Financial Glossary

Accounts Payable

Money you owe to suppliers — bills received but not yet paid.

Accounts Receivable

Money owed to you by customers — invoices sent but not yet paid.

Allowances

Additional payments beyond basic salary: housing, transport, meals.

Balance Sheet

Snapshot of what a business owns, owes, and is worth.

Basic Salary

Core salary before allowances, typically 50-60% of gross.

Bonds

Debt securities where you lend money for periodic interest payments.

Break-Even Point

Revenue level where costs equal income — no profit, no loss.

Budget

A plan for how you'll spend and save your money.

BVN (Bank Verification Number)

11-digit unique banking identifier that links all your accounts.

Capital Allowance

Tax deduction for depreciation of business assets.

Capital Gain

Profit from selling an asset for more than you paid.

Cash Flow

The movement of money in and out of your accounts.

Cash Flow Statement

Financial report showing money moving in and out of the business.

CBN (Central Bank of Nigeria)

Nigeria's central bank regulating monetary policy and banking.

CIT (Company Income Tax)

Tax on company profits with three tiers: 0%, 20%, or 30% based on turnover.

Compound Interest

Interest earned on both principal and accumulated interest.

CRA (Consolidated Relief Allowance)

Tax relief for individuals: ₦200,000 plus 20% of gross income.

Disposable Income

Money left after taxes and essential expenses for discretionary spending.

Dividend

Share of company profits paid to shareholders.

Emergency Fund

Savings for unexpected expenses — experts recommend 3-6 months of expenses.

FIRS (Federal Inland Revenue Service)

Nigeria's federal tax authority responsible for collecting taxes.

Fixed Deposit

Bank savings locked for a set period for higher interest returns.

Gross Income

Your total income before any deductions.

Gross Profit

Revenue minus cost of goods sold, before operating expenses.

Gross Salary

Total compensation including basic salary plus all allowances.

Inflation

The rate at which prices increase, reducing purchasing power.

Invoice

A document requesting payment for goods or services provided.

Liquidity

How easily you can access your money.

Minimum Tax

Fallback tax of 0.5% of gross turnover when calculated tax is very low.

Naira (₦)

Nigeria's official currency, issued by the Central Bank of Nigeria.

Net Income (Take-Home Pay)

Your income after all deductions — what actually hits your bank account.

Net Profit

Revenue minus ALL expenses — the bottom line.

Net Worth

Total assets minus total liabilities — your overall financial health.

NGX (Nigerian Exchange Group)

Where Nigerian stocks are traded (formerly NSE).

NHF (National Housing Fund)

2.5% of basic salary contributed toward housing loans.

NHIS (National Health Insurance Scheme)

Health insurance with contributions from employer and employee.

NIBSS (Nigeria Inter-Bank Settlement System)

Infrastructure enabling electronic payments between Nigerian banks.

NIN (National Identification Number)

11-digit unique identifier issued by NIMC for various services.

Overhead

Ongoing business expenses not directly tied to production.

PAYE (Pay As You Earn)

System where employers deduct income tax from salaries before payment.

Payslip

Document showing earnings and deductions for a pay period.

Pension Contribution

Mandatory retirement savings: employee 8%, employer 10%.

Pioneer Status

Tax holiday of 3-5 years for companies in qualifying industries.

POS (Point of Sale)

Terminal for accepting card payments, common in Nigerian retail.

Profit

Money left after subtracting expenses from revenue.

Profit & Loss Statement (P&L / Income Statement)

Report showing revenue, expenses, and profit over a period.

Profit Margin

Profit as a percentage of revenue — how much of each naira becomes profit.

Revenue / Turnover

Total money earned from sales before any expenses.

Safe to Spend

Amount you can actually spend after bills, subscriptions, savings, and taxes.

Statutory Deductions

Legally required deductions: PAYE, pension, NHF, NHIS.

Stocks / Equities

Ownership shares in a company traded on the stock exchange.

Tax Clearance Certificate (TCC)

Document proving you've paid your taxes, required for government contracts.

Taxable Profit

Profit after all allowable deductions, used to calculate CIT.

TET (Tertiary Education Tax)

2.5% tax on assessable profits of large companies for education funding.

TIN (Tax Identification Number)

Unique number issued by FIRS to identify taxpayers in Nigeria.

Transfer Charges

Fees for moving money between banks, varying by amount and method.

Treasury Bills

Short-term government securities with low risk and modest returns.

VAT (Value Added Tax)

A 7.5% consumption tax charged on most goods and services in Nigeria.

WHT (Withholding Tax)

Tax deducted at source on certain payments like contracts, rent, and professional fees.

Working Capital

Current assets minus current liabilities — money for daily operations.