Cash Equity Contribution – money invested in your practice that represents an ownership interest.

Cash receipts – cash you receive from patients after you’ve provided a treatment or sold a product.

Collateral or security – assets pledged to support a loan (i.e. money, house, equipment).

Cost of goods/services sold – direct costs incurred in delivering your product or service (i.e. pillows, supplements, orthotic supplies etc.).

Current assets – cash, accounts receivable, inventory and other assets that are due within one year.

Current liabilities – payables, bank loans and other debts payable within one year.

Depreciation – the amount by which the cost of an asset is written off, over its estimated useful life.

Disbursements – money paid out to run your practice – the opposite of revenue.

General and administrative expenses – the common expenses of doing business (i.e. chiropractic supplies, paper, marketing, rent, insurance etc.).

Goodwill – an intangible asset reflecting the excess paid for your practice over its net asset value (i.e. the value of your patient files, location etc.).

Gross profit margin – the difference between revenue and the cost of goods or services sold.

Interest expense – the cost of servicing your debt with lenders such as leasing companies, and banks.

Operating loan – a type of bank loan that should be used for day-to-day operating expenses.  (This is also known as a line of credit.)

Operating profit – profit before your draw, dividends and income tax.

Payables – also known as accounts payable – money owed by the practice to suppliers.

Receivables – also known as accounts receivables – money owed to the practice by patients and third-party payers.

Retained earnings – accumulated profits retained in your practice and not paid out as dividends.  This is more applicable to practices that are incorporated.

Shareholder’s equity – the net assets belonging to the owner of the practice.  It is the difference between the practice’s total assets and total liabilities.

Term loan – a type of bank loan that is for a specified amount and period of time, often used to finance the purchase of practice, equipment and leasehold improvements.