Glossary
AI Finance Glossary
Plain-English definitions of AI, accounting, and SaaS-finance terms.
Categories
A
B
C
Captive Insurance
Insurance subsidiary created by a company to insure its own risks rather than purchasing coverage externally.
Credit Default Swap
Financial derivative transferring credit risk of a reference entity from protection buyer to protection seller.
F
FX Hedging
Using financial instruments to reduce currency risk exposure on foreign-denominated revenues or expenses.
Federal Funds Rate
Interest rate at which banks lend reserves to each other overnight, set by the Federal Reserve.
Float
The time gap between when a payment is initiated and when funds are actually debited or credited, creating a temporary balance discrepancy.
L
LIBOR
London Interbank Offered Rate, the formerly dominant global benchmark for short-term interbank lending, now discontinued.
Letter of Credit
Bank guarantee ensuring a seller receives payment once specified documentary conditions are met.
O
P
Q
R
Real-Time Gross Settlement
Central bank payment system settling large-value transactions individually in real time with immediate finality.
Reinsurance
Insurance purchased by insurance companies to transfer part of their risk to other insurers.
Revolving Credit Facility
Flexible bank credit line allowing repeated borrowing and repayment up to an approved limit.
S
SOFR
Secured Overnight Financing Rate, the primary U.S. replacement for LIBOR, based on overnight Treasury repo transactions.
Self-Insured Retention
Amount a company pays out-of-pocket per loss before excess insurance coverage begins.
Standby Letter of Credit
Bank guarantee drawn only if an obligor fails to fulfill a contractual or financial obligation.
Sweep Account
A bank account that automatically transfers excess funds into an interest-bearing investment at the end of each business day, maximizing returns on idle cash.
Syndicated Loan
Large loan provided jointly by a group of lenders to a single borrower, arranged by a lead bank.
T
W
Wire Transfer
An electronic transfer of funds between banks processed directly and irrevocably, used for large, time-sensitive, or international payments.
Working Capital
The difference between current assets and current liabilities, measuring a company's short-term liquidity and operational efficiency.
Working Capital Management
Optimizing the balance between current assets and current liabilities to sustain daily operations and cash flow.