for contactless cards.
Sole proprietorship (ditta individuale): A one-person business whose owner answers for debts with all their assets. It is the simplest form to open and has no share capital.
SPA (joint-stock company): The company limited by shares with capital divided into shares and at least 50,000 euro of capital. The form of the largest and listed companies.
Split payment: Public administration pays the supplier only the taxable amount and pays the VAT directly to the State.
SRL (limited liability company): The most common Italian company form. Partners answer for debts only with what they contributed; the minimum capital is one euro.
SRLS (simplified SRL): The simplified SRL: same limited liability, capital between 1 and 9,999 euro, standard bylaws and incorporation without notary fees.
Stamp duty (imposta di bollo): The fixed 2-euro duty on invoices without VAT above 77.47 euro. On electronic invoices it is paid quarterly through the F24.
Startup: A young company looking for a repeatable, scalable business model. Innovative startups on the special register enjoy tax benefits.
SWIFT: The network banks worldwide use to exchange payment orders. The SWIFT code, or BIC, identifies the receiving bank.

Tap to Pay: Collecting a card payment by holding the card to the seller's own phone, with no physical terminal.
Tax deduction (detrazione): An amount subtracted directly from the tax due, not from income. It cuts what is paid euro for euro.
Tax drawer (cassetto fiscale): The taxpayer's reserved area on the Italian Revenue Agency site: returns, payments, electronic invoices issued and received.
Tax rate (aliquota): The percentage applied to a tax base. Italian VAT rates are 4, 5, 10 and 22 percent.
Tax return: The yearly document that reports the year's income to the tax authority and computes the taxes. For companies it is the Redditi SC form.
Taxable amount (base imponibile): The amount a tax is computed on. On an invoice it is the sum of prices before VAT: total equals taxable amount plus tax.
Two-factor authentication: Access to a service that asks for two different proofs, such as a password and a code on the phone. It stops whoever has stolen the password alone.

VAT (IVA): Value added tax, applied to goods and services. The company collects it on sales and pays it on purchases: the difference goes to the State.
VAT advance payment (acconto IVA): The VAT instalment due by 27 December, worked out on the previous year's payment or on the last period's transactions. It is deducted from the December or last-quarter settlement.
VAT number (partita IVA): The 11-digit code that identifies anyone carrying on a business in Italy. For companies it is also the key that links invoices and records.
VAT settlement (liquidazione IVA): The periodic, monthly or quarterly, computation of the difference between VAT charged and VAT paid. It gives the amount due or the credit to carry forward.
Visa: One of the two international card networks, with Mastercard.
Vishing: The phone scam: someone poses as the bank or a supplier to obtain codes and authorisations. Hang up and call the official number.

Withholding tax (ritenuta d'acconto): The share of a fee the payer withholds and pays to the tax authority on the professional's behalf, usually 20 percent. The professional deducts it from their taxes.
Working capital: Receivables, inventory and cash on one side minus short-term debts on the other. It says how much money is needed to run the business every day.

XML invoices: The structured file an electronic invoice travels in, with fixed fields for parties, lines, taxes and payment. It is the format the Revenue Agency reads and checks.