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Introduction
Welcome to the Daylit Glossary. This comprehensive guide helps to explain key financial and technological terms and concepts relevant to embedded lending, AI agents for accounts receivable, and business financing. Whether you’re a small business owner, CFO, or financial enthusiast, this glossary will help you understand essential terms and how they apply to your financial operations.
Terms
2/10 Net 30
A payment term offering a 2% discount if an invoice is paid within 10 days; otherwise, the full amount is due in 30 days. This incentivizes early payment and improves cash flow.
Example Formula:
Discount Amount = Invoice Amount × 0.02
Accounts Payable
Money owed by a business to its suppliers for goods or services received but not yet paid for. Managing A/P effectively is crucial for maintaining good supplier relationships and ensuring the business has adequate cash flow and operational liquidity.
Accounts Receivable
Money owed to a business by its customers for goods or services provided but not yet paid for. Managing A/R effectively is crucial for maintaining cash flow and operational liquidity.
AI Agent
An autonomous software program that uses artificial intelligence to execute multi-step business tasks, such as sending payment reminders, resolving disputes, and applying cash... without requiring manual input at each stage.
Days Inventory Outstanding (DIO)
Measures the average number of days inventory is held before it is sold.
Example Formula:
If a company has an average inventory of $50,000 and a COGS of $200,000, the DIO would be 50,000/200,000 x 365 = 91.25 days.
Days Past Term (DPT)
Days past terms measures how late a payment is relative to its agreed due date. Use it alongside DSO to distinguish overdue collections from longer contractual terms.
If an invoice had a due date of March 1 and was paid on March 19, the DPT would be 19 − 1 = 18 days past term.
Days Payables Outstanding (DPO)
Measures the average number of days a company takes to pay its suppliers.
Example Formula:
If a company has accounts payable of $30,000 and a COGS of $200,000, the DPO would be 30,000/200,000 x 365 = 54.75 days.
Days Sales Outstanding (DSO)
Measures the average number of days it takes to collect payment after a sale.
Example Formula:
If a company has accounts receivable of $25,000 and total credit sales of $150,000, the DSO would be 25,000/150,000 x 365 = 60.83 days.
Demand Forecasting
Demand forecasting estimates future demand for products or services using relevant historical data and other inputs. It can inform inventory, staffing and cash planning; receivables forecasting instead estimates when outstanding invoices will be collected.
Example:
For example, a distributor anticipating a seasonal increase in orders can forecast the inventory purchases and customer receipts needed to support it. This is a planning example, not a claim about a specific product’s forecasting accuracy.
Embedded Lending
A financial service integrated within a software platform, enabling users to access credit seamlessly. It simplifies the borrowing process and enhances user experience by providing financial services within existing workflows.
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Enterprise Value
Enterprise Value (EV) is a measure of a company’s total value, often used as a more comprehensive alternative to market capitalization. It includes the market cap, debt, minority interest, and preferred shares, minus total cash and cash equivalents. EV is useful in assessing the value of a business for potential acquisition.
Example Formula:
Enterprise Value = Market Capitalization + Total Debt + Preferred Shares + Minority Interest - Cash and Cash Equivalents
For instance, if a company has a market cap of $50 million, total debt of $10 million, and $5 million in cash, its EV would be $55 million.
ERP Integration
The process of connecting a company’s Enterprise Resource Planning (ERP) system with other applications to streamline operations and ensure consistent data flow. It improves efficiency and accuracy in financial management.
Factoring
Factoring is the sale of accounts receivable to a third party, usually at a discount. Advance amounts, reserves, fees and responsibility for non-payment depend on the agreement.
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Factor Rate
A factor rate is a multiplier used to calculate a contracted repayment amount. It is not an annual percentage rate: the payment schedule and duration matter when comparing financing costs. Factoring fees may use a different pricing structure.
Example Formula:
Total Repayment Amount = Advance Amount × Factor Rate
For instance, if the advance amount is $10,000 and the factor rate is 1.2, the total repayment would be $12,000.
Invoice Reminder
A message asking a customer to pay an invoice, usually including the invoice amount, due date and payment instructions.
Example Formula:
For example, a company could send a reminder before an invoice’s agreed due date and follow up after it becomes overdue. The cadence should reflect the contract and customer context.
Reverse Factoring
A financial arrangement where a third party finances a company’s suppliers, allowing the suppliers to get paid early while the company pays the third party later. It enhances supplier relationships and improves cash flow management.
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Small Bill Charges
Additional fees that a service provider applies for processing smaller invoices or bills, typically to cover administrative or processing costs. These charges are often implemented to ensure that even smaller transactions remain cost-effective for the business providing the service.
Vertical SaaS
Vertical SaaS is software designed specifically for the needs of a particular industry or niche, such as healthcare or finance. It provides specialized features and solutions tailored to the unique challenges of that sector.
Working Capital
The difference between a company’s current assets and current liabilities, representing the liquidity available for day-to-day operations. Effective management of working capital is essential for maintaining business solvency.
Example Formula:
Working Capital = Current Assets - Current Liabilities
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Further reading
KPMG analyzes cash conversion cycles by industry and company size. See KPMG’s analysis.
Related guidance: Why We Built Accounts Receivable Intelligence; AR Automation Software for Wholesale Distributors.
References
- KPMG: Working capital trends in the US market. Read September 28, 2026.
