AP Glossary

A type of short-term debt, accounts payable are amounts a business owes- bills from suppliers for goods or services purchased on credit. Accounts Payable is classified as a current Liability because the obligation is generally due within 12 months from the initial transaction date.

An internal or external examination of financial accounts and records in order to assure compliance with accounting rules and regulations, catch fraudulent activity and to review efficiency of financial operations.

ACH payments are processed through the Automated Clearing House network and involve transferring money from one bank account to another. The funds are between domestic banks and in US dollars.

Awards are payments made to students or non-Emory employees in recognition of an accomplishment (reportable for tax purposes) or to assist them in further research opportunities (non-reportable for tax purposes).

Notification from the IRS that a payee name and TIN combination are incorrect. Backup withholding must be done on any further payments until a corrected Form W-9 from the payee or a TIN validation form from the IRS has been received.

A percentage that is withheld from any payment made to a payee that has not provided a correct TIN or where the IRS has issued a notice to backup withhold on payments to that individual. Backup withholding is also required on payments made to nonresident aliens without a signed Form W-8 or W-8BEN certifying foreign status.

A nine-digit number printed across the bottom of a check that identifies the financial institution it is drawn upon.

Long-term agreement between a company and its suppliers often contains predetermined delivery dates.

A required statement that adequately describes the expense as a necessary, reasonable, and appropriate business expense for the University. All expenses must support or advance the goals, objectives, and mission of the University.

A deduction that a vendor allows on the invoice amount to encourage prompt payment. For example, terms of sale might include 2/10, n/30, meaning that the customer can pay 2% less than the invoice amount if the bill is paid within 10 days. The full amount must be paid within 30 days.

The W-8BEN form is used to create or update a foreign individual's record in Emory's Compass system. The form is required to show that the individual is:

• Not a U.S. person
• The beneficial owner of the income for which Form W-8BEN is being provided or a foreign partner in a partnership
• A resident of a foreign country with which the U.S. has an income tax treaty and who is eligible for treaty benefits that, if applicable, can claim a reduced rate of, or exemption from withholding.

(Foreign persons are subject to U.S. tax at a 30% rate of income they receive from U.S. sources that consists of Interest, Dividends, Rents, Royalties, Premiums, Annuities, Performed Services, Substitute payments in a securities lending transaction, and Gains, Profits, and income.)

The W-8BEN-E form is a document used by foreign entities to certify their status for U.S. tax withholding and reporting purposes. A foreign business may need to fill out this form if it is receiving payment from an American company or if it has income that is effectively connected with a U.S. trade or business.

A listing of Accounts in a financial system generally using alpha numeric characters to designate the transactions that comprise the Balance Sheet and Income Statement. The chart of accounts is used as the basis for preparing financial reports from an accounting system.

Checks are paper documents in which the bank is to pay the receiver of the check a stated amount of money.

A Check Request is a form used for processing payments (invoices) that are not on a Purchase Order. The Check Request should only be used for payments to companies and suppliers.

A credit card issued to an individual under a corporate account, used for business-travel expenses.

A legal business entity that has its own rights, including issuance of freely transferable stock, perpetual life and limitation of owner's liability.

The Credit Card Maintenance Form is used to request changes to either the Corporate Credit Card or the PCard. Changes include closing the card, reactivating the card, replacing the card and increasing/decreasing credit card limits.

A credit memo is a document issued by a company to a customer to offset all or part of an invoice, to correct accounts receivable and make good to the customer for such issues as damaged or return goods, lack of delivery, incorrect prices or freight charges, or other such problems. The company usually applies the credit memo against the customer’s outstanding balance, or issues a check to the customer.

An amount owed by a company as an obligation expected to be settled within 12 months from the date of the initial transaction that resulted in the liability.

A number representing the number of days on average that a business takes to settle its trade payables.

Document dated and signed by consignee or its agent at the time of delivery stating the condition of the goods at delivery.

A list published by the Department of Commerce’s Bureau of Industry and Security. It contains the names, addresses and countries of individuals and companies whose export and re-export privileges were revoked by the U.S. government.

Paying out in the discharge of a debt or expense; actual payment made for product or service to a contractor or vendor.

Generic term for any piece of paper with important data such as an invoice, inventory sheet, application, etc.

DBA is the abbreviation for “Doing Business As” when using a trade name, i.e., a name that is less or other than the full legal business name. Typically, the DBA name is the name seen by the public. In the U.S., a company must register its DBA at the county or sometimes state level. In the U.K., the similar term is T/A - trading as.

The amount of time an unclaimed property item can be held before it has to be reported to a state (this varies by state.)

In AP, due diligence typically refers to efforts made by a business to find the owner of unclaimed property. Performing due diligence usually includes sending a search letter to the owner's last known address within 60 to 120 days before the end of the dormancy period. However, rules tend to vary by state. Due diligence can also refer to efforts to verify vendor legitimacy when doing business with a new vendor.

More than one invoice issued for the same transaction. Duplicate invoices can result in duplicate payments, and may be issued as a method of fraud, or may be due to inadequate internal controls, such as duplicate vendors within the vendor master file.

EFT payments are processed through the Automated Clearing House network and involve transferring money from one bank account to another. The funds are between international banks and in US dollars.

An employee is anyone who performs services for the business and the business controls what will be done and how it will be done. The business must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment taxes on wages paid to the employee.

A nine-digit number assigned to all business entities by the IRS for taxation purposes. An EIN is required on all business tax returns, documents and statements.

Remittance of unclaimed property to the state in compliance with unclaimed property law. Abandoned or unclaimed property (of all kinds) becomes the property of the state, which protects the property on behalf of the owner. For AP departments, this would be, for instance, a check never cashed. Unclaimed property laws in each state set dormancy periods, requirements for due diligence in seeking the owner, and reporting and escheat requirements for the state. Owners can claim escheated property held by the state, though only a small percentage ultimately do.

A tax levied on the manufacture, sale, or consumption of certain (particular) non-essential goods or services, e.g., airline tickets, gasoline, alcohol, tobacco, etc. An excise tax is levied on a particular product in contrast to sales and use taxes, which are levied because sales occurred, rather than on the product purchased.

A Fellowships is amounts paid for the benefit of an individual to pursue study, training, or research, and generally require services to be performed (either currently or in the future) as a condition of the award.

The Foreign Source & Canadian Resident Statement is used to request payment to a foreign source.

An information form filed with the IRS and the supplier that reports total payments made during the calendar year.

Any dishonest and illegal activity perpetrated in the course of business to give an advantage to an individual or company.

Generally Accepted Accounting Principles are accounting guidelines accepted by accounting professionals and businesses on a set of practices that provide guidance for preparing and reporting financial information. There are also two other sources that provide the basis for establishing accounting standards: 1) APB Opinions are accounting guidelines issued by the AICPA Accounting Principles Board and 2) ETIF abstracts are issued by FASB Emerging Task Force for guidance on new accounting issues. GAAP helps to create conformity when reporting financial results across all businesses and industries in the United States. Financial Reporting methodologies in accordance with GAAP provides comparable data and common principles when a company prepares and reports financial information.

Grants are a type of financial aid for colleges that offers free money that does not need to be paid back, as long as students meet the grant’s criteria. Unlike student loans, grants offer unrestricted use of funds and do not have repayment obligations.

A guest speaker is someone who possesses advanced knowledge of a particular subject area and speaks about that subject area to a group or organization with which he or she is normally not involved.

The business in possession of an unclaimed property item.

An honorarium is a one-time payment made to an individual (not a corporation, business or partnership), who is not an employee, student employee, or a student of the University, for a special and non-recurring activity or event with a short duration for which a fee is not legally or customarily required and which fixed business price has not been set.

Honoraria are typically paid to persons of scholarly or professional standing expertise with the intent of showing good will and appreciation for voluntarily service to the university.

An Independent Contractor is an individual who performs services for the business whereby the business has the right to specify the result to be accomplished by the work, but not the means and methods by which the result is to be accomplished. The earnings of a person who is working as an independent contractor are subject to Self-Employment Tax. Businesses generally do not have to pay any taxes on payments to independent contractors.

An IRB is a committee of scientists and non-scientists who review projects submitted by researchers at the University. Normally, each IRB must also have at least one member who represents the community and is not affiliated with the University.

The United States government agency that collects taxes and enforces internal revenue laws. The IRS is a bureau of the Department of Treasury.

An IBAN, or International Bank Account Number, identifies specific bank accounts at international banks. Depending on the country, we may ask you to provide an IBAN when you send an international wire transfer.

A request for payment for products or services rendered, typically comprising an itemized list of charges, including prices, quantity, tax if applicable, and shipping charges.

An amount owed; an obligation of a company or entity that must be settled in the future by transfer of assets, provision of services, or assignment of future economic benefit, it is the result of a past transaction.

A form of business structure designed to combine the best of corporate and partnership attributes into one entity; members have limited liability and are taxed like a partnership, avoiding double taxation. Rules vary by state.

Business structure consisting of at least one general partner and one limited partner; limited partners have limited liability and are not involved in management. It serves as a tax shelter, but does not constitute a separate legal entity from the owners, as does a corporation.

A universal four-digit classification code describing whether a particular business predominantly provides goods or predominantly provides services. Credit card providers furnish these codes to businesses as a way to help them know which credit card card purchases should be reported on a 1099. Purchases made to vendors with MCCs labeling them service providers are reportable while purchases made to goods providers are not.

A character recognition technology adopted by the banking industry to facilitate check processing, includes magnetic ink or toner and unique fonts on the bottom of checks. The encoding contains the account number, the routing number, the serial number and the amount of the check.

The Treasury Department's Office of Foreign Assets Control. OFAC publishes the Specially Designated Nationals and Blocked Persons List (SDN). U.S. businesses are prohibited from doing business with individuals and countries contained on the list.

Contracting to move an in-house work function to an external service provider that specializes in the function, e.g., freight bill auditing, processing and payment; objectives typically include cost reduction and access to required expertise.

A document that accompanies product shipped and lists quantity shipped versus amounts ordered; should be checked by Receiving to verify agreement with actual product received; used in a three-way match for payment approval with a Purchase Order and Invoice.

The individual or organization to whom a check is made payable. Also known as the receiver of payments.

A method to affect the transfer of value; the transfer of funds between bank depositories or to or from a debt instrument.

Provisions, typically set by the vendor, regarding settlement of a transaction. May be negotiated between vendor and buyer as part of a contract.

The individual or organization that makes a payment.

A best-practice deterrent to check fraud, positive pay involves daily reconciliation of a company's issued checks to checks presented for payment to the company's bank. The company sends a daily data file of issued checks to the bank. The information in the data file includes check number, amount and date, bank and account information. It may also include payee information, as payee positive pay is becoming more common (ensuring that the correct payee is on the presented check). Checks presented for payment are compared to the checks-issued file; those that fail to match are rejected and a list of the exceptions is sent to the company, which makes the decision whether to pay or not.

The PI is responsible for the overall management of the research study.

Generally, procurement is the act of purchasing items for your organization. Many companies also refer to their purchasing departments as the procurement department. Procurement performs activities associated with documenting and placing orders with suppliers of goods or services. They also develop purchasing policies and negotiate supplier contracts.

An invoice typically sent prior to shipment represents an estimate. It is not the actual bill. Companies do not pay from these invoices. A commercial invoice should follow with the final price.

A PO serves as an acknowledgement, or promise, that payment will follow in the future for specific goods or services. The information sent to a vendor to request product or services typically includes item, quantity, price, discounts, vendor information, and ship-to information.

Activities associated with documenting and placing an order with a supplier of goods or services; buying/obtaining goods and services; also, the department responsible for those activities.

Multi-purpose bank cards aimed at streamlining the traditional purchase order and payment processes for lower-dollar transactions, typically not exceeding $5,000, but often much smaller.

Process of extending a formal offer to a prospective buyer for a product or service

A written or electronic record of a transaction verifying payment.

The information needed by the biller to accurately post customer bill payments.

A request for service or product initiated by the user or consumer.

A research study, sometimes also called a clinical trial or research experiment, is a way for scientists and other researchers to find out information about a particular topic or answer to a specific question.

A tax on gross receipts from retail sales of products and services is calculated as a percentage of the sales prices.

When a customer pays less than the total amount due on an invoice, the deduction is usually taken for a real or perceived error, such as damaged goods.

Single Use Account is a card-based payment solution that acts like a check by providing a 16-digit virtual account number for each payment. This allows you to set each Single-Use Account with a credit limit that matches the specific payment amount.

Amounts paid to, allowed to, or for the benefit of a student to aid in the pursuit of studies. It may also be in the form of a reduction in the amount owed by the recipient for tuition, room and board, or any other fee.

A business that is owned and operated by one individual. The sole owner assumes all financial and legal liability for the business.

The process of identifying, negotiating, and creating supply agreements with vendors of goods and services.

The Specially Designated Nationals and Blocked Persons list prepared by the Treasury Department’s Office of Foreign Assets Control. U.S. businesses are prohibited from doing business with the individuals, organizations, and countries on the SDN. The list includes terrorists, drug and weapon dealers and other prohibited individuals and organizations.

A written record of an account; also, a summary of outstanding (unpaid) invoices. Unlike an invoice or bill, a statement is not generally used as a formal request for payment but rather as a reminder of amounts owed by a customer.

A stipend is a fixed sum of money paid periodically to someone who is providing a service or receiving career training, but not necessarily for work performed. A stipend can help cover basic expenses or enable someone to be exempt from wages or salaried employment.

A stop payment is a request made to a bank by an account holder to cancel a payment before it is processed.

A study participant is an individual that participates in research.

The Study Participant form is used to create or update the individual’s vendor record. This form is used in lieu and/or in conjunction with the IRS’ Form W-9.

A subaward is an award provided by a passthrough entity (such as Emory University) to a subrecipient for the subrecipient to carry out part of a federal award received by the pass-through entity.

The SIF is used to create or update a vendor/payee record in Emory’s Compass system. This SIF is used in lieu of/or in conjunction with the IRS’ Form W-9 as it provides all the information needed to set up a vendor.

A SWIFT code or bank identification code (BIC) identifies the bank that will be receiving the wire transfer. You will need a SWIFT/BIC to send international wire transfers.

A nine-digit number assigned by the IRS. The TIN can be an individual Social Security Number (SSN), an Employee Identification Number (EIN) for a business, or a nonresident alien's number (ITIN).

Validation of an invoice by matching it to a purchase order and a receiving document. If all three match or agree, the invoice is approved for payment.

An IRS online database and batch process program where payers can search payee name and TIN combinations. The system informs the payer if the name and the TIN are a valid match or not.

Activity between two parties. A transaction can be financial or commercial.

A "Travel Advance" is the payment of funds to an individual to be used in the future during an authorized trip, project, or event.

Expenses employees incur for business travel and entertainment that may be tax deductible.

Tangible or intangible property that is considered lost or abandoned by the rightful owner after that owner cannot be located for a specific period. Intangible unclaimed property typically includes money, checks, drafts, deposits, interest, dividends and income, credit balances, customer overpayment, gift certificates, security deposits, refunds, credit memos, unpaid wages, unused airline tickets, and unidentified remittances. Such property must be reported and escheated (remitted) to the states after a dormancy period and a due diligence effort to locate the owner. See Escheatment.

A tax on the use or consumption of a taxable product or service was devised to capture revenue that slips through the cracks of the sales tax law.

VAT is a consumption tax levied on goods and services at each step of the production/distribution cycle. An indirect tax, VAT is paid by manufacturers, distributors and retailers when they receive goods in their inventories. Businesses are able to recover VAT payments through tax deductions, with the cost of the tax ultimately paid by the end-consumer. More than 100 countries worldwide have VAT systems in place, including Canada, New Zealand, Japan, Australia and the European Union. VAT rates can vary from 3.6 percent to 25 percent of a good's total value.

A central, comprehensive database file generally maintained by Accounts Payable that contains information about vendors used to facilitate financial transactions between companies. The information includes payment terms, address, names, and payment or purchase transaction history.

A document that can serve as an authorization for payment and/or entry to the accounts payable system of a vendor. The invoice usually indicates how the invoiced amount should be charged in the company's general ledger.

A wire is a monetary transfer of funds that takes place either between one bank and another through an electronic funds transfer or through a transfer of cash via non-bank providers, such as Western Union. The funds are in foreign currency.