Many Filipino entrepreneurs venture into business with passion and great ideas, but often without a solid understanding of financial jargon. If you’ve been in this boat, you might believe that focusing solely on operations, products, or services is enough to get by. While those areas are important, having a strong grasp of key financial terms is just as essential. These concepts are crucial for strategic decision-making, especially for startups, which typically operate with leaner resources and tighter margins.
The good news is that mastering financial terms doesn’t require an accounting degree, just a willingness to understand the basics that influence your business’s numbers. As one of the most trusted business banking partners of startups in the country, Maya Business is committed to helping more entrepreneurs like you build financial confidence, make smarter decisions, and manage their operations more effectively. To help make the financial side of entrepreneurship less daunting, we’ve listed some essential financial terms that every business owner should be familiar with.
1. Settlement Account
When starting a business, it’s highly recommended to open a separate bank account to keep personal and business finances separate. This account usually serves as the settlement account, where customer payments from point-of-sale systems, online platforms, or payment gateways are deposited. It acts as the central hub for incoming revenue after transactions are processed.
One example of a settlement account is Maya Business Deposit, a fully digital bank account tailored for startup and SME business banking needs. It allows you to receive payments directly from customers while also managing outgoing transactions such as paying suppliers. By centralizing the flow of funds, a settlement account like this makes it easier for you to track earnings and maintain organized financial records.
2. Interest Rate
An interest rate is the percentage that represents how much is earned on savings or paid on borrowed money over time. For business banking accounts, it reflects how much the bank pays for keeping funds on deposit.
Conversely, when applied to borrowing, such as through loans or credit lines, it determines the cost of financing. That’s why it’s important to look for business loans with competitive interest rates, as they can significantly reduce your total borrowing costs. Understanding how interest rates work helps you choose the right banking products and make informed decisions about saving or borrowing.
3. Cash Flow
Cash flow refers to the movement of money in and out of a business. Positive cash flow means more money is coming in than going out, which is necessary for covering operating expenses and investments. Even if your business is profitable on paper, poor cash flow can lead to difficulties in paying suppliers, employees, or bills on time. By regularly monitoring your cash flow, you can keep your business financially healthy and avoid potential disruptions.
4. Accounts Receivable (AR)
Accounts receivable refers to the money owed to the business by customers who have been invoiced but haven’t paid yet. These are essentially sales made on credit, where payment is expected at a later date. Keeping track of AR helps you follow up on collections, maintain a steady cash flow, and assess which customers are reliable payers. Effective AR management can improve your working capital and strengthen overall financial planning.
5. Accounts Payable (AP)
Accounts payable is the amount a business owes to suppliers or service providers for goods or services already received. It represents short-term liabilities that must be paid within a given period, usually 30 to 90 days. Staying on top of your AP carefully helps maintain good supplier relationships, avoid late payment penalties, and ensure smooth business operations. To this end, you can use a settlement account like Maya Business Deposit to manage your AP by tracking outgoing payments and ensuring bills are paid on time.
6. Gross Income
Gross income is the total revenue a business earns before any expenses are deducted. It includes all sales, service fees, and other income generated through regular operations. This figure gives you a clear picture of your business’s overall earning potential, but keep in mind that it doesn’t reflect your actual profit, as that would only be seen after subtracting expenses. Still, tracking revenue is important to measure growth over time, set realistic sales goals, and evaluate the effectiveness of your revenue-generating activities.
7. Net Income
Also known as the bottom line, net income refers to the profit that remains after all operating expenses, taxes, interest, and other costs are deducted from gross income. It shows how much your business truly earned over a given period. Knowing your net income helps you evaluate your financial performance and make smarter decisions about growth, spending, and savings.
8. Operating Expenses
Operating expenses are the ongoing costs of running a business, including rent, salaries, utilities, office supplies, and marketing. Keeping your operating expenses in check is important for profitability because even if your revenue is high, poor expense management can significantly reduce your earnings.
If you’re a Maya Business Deposit account holder, you can use the accompanying Maya Business Manager dashboard to conveniently monitor outgoing payments, making it easier to stay on top of your operating expenses. Regularly reviewing these costs can help you identify areas for savings and improve your overall financial efficiency.
9. Break-Even Point
The break-even point is when total revenue equals total costs, meaning the business is not making a profit but also not incurring a loss. It shows the minimum amount of sales needed to cover expenses. Knowing this figure helps you set realistic sales targets and price your products or services appropriately. It also gives you a benchmark for evaluating whether your current business strategy is sustainable.
10. Withholding Tax
Withholding tax is a government-mandated deduction that businesses must withhold from certain payments, such as salaries, professional fees, rent, or commissions, and remit to the Bureau of Internal Revenue (BIR). As the withholding agent, you’re responsible for collecting these taxes before the recipient receives their net payment.
Maya Business supports compliance by automatically collecting withholding tax on applicable transactions for qualified merchants, helping you simplify your BIR settlements. With this added convenience and an understanding of how withholding tax works, you can stay compliant with tax regulations, avoid penalties, and manage your tax responsibilities more effectively.
Put Your Financial Knowledge to Work with Maya Business Deposit
Understanding these financial terms can make day-to-day business management easier and more strategic. And with the right tools at your disposal, applying this knowledge becomes even more seamless. Sign up for Maya Business to access smart banking solutions that can help you manage cash flow, track transactions, and grow your business with confidence.
Setting up a Maya Business account lets you open a Maya Business Deposit account, which can serve as your settlement account. With a market-leading 2.5% per annum interest rate, your PHP 1 million deposit can earn PHP 25,000 in interest per year. As an added convenience, you can also send money to partners and suppliers for free via InstaPay and PESONet, helping you save even more.
Signing up also qualifies you for a no-collateral Maya Flexi Loan offer of up to PHP 2 million in just 3 months, giving you the flexibility to reinvest in your business as needed. Simply use Maya as your primary processor for all wallet and card payments. The more you use our solutions, the better the loan offer will be.
Sign up for Maya Business today to enjoy the benefits of Maya Business solutions and turn your financial knowledge into real growth for your business.
