Glossary terms starting with C

C-Corporation

A C corporation is a corporation that is treated as a separate taxpayer from its owners.

Calendar Year

A calendar year is the 12 months from January 1 through December 31.

Capacity Planning

Capacity planning is the process of determining the production capacity needed to meet changing service demand, including forecasting future work requirements, assessing current resource availability, and planning hiring or adjustments to match demand.

Capital Account

A capital account tracks each owner's equity in a partnership or LLC.

Capital Allocation Strategy

A capital allocation strategy defines how a firm prioritizes and distributes financial resources among competing uses, including operations, growth investments, debt repayment, reserves, and owner distributions.

Capital Contribution

Capital contribution is money or property an owner invests in a business in exchange for ownership interest, increasing the owner's basis and the company's equity.

Capital Expenditure (CapEx)

A capital expenditure, or CapEx, is spending on a long-term asset that will be used for more than one year, such as computers, furniture, software, vehicles, or office improvements.

Capital Expenditure Budget

A capital expenditure budget plans anticipated investments in long-term assets such as equipment, technology, furniture, and improvements over a planning period.

Capital Investment Analysis

Capital investment analysis is the evaluation of significant investments using financial metrics to determine whether they are worthwhile, including the payback period, return on investment, net present value, and internal rate of return.

Capital Reserve

A capital reserve is cash set aside specifically for major investments, unexpected opportunities, or financial emergencies, separate from operating cash used for daily business needs.

Capital Structure

Capital structure refers to the mix of debt and equity a business uses to finance its operations and growth.

Capitalization

Capitalization is the accounting practice of recording a cost as an asset on the balance sheet instead of expensing it immediately.

Capped Fee Arrangement

A capped fee arrangement sets a maximum total fee while billing at an hourly rate below it.

Cash Application

Cash application is the process of matching each customer payment to the open invoice or invoices it settles, then updating accounts receivable.

Cash Balance Plan

A cash balance plan is a defined benefit retirement plan that looks like a 401(k) to participants but allows far larger contributions, often several times the 401(k) limit.

Cash Basis Accounting

Cash basis accounting is an accounting method that records revenue when cash is received and expenses when cash is paid, regardless of when services are delivered or obligations incurred.

Cash Basis Tax Planning

Cash basis tax planning is the practice of choosing when to receive income and pay expenses to manage taxable income in a given year.

Cash Basis vs Accrual Basis Accounting

Cash basis records revenue when cash is received and expenses when cash is paid.

Cash Conversion Cycle

The cash conversion cycle measures the time between when a firm invests in service delivery (paying consultants) and when it receives payment from clients, calculated as days of AR outstanding minus days of AP outstanding plus the time invested in WIP.

Cash Conversion Efficiency

Cash conversion efficiency measures how effectively a company converts profit into operating cash flow, typically calculated as operating cash flow divided by net income.

Cash Cushion

A cash cushion is the reserve of liquid funds a business maintains to absorb unexpected expenses or revenue shortfalls.

Cash Disbursement

Cash disbursement is the payment of cash from a business for any purpose, including vendor payments, payroll, taxes, and distributions.

Cash flow

Cash flow is the movement of money into and out of your business over a specific period.

Cash Flow Budget

A cash flow budget projects expected cash inflows and outflows over a future period, typically weekly or monthly, enabling anticipation of cash surpluses and shortfalls before they occur.

Cash Flow Forecast

A cash flow forecast projects expected cash inflows and outflows over a future period, identifying when cash will be available and when shortfalls might occur.

Cash flow management

Cash flow management is the process of monitoring, analyzing, and optimizing the timing of cash inflows and outflows to ensure adequate liquidity for operations and strategic needs.

Cash Flow Ratio

The cash flow ratio compares the cash a business generates from operations with the obligations due within a year.

Cash flow statement

The cash flow statement is a financial report showing how cash moved in and out of the business during a specific period, organized into three categories: Operating Activities (core business operations), Investing Activities (equipment purchases, investments), and Financing Activities (loans, owner contributions, distributions).

Cash Flow Visibility

Cash flow visibility is the ability to see the current cash position and project future cash balances based on known receivables, payables, recurring expenses, and expected revenue.

Cash Forecast Accuracy

Cash forecast accuracy measures how closely actual cash flows match predicted amounts, typically calculated as the percentage variance between forecast and actual.

Cash Management

Cash management encompasses all activities related to collecting, holding, and disbursing cash to ensure the business has adequate liquidity while optimizing returns on excess funds.

Cash Management Strategy

A cash management strategy defines the approach and policies for managing business cash, including collection practices, disbursement policies, reserve targets, and the investment of excess funds.

Cash Position Report

A cash position report shows current cash and cash equivalents across all accounts, outstanding receivables, pending payables, and projected cash balance at key future dates.

Cash Ratio

The cash ratio measures whether a business could pay its current liabilities using only cash and cash equivalents.

Cash Receipts

Cash receipts are all cash and check payments received by a business, including customer payments, owner contributions, and other inflows.

Cash Reserve

Cash reserve is liquid funds set aside to cover operating expenses during revenue downturns, unexpected costs, or growth investments.

Cash Runway

Cash runway is the number of months a business can operate using its current cash reserves at its current burn rate.

Certificate of Insurance

A certificate of insurance is a document from your insurance company proving you have specific coverage.

CFO Services

CFO services encompass the strategic financial leadership functions typically performed by a chief financial officer, including financial planning, analysis, reporting, cash management, and strategic guidance.

Change Order

A change order is a written agreement that modifies the scope, price, or timeline of an existing contract.

Chargeback

A chargeback occurs when a credit card holder disputes a transaction and the card issuer reverses the charge, pulling the funds back from the merchant.

Chart of accounts

A Chart of Accounts (COA) is the organizational framework that categorizes every financial transaction in your business.

Chart of Accounts Mapping

A chart of accounts maps how accounts in one system or structure correspond to accounts in another, which is essential when transitioning to a new accounting system, merging entities, or consolidating financials.

Chart of Accounts Optimization

Chart of accounts optimization tailors the accounting classification structure to a professional service firm's specific business model, creating meaningful categories that support management decision-making rather than generic templates.

Chart of Accounts Standardization

Chart of accounts standardization is the process of establishing consistent account structures, naming conventions, and categorization rules to ensure uniform financial recording and reporting.

Check Register

A check register is a record of all checks written against a bank account, including the check number, date, payee, amount, and purpose.

Check-the-Box Election

The check-the-box election allows eligible entities to choose their federal tax classification by filing Form 8832.

Child Support Withholding

Child support withholding is the mandatory deduction of child support payments from employee wages when ordered by a court or child support agency.

Churn Rate

Churn rate measures the percentage of clients or recurring revenue lost over a specific period, serving as the inverse of retention.

Claims-Made Policy

A claims-made policy covers claims reported during the policy period, regardless of when the underlying incident occurred, subject to a retroactive date.

Classification Audit

A classification audit is an examination by tax authorities reviewing whether workers have been properly classified as employees or independent contractors, potentially resulting in reclassification, back taxes, and penalties.

Client Acquisition Cost (CAC)

Client acquisition cost (CAC) is the total sales and marketing cost of winning new clients, divided by the number of new clients won in the same period.

Client Acquisition Payback Period

The client acquisition payback period measures the time required for the profit from a new client to recover the cost of acquiring that client.

Client Advance

A client advance is a payment received from a client before services are performed, recorded as a liability until earned through service delivery.

Client concentration

Client concentration measures the percentage of total revenue derived from the largest clients, indicating revenue risk and business stability.

Client Concentration Risk

Client concentration risk measures the vulnerability created when a significant portion of revenue comes from a small number of clients.

Client Credit Assessment

Client credit assessment is the process of evaluating a client's ability and likelihood to pay for services, typically performed before extending credit or undertaking significant work.

Client Deposit Tracking

Client deposit tracking is the proper recording and monitoring of deposits received from clients, typically held as liability until applied to invoices or refunded.

Client Economics

Client economics refers to the financial performance of client relationships, including revenue, costs, profitability, and lifetime value.

Client Funds

Client funds are monies held by a firm on behalf of clients, distinct from the firm's own operating funds.

Client Health Score

A client health score is a composite metric that measures the overall strength of a client relationship, typically incorporating factors such as engagement frequency, project success, payment patterns, executive access, and growth trajectory.

Client Intake

Client intake is the process of onboarding new clients before beginning work.

Client Ledger

A client ledger is a detailed record of all financial transactions related to a specific client, particularly for funds held in trust.

Client Lifetime Value (CLV)

Client lifetime value (CLV) is the total gross profit a firm expects to earn from a client over the whole relationship.

Client Margin Ranking

Client margin ranking orders clients by profit margin from highest to lowest, revealing which relationships generate the best returns and which may need attention.

Client Metrics

Client metrics are quantitative measures of client relationship performance, including revenue, profitability, retention, satisfaction, and growth.

Client Onboarding Cost

Client onboarding cost measures the total investment required to bring a new client from a signed contract to a productive engagement, including administrative setup, system configuration, knowledge transfer, and initial relationship-building.

Client Payment Plan

A client payment plan is a structured agreement allowing a client to pay outstanding invoices over time rather than in a single payment, typically used when clients face temporary cash constraints but intend to pay.

Client Profitability Analysis

Client profitability analysis measures how much profit each client generates after the cost of serving them.

Client Profitability Report

A client profitability report analyzes revenue, costs, and resulting profit for individual clients, revealing which clients generate strong returns and which consume resources without adequate compensation.

Client Retainer

A client retainer is an arrangement in which a client pays a recurring fee to secure ongoing access to services or to reserve capacity, typically providing the firm with predictable revenue and the client with priority access.

Client Retention Rate

Client retention rate measures the percentage of clients who continue working with a consulting firm over a defined period, typically measured annually.

Client Segmentation

Client segmentation divides a firm's client base into distinct groups based on characteristics like revenue, profitability, strategic value, or growth potential, enabling differentiated service levels and resource allocation.

Client-Level Profitability

Client-level profitability measures the profit contribution of each client relationship by allocating revenue, direct costs, and appropriate overhead to determine each client's true profitability.

Close Calendar

A close calendar is a detailed schedule mapping every task in the month-end close process to specific dates, owners, and deadlines.

Closing Entry Process

The closing entry process is the set of journal entries a firm makes at the end of a period to move temporary accounts, revenue and expenses, into retained earnings and reset them for the next period.

Closing Procedures Manual

A closing procedures manual documents all steps, calculations, and reviews required to complete the monthly or annual financial close, providing detailed instructions anyone can follow to execute the close consistently.

COGS

COGS (Cost of Goods Sold) represents the direct costs attributable to producing the goods or services sold by a company.

Collection Agency

A collection agency is a third party that pursues payment on delinquent accounts receivable.

Collection Aging Report

A collection aging report tracks the status of collection efforts on overdue invoices, showing which accounts have been contacted, when, and what responses have been received.

Collection Call Schedule

A collection call schedule defines when and how follow-up contacts are made on outstanding receivables, specifying timing triggers, responsible parties, and escalation procedures.

Collection Effectiveness Index

The collection effectiveness index (CEI) measures the effectiveness of collection efforts over a period and is calculated as the percentage of collectible receivables that were actually collected.

Collection Efficiency

Collection efficiency measures how effectively a business converts invoiced amounts into cash.

Collection Lag

Collection lag is the delay between sending an invoice and receiving payment.

Collection Letter

A collection letter is a written notice asking a customer to pay an overdue invoice.

Collection Rate

Collection rate measures the share of billed revenue that a firm actually collects in cash over a period.

Collection Realization

Collection realization measures what percentage of billed amounts you actually collect.

Collections

Collections refers to the activities and processes for pursuing payment on outstanding invoices, from initial follow-up through escalation to formal collection actions.

Commingling

Commingling is mixing client funds with your firm's operating money.

Comparative Income Analysis

Comparative income analysis puts income statements from several periods side by side to find trends and unusual changes in revenue, costs, and profit.

Compensation Benchmarking

Compensation benchmarking compares what a firm pays for each role with pay data for similar roles at comparable organizations.

Compensation Ratio

The compensation ratio measures total compensation expense (salaries, wages, benefits, payroll taxes) as a percentage of revenue, indicating how much of each revenue dollar is spent on payroll.

Compilation vs Review vs Audit

Compilation: CPA presents management data with no verification or assurance.

Compliance

Compliance refers to adhering to laws, regulations, standards, and internal policies applicable to a business.

Compliance Calendar

A compliance calendar is a comprehensive schedule of all tax filings, regulatory deadlines, and business compliance requirements with proactive alerts and preparation workflows.

Compliance Tracking

Compliance tracking is the systematic monitoring of regulatory deadlines, filing requirements, and policy obligations to ensure timely completion.

Composite Return

A composite return is a single state filing a pass-through entity makes on behalf of its nonresident owners, paying their state tax for them.

Conflict Check

A conflict check is a review to determine whether taking on a new client or matter would create a conflict of interest with existing or former clients.

Consultant Compensation Models

Consultant compensation models define how consultants are paid, including base salary, variable compensation, bonuses, profit sharing, and equity arrangements.

Consultant Cost Rate

The consultant cost rate is the true hourly cost of a consultant, including salary, benefits, payroll taxes, and allocated overhead, used for project costing and profitability analysis.

Consultant Cost Variance

Consultant cost variance measures the difference between budgeted and actual consultant costs on a project, distinguishing between rate variance (a different hourly rate than planned) and efficiency variance (different hours than planned).

Consultant Leverage

Consultant leverage refers to the ratio of junior to senior staff on project teams, measuring how effectively a firm uses lower-cost resources to deliver work while maintaining quality through senior oversight.

Consulting Contract Terms

Consulting contract terms are the provisions in an engagement agreement that define the work, the fees, and each party's responsibilities.

Consulting Contract Types

Consulting contract types are the different structures used for consulting engagements, including time and materials, fixed fee, retainer, performance-based, and hybrid arrangements.

Consulting Firm Valuation

Consulting firm valuation is the process of estimating what a consulting business is worth.

Consulting Service Models

Consulting service models define how consulting services are structured, delivered, and priced, ranging from traditional project-based work to productized services, managed services, and subscription offerings.

Contingency Budget

A contingency budget is a reserve amount set aside to cover unexpected costs, opportunities, or revenue shortfalls that may arise during the budget period.

Contingency Fee

A contingency fee is a payment arrangement where the professional receives compensation only if a specific outcome is achieved.

Contingent Liability

A contingent liability is a potential financial obligation that may arise depending on the outcome of a future event, such as pending litigation, warranty claims, or performance guarantees.

Contra Account

A contra account is an account whose balance offsets another account.

Contract Profitability Analysis

Contract profitability analysis examines the financial performance of individual client contracts, comparing revenue to all associated costs, including direct labor, expenses, and allocated overhead.

Contract Renewal Tracking

Contract renewal tracking monitors upcoming contract expirations and renewal opportunities, ensuring timely client outreach and preventing revenue loss from lapsed contracts.

Contractual Adjustment

A contractual adjustment is the difference between what a practice bills an insurer and the lower amount the insurer has contracted to pay.

Contribution Margin Ratio

The contribution margin ratio is the share of each revenue dollar that remains after variable costs.

Contribution Per Hour

Contribution per hour measures the profit contribution generated from each billable hour worked, calculated as revenue per hour minus direct variable costs per hour.

Controller Services

Controller services provide oversight, quality assurance, and financial analysis beyond basic bookkeeping, including reviewing transactions, ensuring accurate month-end close, analyzing financial statements, and maintaining internal controls.

Cost Allocation

Cost allocation is the process of assigning shared or indirect costs to the projects, clients, or service lines that benefit from them.

Cost Behavior Analysis

Cost behavior analysis examines how costs change with changes in business activity levels, classifying costs as fixed (unchanged regardless of volume), variable (changing proportionally with volume), or mixed (containing both elements).

Cost Benefit Analysis

Cost-benefit analysis compares the total expected costs of a decision with its total expected benefits, so leaders can decide whether it is worth doing and which option is best.

Cost Center

A cost center is an organizational unit or function that incurs costs but does not directly generate revenue, such as administration, IT, or human resources.

Cost Center Allocation

Cost center allocation is the process of distributing cost center expenses to revenue-generating units, services, or clients to understand fully loaded costs.

Cost Management

Cost management is the process of planning, monitoring, and controlling business expenses to optimize resource use and maintain profitability.

Cost of Capital

Cost of capital is the return rate that must be earned on investments to satisfy owners and lenders, representing the opportunity cost of using funds in the business rather than alternative investments.

Cost of goods sold (COGS)

Cost of Goods Sold (COGS), also called Cost of Services for service businesses, represents the direct costs of delivering services to clients.

Cost of Services

Cost of services represents the direct costs incurred to deliver services to clients, analogous to the cost of goods sold for product companies.

Cost Per Employee

Cost per employee measures total operating costs divided by employee count, providing a benchmark for operational efficiency and cost management.

Cost Plus Contract

A cost-plus contract reimburses the consulting firm for allowable costs incurred plus a predetermined fee or percentage representing profit.

Cost Pool

A cost pool is a grouping of individual costs that share a common allocation basis, used to simplify and systematize cost allocation to products, services, or departments.

Cost Recovery

Cost recovery is the practice of billing clients for expenses incurred on their behalf, including travel, materials, software licenses, and subcontractor costs, either at actual cost or with a markup.

Cost Recovery Analysis

Cost recovery analysis examines whether revenue from services covers all associated costs, including direct costs, overhead allocation, and target profit margin.

Cost Structure

A cost structure is the mix of costs a business carries and how those costs behave as revenue changes.

Credit Balance Review

Credit balance review is the periodic examination of accounts receivable credit balances (amounts owed to clients rather than by them), identifying causes and resolving them through refund, application to future invoices, or correction of errors.

Credit Card Fee

Credit card fees are the costs associated with accepting credit card payments or using business credit cards.

Credit Hold

A credit hold suspends further services or deliveries to a customer until outstanding balances are resolved.

Credit Limit Management

Credit limit management is the practice of establishing maximum credit limits for clients before requiring payment, monitoring exposure against those limits, and taking action when limits are approached or exceeded.

Credit Line Draw

A credit line draw is borrowing money from your available line of credit.

Credit Memo

A credit memo is a document issued to reduce the amount a client owes, typically to correct billing errors, provide agreed-upon discounts, or compensate for service issues.

Credit Period Analysis

Credit period analysis examines the payment terms offered to clients and the actual payment patterns, comparing the offered terms to the realized collection timing.

Credit Terms

Credit terms specify the payment conditions offered to clients, including payment due date, early payment discounts, and late payment penalties.

Current Assets

Current assets are resources a business expects to convert to cash or consume within one year or one operating cycle, whichever is longer.

Current Liabilities

Current liabilities are obligations a business must settle within one year or one operating cycle.

Current ratio

The current ratio measures a business's ability to pay short-term obligations and is calculated as current assets divided by current liabilities.

Customer Concentration Analysis

Customer concentration analysis examines the distribution of revenue across the client base to identify dependence on a small number of clients.

Customer Deposit

A customer deposit is an advance payment received before delivering goods or services.