The financial sector is jam-packed with acronyms and abbreviations. Getting to grips with the language of finance can feel like deciphering a code.
However, once you are familiar with these acronyms and abbreviations, learning the language of finance becomes much easier.
This guide covers 25 finance acronyms you’ll see most often in UK businesses, what they mean in plain English, where they show up, and a quick example so people stop guessing.
A lot of confusion about finance acronyms comes from messy processes (missing receipts, unclear approvals, inconsistent coding). ExpenseIn helps teams tighten up how expenses are submitted, approved, and reported, so finance gets clean data without the chasing. Book a demo today.
Quick finance abbreviation answers
What does AML stand for? Anti-Money Laundering (rules to prevent criminals from disguising illegal money as legitimate).
What does P&L mean? Profit and Loss (income statement showing revenue, costs, and profit over a period).
What’s the difference between BS and P&L? The Balance Sheet (BS) is a snapshot at a point in time; the P&L shows performance over a period.
What does MTD mean in the UK? Making Tax Digital: VAT-registered businesses must keep VAT records digitally and file VAT returns using software.
What does VAT stand for? Value Added Tax. UK standard rate is 20% (with reduced and zero rates for some goods/services).
What does YTD mean? Year-to-date (from the start of the year up to today).
Finance acronyms cheat sheet
Acronym | Stands for | Plain-English meaning | Where you’ll see it |
|---|---|---|---|
AML | Anti-Money Laundering | Rules and controls to detect/prevent money laundering | Compliance, banking, vendor checks |
BS | Balance Sheet | Snapshot of assets, liabilities, equity | Accounts, reporting packs |
CA | Capital Allowances | Tax relief on qualifying assets | Tax computations |
CA | Current Assets | Assets you can use/sell within 12 months | Balance sheet |
CAGR | Compound Annual Growth Rate | Smoothed annual growth over time | Forecasts, board packs |
CF | Cashflow | Money moving in/out of the business | Treasury, finance ops |
CFO | Chief Financial Officer | Senior exec leading finance | Org charts, leadership updates |
EBITDA | Earnings Before… | Proxy for operating performance (with caveats) | Valuations, banking, M&A |
FA | Fixed Assets | Long-term assets (equipment, buildings) | Fixed asset register |
FY | Financial Year | Company’s reporting year | Budgeting, reporting |
GAAP | Generally Accepted… | Accounting rules/standards used for reporting | Statutory accounts |
GDPR | General Data Protection Regulation | Rules for handling personal data | Security, procurement |
HMRC | His Majesty’s Revenue and Customs | UK tax authority | Tax, payroll, VAT |
IPO | Initial Public Offering | Listing on a public stock exchange | Corporate finance, news |
MTD | Making Tax Digital | Digital VAT record-keeping + VAT return filing | VAT processes, software |
M&A | Mergers & Acquisitions | Buying/combining companies | Corp dev, finance |
NBV | Net Book Value | Asset value after depreciation | Fixed assets, reporting |
OPM | Operating Profit Margin | Operating profit as % of revenue | KPI dashboards |
P&L | Profit & Loss | Income statement over a period | Management accounts |
ROA | Return on Assets | Profitability vs asset base | Performance analysis |
ROI | Return on Investment | Profitability of an investment | Business cases |
TB | Trial Balance | List of ledger balances (debits/credits) | Month-end close |
VAT | Value Added Tax | Consumption tax on goods/services | Expenses, invoicing |
WDA | Written Down Allowance | Capital allowance based on reducing value | Tax computations |
YTD | Year-to-Date | From start of year to now | Reporting, analysis |
1. AML: Anti-Money Laundering
AML, or anti-money laundering, refers to the laws and regulations in place that aim to uncover and prevent criminals from disguising illicit funds from illegal activities, such as drug trafficking and terrorism, as lawful income.
Example: "We need to complete AML checks before we onboard that new supplier."
2. BS: Balance Sheet
A BS (balance sheet) is a statement that provides information on a company’s assets, liabilities and shareholder equity.
A balance sheet is a financial statement that can be used to assess a business’ financial health and provide insight into a business’ finances at the time of publication.
Example: “Prepayments look high on the BS - can we review?”
3. CA: Capital Allowance
Capital allowances (CA) are a type of tax relief for businesses that allow them to deduct some or all of the value of an item from their profits before they pay tax.
Capital allowances can be claimed on machinery, equipment and vehicles used by a business to conduct its operations – these are also referred to as plant and machinery.
Example: “Add the laptops to the capital allowances schedule.”
4. CA: Current Assets
Current assets (CA) are assets owned by a business that can be converted to cash, whether through liquidation, use or sales, within a financial year.
Examples of current assets include:
Cash
Accounts receivable
Stock inventory
Marketable securities
Example: “Receivables are up - current assets are inflated by late payers.”
5. CAGR: Compound Annual Growth Rate
CAGR (Compound Annual Growth Rate) is the average annual rate of growth of an investment or business over a specific period, accounting for compounding effects.
Example: “Revenue CAGR over three years is 12%.”
6. CF: Cashflow
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Just as the name suggests, cashflow (CF) refers to the flow of cash moving in and out of a business.
Cashflow is vital for the smooth running of a business as it dictates whether a business can pay its suppliers, employees, owners, and other expenses on time.
The amount of cash in the business is determined by the cash made from selling products, investments and bank loans.
Example: “Cashflow is tight this month - delay non-essential spend.”
7. CFO: Chief Financial Officer
CFO (Chief Financial Officer) is the title given to a senior executive in a company who is responsible for managing the financial matters of the business.
Often holding the highest financial position in a business, the chief financial officer plays a key role in ensuring the business is operating efficiently and within financial legislation and regulations.
Example: “The CFO wants monthly visibility by department.”
8. EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortisation
EBITDA (earnings before interest, taxes, depreciation, and amortisation) is a useful measurement for judging a company's operating performance.
Example: “EBITDA is strong, but cash conversion needs work.”
9. FA: Fixed Assets
Fixed assets (FA) refer to long-lived assets that a company owns and uses in its operations that it is unlikely to sell.
Examples of fixed assets include:
Buildings
Factories
Computer hardware and software
Equipment and machinery
Example: “Add the new equipment to FA and start depreciation.”
10. FY: Financial Year
A financial year (FY) refers to a one-year period that businesses use for preparing financial reports and budgeting. A financial year doesn’t necessarily have to match the calendar year (1 January - 31 December).
Different businesses have different financial years. For example, educational institutions might match their financial year to fit in with term-time, but it does have to cover 12 months.
Example: “FY25 closes in March, so plan spend accordingly.”
11. GAAP: General Accepted Accounting Principles
GAAP (General Accepted Accounting Principles) refers to the standards, rules and procedures issued by the Financial Reporting Council (FRC) in the United Kingdom. These standards cover the details and legalities of business and corporate accounting.
GAAP creates consistent accounting and reporting standards, providing stakeholders with reliable methods of assessing a business’ financial health.
(Note: Businesses can also follow the IFRS rules.)
Example: “We need to confirm the revenue policy under GAAP.”
12. GDPR: General Data Protection Regulation
GDPR (General Data Protection Regulation) is a data protection and privacy law in the EU and the European Economic Area. Coming into force in 2016, GDPR restricts what organisations can do with personal data and enhances how individuals can access their personal data.
GDPR applies to any entity that processes the personal data of EU citizens or residents. If entities provide goods or services to EU citizens or residents, even if the entity itself isn’t based in the EU, they still need to comply with GDPR. The Data Protection Act 2018 is the UK's implementation of the General Data Protection Regulation (GDPR).
Example: “Before we sign, confirm the supplier’s GDPR terms and data retention.”
13. HMRC: His Majesty's Revenue and Customs
HM Revenue & Customs (HMRC) is responsible for collecting, paying, administering and enforcing taxes in the UK.
Example: “HMRC asked for evidence supporting the VAT treatment.”
14. IPO: Initial Public Offering
An initial public offering (IPO) is the process of offering shares of a private company to the public for the first time, allowing it to become a publicly traded company.
Example: “Post-IPO reporting requirements are much stricter.”
15. MTD: Making Tax Digital for VAT
Making Tax Digital for VAT (MTD) is a component of a larger government effort to streamline the taxation system so that taxpayers can pay their taxes more accurately.
Ultimately, the government aims to reduce the amount of tax lost due to avoidable errors from manual data entry. It requires both companies and qualifying individuals to:
Maintain digital records
Submit quarterly updates, which will help the tax system get closer to real-time
Example: “We need to file the VAT return via MTD-compatible software.”
16. M&A: Mergers and Acquisitions
M&A (Mergers and Acquisitions) is the consolidation of companies through various transactions, including:
Mergers
Acquisitions
Takeovers
Example: “Finance is supporting due diligence on the acquisition.”
17. NBV: Net Book Value
The financial term "net book value" (NBV) refers to the value of an asset as recorded on a company's balance sheet after deducting its accumulated depreciation, depletion, or amortisation.
Example: “What’s the NBV of the asset we’re disposing of?”
18. OPM: Operating Profit Margin
Operating profit margin (OPM) is a metric used to work out the profitability or performance of a business. It measures the percentage of profit a company makes from its operations before the deduction of interest charges and taxes. It is calculated with the following formula:
Operating Profit Margin = (Operating Profit / Total Revenue)
Example: “OPM dipped this quarter - costs rose faster than sales.”
19. P&L: Profit and Loss (Income Statement)
A profit and loss statement (P&L), sometimes referred to as an income statement, is a financial report that shows how much a company has spent and earned over a specified period of time. It also shows if the company has made a profit or a loss over that time.
Along with the balance sheet and cash flow statement, the P&L statement is issued by every public company on a quarterly and annual basis.
Example: “Travel is over budget on the P&L - what’s driving it?”
20. ROA: Return On Assets
ROA, or return on assets, is a metric used to work out how well a company uses its assets to make a profit. ROA can be expressed as a percentage by dividing the net income of a business by its total assets. The higher the ROA, the more efficient a business is at generating profit.
Example: “ROA improved after we reduced underused assets.”
21. ROI: Return On Investment
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ROI (return on investment) refers to the metric that shows how profitable an investment is. ROI is calculated using the following formula:
ROI = (Net Profit / Cost of Investment) x 100
The ROI is expressed as a percentage. A business can then use this to see if a specific business activity, like participating in a tradeshow or running a paid advertising campaign, has been worth it.
Example: “What ROI did we get from the event sponsorship?”
22. TB: Trial Balance
A trial balance (TB) is a list of credit and debit entries that a company uses to audit its double-entry accounting systems internally.
A trial balance aims to verify that the sum of all debits equals the sum of all credits and check if any entries have been recorded in the wrong account.
Example: “The TB is out - there’s likely a posting error.”
23. VAT: Value Added Tax
VAT stands for Value Added Tax, and the current standard rate is 20% for most services and goods.
Subject to various conditions, there are exemptions, which means that some goods earn a reduced rate of 5% (such as home energy), and other items are zero VAT.
Example: “YTD marketing spend is up 18% vs last year.”
24. WDA: Written Down Allowance
The term "written down allowance" (WDA) refers to a tax deduction that allows businesses to reduce the value of an asset over time, reflecting its depreciation or wear and tear.
It is calculated by applying a depreciation rate or percentage to the initial cost of the asset. The depreciation rate varies depending on the asset type and the applicable tax laws.
Each year, the business deducts the written-down allowance from its taxable profits, thereby reducing its tax liability.
Example: “Apply WDA to the pool balance for this year.”
25. YTD: Year-to-date
YTD stands for "Year-to-date." It is a financial term used to describe the period of time from the beginning of the current calendar year up to the present date. YTD is often used to analyse and compare financial data, performance, or metrics within the context of the current year.
For example, if the current date is 12th July 2023, the YTD period would represent the time from 1st January 2023 to 12th July 2023.
During this period, financial figures or metrics can be tracked and evaluated to assess performance or measure progress.
Example: “YTD marketing spend is up 18% vs last year.”
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FAQs: Finance acronyms and abbreviations
Because acronyms get reused. In finance, CA can mean Capital Allowances (tax) or Current Assets (balance sheet).
Context is everything. Look at the report or conversation topic.
For MTD for VAT, it means maintaining VAT records digitally and filing VAT returns using compatible software. It affects processes, tooling, and how evidence is stored for compliance.
VAT is a tax added to many goods and services. In the UK, the standard VAT rate is 20%, with reduced and zero rates for certain categories.
A TB lists ledger balances to help validate postings and support reconciliations. It’s a common starting point for month-end checks and preparing management accounts.
EBITDA can help compare operating performance, especially across businesses, but it doesn’t show cash movement, debt costs, or capex needs. Use it alongside cashflow and other metrics.
