Quick answer
This glossary explains practical commercial terms in plain English for UK SME owners, linking each concept back to pricing, margin, VAT, cashflow, and better decisions.
How to use this glossary
Use it when a term sounds familiar but the business meaning is still unclear. Each definition is written to be practical, not academic.
Landed Cost
The true cost of getting a product into your business, including purchase price, freight, duty, handling, and any import-related cost. Many SMEs underprice because they ignore parts of landed cost.
Use this in practice: apply it with the Import Cost Calculator.
Gross Margin
The percentage difference between selling price and direct cost. It is one of the clearest indicators of whether a product or service is commercially worthwhile.
Use this in practice: check it with the Profit Margin Calculator.
EBITDA (for SMEs)
Earnings before interest, tax, depreciation, and amortisation. For many SMEs, it is a rough measure of operating performance before financing and accounting adjustments.
Working Capital
The operating cash tied up in stock, debtors, and creditors. A business can grow sales and still create pressure if too much cash is trapped in stock or slow customer payments.
Use this in practice: review pressure points with the Cashflow Analysis Tool.
Break-even Point
The level of sales required to cover fixed and variable costs before real profit begins. It helps test whether a business model is commercially realistic.
Use this in practice: use the Break-even Calculator.
Markup
The uplift added to cost when setting a selling price. Markup is based on cost, while margin is based on selling price. Confusing the two leads to underpricing.
VAT
Value Added Tax. For many UK businesses this is normally 20%, and it matters for pricing, cashflow timing, and reporting. Under HMRC Making Tax Digital rules, accurate tracking matters even more.
Debtor Days
The average time customers take to pay you. Longer debtor days create cash pressure even when sales look healthy.
Common questions
Why does a glossary page help SMEs?
It removes confusion around commercial language and helps owners connect concepts directly to decisions and tools.
Why does UK wording matter?
Because VAT, HMRC processes, GBP pricing, and UK SME reality are different from generic US-led business content.