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Plain-English definitions of the inventory, costing, cash and compliance terms that come up when a mid-sized company reviews its ERP: dead stock, carrying cost, landed cost, job costing, three-way match, credit control, DSO, the 13-week cash forecast, FSMA 204, Peppol, Making Tax Digital, CIS and packaging EPR. Each with its formula and a full guide.
Short answer: this glossary defines the terms that come up most often when a mid-sized company looks at its inventory, its margins, its cash and its compliance obligations, and decides whether its ERP is helping or getting in the way. Each entry gives the definition in two or three sentences, the formula where there is one, and a link to the full guide with worked examples.
Inventory
Buffer inventory (safety stock). Stock held on top of what you expect to sell before the next delivery, so a demand spike or a late supplier doesn't become a stockout. Its size depends on how variable demand is, how long and variable the supplier's lead time is, and how much stockout risk you accept. Formula: safety stock = Z × σ(demand) × √(lead time). Full guide with three worked examples and a calculator for every SKU.
Dead stock. Inventory that hasn't sold or been consumed for a set period, usually 12 months, and is unlikely to move again at full price. It is cash already spent, sitting on a shelf and costing storage, insurance and handling every month. How to find it and six ways to clear it.
Inventory carrying cost. The annual cost of holding inventory, expressed as a percentage of its value: capital, storage, insurance, taxes, handling and the risk of obsolescence. For most companies it lands between 20% and 30% a year. Formula: carrying cost = carrying cost % × average inventory value. Formula and worked example.
Landed cost. The full cost of a product once it arrives: purchase price plus freight, insurance, customs duties and tariffs, brokerage and handling. It is the only honest basis for pricing and margin. Formula: landed cost = purchase price + freight + insurance + duties and tariffs + fees. Formula, example and allocation methods.
Costing and payables
Job costing. Tracking materials, labor and a share of overhead per individual job — a custom order, a project, a batch — so you know what each one cost and whether it made money. It is the costing method for contractors, custom manufacturers and anyone whose work differs job by job. Methods and a worked example.
Three-way match. An accounts payable control that compares the purchase order, the goods receipt and the supplier invoice before payment. If quantity and price agree within a tolerance, the invoice is approved; if not, it is held. How it works and how to automate it.
Cash and the close
Credit control. The process of deciding who you sell to on credit, on what terms, and making sure they pay on time: credit checks and limits, clear terms, reminders, escalation and holds. In the US it is usually called collections or accounts receivable management. Process, KPIs and automation.
DSO (days sales outstanding). How many days, on average, customers take to pay. Formula: DSO = accounts receivable ÷ revenue for the period × days in the period. Every day of DSO removed releases revenue ÷ 365 in cash, once. How credit control brings it down.
13-week cash forecast. A rolling weekly view of cash in, cash out and closing balance for the next quarter. It answers the question that matters most in a tight year: will we have the cash in week 9? How to build it.
Month-end close. The work of finalizing a period's books: reconciliations, accruals, intercompany, inventory valuation and reporting. A close that runs past ten days usually signals data problems upstream, in purchasing and inventory, not in accounting. Seven causes and how to fix them.
Compliance
FSMA 204. The US FDA's food traceability rule. Businesses that manufacture, process, pack or hold foods on the Food Traceability List must keep key data elements at each critical tracking event and give the FDA a sortable spreadsheet within 24 hours when asked. Compliance date: July 20, 2028. What it means for produce and seafood distributors.
Peppol and UK e-invoicing. Peppol is the network over which structured e-invoices are exchanged through access points. The UK will require structured e-invoices for all VAT invoices between businesses from April 2029, and confirmed Peppol as the network in June 2026. The 2029 mandate and how to prepare.
Making Tax Digital (MTD) for VAT. HMRC's requirement to keep VAT records digitally and submit VAT returns through compatible software. It stays in place alongside the 2029 e-invoicing mandate. How it works in Business Central.
CIS and the domestic reverse charge. Under the UK Construction Industry Scheme, contractors deduct 20% from registered subcontractors' labor (30% if unverified) and file a monthly return by the 19th. The domestic reverse charge shifts VAT on construction services between VAT-registered businesses to the customer. How UK contractors handle both.
Packaging EPR (UK). Extended Producer Responsibility makes producers pay for the household packaging they place on the market. Large producers report packaging data every six months, and fees per tonne vary by material and, from 2026-27, by recyclability. Fees and the data you need.
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