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Understanding business terms is the key to learning about business. Terms P-Q are listed below:

Payment Gateway, Performance Appraisal, Petty Cash, Point-of-Sale (POS), Price Control, Price Discrimination, Principal, Product Life Cycle, Profit, Pro-Forma Invoice, Purchase Order (PO), Qualified Lead, Quote (Quotation)


Payment Gateway
A Payment Gateway is a service that authorizes payment thereby enabling the use of credit cards to make purchases.  The payment gateway service interface with the credit card holder's bank and the vendor's bank to ensure available funds and make depsoits so that the buyer's account is debited and the seller's account is credit with payment.  

Payment Terms
Payment terms is the conditions under which a seller may complete a  sales transactions.  It refers to the period allowed to a buyer to pay off the amount due.  Payment terms include  Net 10, Net 15, Net 30 or Net 60.  This means that 10, 15, 30 or 60 days after completing the sales transactions you will receive full payment.  Net means "total after all discounts and fees".  This type of payment terms are used between businesses.  For example, between a retailer and a manufacturer or distributor.  The retailer buys the items from a manufacturer or distributor and turns around and sell it, then pay the manufacturer or distributor 10, 15, 30 or 60 days later depending on the agreement.

Performance Appraisal
Performance Appraisal is used to asses an employee's job performance.  It is a systematic process that describes what an employee did or didn't do over a specific period (usually one year) based on pre-established objectives.  It is a written document that is done by a supervisor on his/her subordinate.  Every organization define for themself how and when performanc appraisals are accomplished.

Petty Cash
Petty Cash is a small amount of discretionary funds in the form of cash used for expenditures where it is not sensible to make any disbursement by check, because of the inconvenience and cost of writing, signing and then cashing the check.  Source:  Wikipedia

Point-of-Sale (POS)
Point-of-Sale refers to the point at which the sales transaction takes palce.  It is also called Point-of-Purchase.  For a retail store with a physical location this is the cash register where the customer checks out and pay for the items they purchase.  For a retail store with an e-commerce site it is the website where the customer enters their payment and makes the payment transaction.  POS systems are equipment and software that make the payment transaction possible.  They include cash register and electronic payment systems.

Price Control
Price controls are governmental restrictions on the prices that can be charged for goods and services in a market. The intent behind implementing such controls can stem from teh desire to maintain affordability of staple foods and goods, to prevent price gouging during shortages and to slow inflation, or, alternatively, to ensure a minimum income for providers of certain goods.  Source:  Wikipedia

Price Discrimination
Price Discrimination or Price Differentiation exists when sales of identicalgoods or services are transacted at different prices fromt he same provider. It also occurs when the same price is charged to customers which have different supply cost. Source:  Wikipedia

Price Gouging
Price gouging is when a business sells their products or services at a level that is much higher than what is considered to be reasonalbe or fair.  This is usually indicated by a steep increase in price over a very short period of time.  This normally occurs when something is suddenly in high demand.  Some examples of when rapid price increses occur include: demand for building material after a hurricane; demand for oil after a disaster at a oil refinery; etc.

Principal is the face amount of a loan. For example, if you borrow $10,000 at 10% interest. The Principal on the loan is $10,000. This is the amount you will pay interest on. For the loan to be repaid the entire $10,000 has to be repaid plus interest..

Product Life Cycle
Product Lifecycle encompases the life of a product from conception, through design and creation to the use and disposal. From a small business standpoint it is about when and how you purchase a new product (machinery, etc.), how you use and maintain it and when and how you dispose of it.

Product Recall
Product recall is an effort to remove a product from the market because of safety issues or product defects that could endanger the lives of consumers and result in legal and financial risks to the maker/seller.  Learnmore about Product Recall.

Profit is the difference between what it cost you to make/deliver a product/service and what you charge for that product/service.

Gross Profit is the difference between what it cost you to make/deliver a product/service and what you charge for that product/service bere expenses such as overhead, Research & Development, Sales & Marketing, interest expense, taxes and other expenses are taken out.

Net profit is what is left over after all expenses have been taken out.

Profit Center
Profit Center is a section, branch or division of a company that is treated as a standalone entity for the purpose of calculating it's profits.  This often means that the section, branch or division chief is given the authority to make decisions related to the product or service pricing and operating expenses because they are held accountable for results.

Pro Forma Invoice
A Pro Forma invoice is a document that states a commitment from the seller to sell goods to the buyer at specified prices and terms. It is used to declare the value of the trade. It is not a true invoice, because it is not used to record accounts receivable for the seller and accounts payable for the buyer. Simply, a 'Proforma Invoice' is a Confirmed Purchase Order where buyer and Supplier agree on the Product Detail and cost to be shipped to buyer. A sales quote is prepared in the form of a pro forma invoice which is different from a commercial invoice. It is used to create a sale and is sent in advance of the commercial invoice. The content of a pro forma invoice is almost identical to a commercial invoice and is usually considered a binding agreement although the price may change in advance of the final sale.

A Pro forma Invoice can also be used for shipments containing items that are not being bought or sold, such as gifts, samples and personal belongings, whereas a Commercial Invoice is used when the commodities shipped are being bought or sold.

Banks usually prefer a pro forma invoice to a quotation for establishment of a letter of credit or for advance payment by the importer through his bank.  Source:  Wikipedia

Proof of Concept
Proof of Concept is a demonstration of the feasability of certain concept or theory.  In other words, it is the ability to show that something can work in the manner you concieved that it will work.  For example, you have an idea that if you designed a one legged that is safe and sturdy as a four legged chair it will gain widespread acceptance from customers.  But, before you launch into a massive production you want to make sure that your product will gain acceptance so, you decided to produce a small amount and test them in different markets.  As it turn out, they sold out quickly.  Hence, your proof of concept.

Purchase Order
A purchase order (PO) is a commercial document issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services the seller will provide to the buyer. Sending a purchase order to a supplier constitutes a legal offer to buy products or services. Acceptance of a purchase order by a seller usually forms a contract between the buyer and seller, so no contract exists until the purchase order is accepted. It is used to control the purchasing of products and services from external suppliers. .  Source:  Wikipedia

Qualified Lead
A Qualilfied Lead is a potential customer who has expressed interest in a product or service and meets general buying criteria.  Source:  Investopia

Quote (Quotation)
This is a formal statement of promise (submitted ussually inresponse to a request for quotation) by potential supplier to supply the goods or services requried by a buyer, at specifeid prices, and within a specified period. A quotation may also contain terms ofsale and payment and warranties. Acceptance of quotation by the buyer constitutes an agreement binding on both parties.  Source:  Business Dictionary








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