Activities
A company’s activities are its business operations, as defined by sector and type of activity. Company activities may be “Operation of a dress-making establishment” or “Trading in stationery”.
Arrears
If a person is “in arrears” with a payment, this means that an amount of money (e.g. rent, or a bill) has not been paid when due (on the agreed date).
Assignment
An assignment is the transfer of a right held by one party to another. Specifically, a creditor may transfer his/her claim (right to repayment) against the debtor by assigning it to a third party.
A
Activities
A company’s activities are its business operations, as defined by sector and type of activity. Company activities may be “Operation of a dress-making establishment” or “Trading in stationery”.
Arrears
If a person is “in arrears” with a payment, this means that an amount of money (e.g. rent, or a bill) has not been paid when due (on the agreed date).
Assignment
An assignment is the transfer of a right held by one party to another. Specifically, a creditor may transfer his/her claim (right to repayment) against the debtor by assigning it to a third party.
B
Bank card
With a bank card – and the PIN code that goes with it – you can withdraw money from cash machines. You can also use the bank card to pay in supermarkets and at petrol stations, as well as any other outlet with cashless payment facilities. To get a bank card you need an account from which the money is transferred to the recipient.
BIC
The abbreviation BIC stands for the international eight- or eleven-digit Business Identifier Code or Banc Identifier Code that has replaced the former bank code as a unique identifier of banks and other companies around the world. Because the BIC is included in the IBAN code, it no longer has to be stated separately for money transfers within the European Union.
Bond
Bonds are debt securities which are issued by companies and governments. In both cases, the issuer uses this debt instrument to borrow a large quantity of money. The investors (=creditors) receive bond certificates that document how much money they have lent the issuer and how much interest they will receive.
Business angel
A person who invests money, as well as know-how and contacts, in a new start-up company. Another term for “business angel” is “mentor”. Business angels will usually expect to receive a share of the company’s profits in return for their input.
Business plan
A plan that outlines how a company wants to realise a business idea. It describes the planned products and services, gives information about market opportunities and competition, the company’s management and staff, and includes a budget with projections for earnings and expenditure.
C
Cancellation insurance
Insurance cover which you can buy when booking a holiday at a travel agency. If you cannot make the trip, part or all of the price will be reimbursed to you. What is covered by the insurance is laid down in the contract.
Central bank
A government institution that is responsible for monetary policy and supervision of the banking sector in a given nation or group of nations with a single common currency. Central banks keep currency reserves, provide funding to the banking sector and the government and issue the currency. The name of Austria’s central bank is Oesterreichische Nationalbank.
Charges
In banking, fees or other amounts that a bank demands from its customers in return for its services.
Consumer credit
A loan taken out by a private individual to buy consumer goods.
Consumer price index
The consumer price index (CPI) is a measure of inflation. It is based on the price of a specific mix of consumer goods, the “market basket”, which is measured every month. Price changes are published as a percentage and are collated over time to create the index. The market basket is reviewed and adjusted every ten years.
Consumer protection
All policies and regulations that protect consumers against excessive prices, products that are unsafe or a health threat, and other damage they may suffer as a result of purchasing goods or services.
Contribution margin
The contribution margin is that portion of total sales revenue that is available to cover a company’s fixed costs, which it has to cover independently of sales volumes. It is the difference between total sales revenue and the variable costs of the product, which arise in proportion to the number of units sold.
Cover funds
A special asset pool held by insurance companies, banks and other institutions whose business involves management of customers’ assets. The cover funds are a reserve held to secure customers’ claims and assets.
Credit
The Latin verb credere means to trust. Credit is based on trust: The person who lends money (the creditor) trusts the borrower (debtor) to repay the debt. If a person has credit it means that others trust that he or she will be able to repay a loan, including interest due, from his/her assets or future income. The specifics of credit – amount, interest rate, term of the loan – are laid down in a loan contract.
Creditor
The lender in a loan relationship, who has a rightful claim to be repaid by the debtor (borrower).
Credit card
A credit card can be used for cashless payments, either when you are out shopping or in online transactions. The credit card company transfers due amounts to the recipients and charges the balance to the card owner’s account on a monthly basis.
Credit rating
A credit rating is a measure of creditworthiness. It is an assessment of a person’s, company’s or other organisation’s ability to repay debt. Credit ratings are also applied to whole states. With poor credit ratings, it is hard to get credit.
Credit transfer
A credit transfer, or bank transfer, is the cashless transfer, executed by a bank, of an amount of money from one account to another.
Crowdfunding
A form of project finance that brings together many people who each invest a small amount. Usually they will receive some sort of compensation for it. That can be money, but the funders could also be the first people to receive a new product whose production has been funded by them.
D
Debit balance
A debit balance is an amount owed. In banking, a debit balance means that your account is overdrawn and you have to pay overdraft interest. If your bank statement shows a credit balance, you have money in your account, on which the bank will pay you interest.
Debt collection agency
The business of a debt collection agency is to collect outstanding payments.
Debt restructuring
When a company or a state is in financial trouble and cannot make the payments due under existing agreements, it may negotiate with its creditors to reduce the debt burden and extend payment terms.
Debit card
With a debit card - and the corresponding secret code(PIN) - you can withdraw money from ATMs . You can also make cashless payments at ATMs, for example at supermarkets and petrol stations. To get a debit card, you need an account from which the amounts can be debited.
Default interest
Also called interest on arrears. If an amount owed is not paid when due, the creditor may charge additional default interest on the debt from the date when it became due.
Deflation
Deflation means that the value of money is rising, so you can buy more for the same amount. Or, in other words: If there is deflation, the value of products goes down. One reason may be that there is more supply than demand. Prices decline because there is more to buy than consumers want to buy. That may sound good, but it has its risks.
Deposit protection
Banks have to protect the savings deposits of their customers by deposit guarantee schemes, which are prescribed by law. The guarantee covers deposits of up to 100,000 euros per person and bank. Under the guarantee scheme, customers do not lose their deposits even if the bank collapses.
Deposit rates
The deposit rate is the interest rate that applies to your deposit at the bank and that determines how much interest you get on the deposit. The opposite of the deposit rate is the lending rate.
Depreciation/devaluation
In the context of currencies, depreciation means that the value of a currency declines; its exchange rate against other currencies goes down. There is less interest in buying the currency in the foreign exchange markets. Deliberate devaluation of a currency can be used as an instrument of economic policy, for example, to make exports cheaper and imports more expensive.
Dividend
A dividend is a profit distribution on shares that shareholders receive. The dividend is expressed either as an amount per share or as a percentage of the nominal value of the share.
Direct debit
Direct debiting is a process in which an account holder authorises another party to withdraw money from his/her account. It is usually done to arrange for the automatic payment of regular bills, for example telephone or electricity bills.
Dunning
Demanding payment. A dunning letter is the same as a “reminder”, which you will be sent if you fail to pay a bill when it is due. This will usually mean that you will have to pay additional collection charges on top of the amount owed.
E
ECB
The European Central Bank (ECB) has its seat in Frankfurt, Germany. It serves as the central bank of the European monetary union (aka “eurozone”) and manages the common European currency, the euro. The ECB is the supervisory authority that oversees major European banks and regulates the money supply in the eurozone. It is a key institution in European monetary and economic policy. A major goal of the ECB is to ensure price stability, so that there is neither strong inflation nor deflation. Its monetary policy aims at stable economic development and preventing recession.
Economic growth
A national economy is growing when its economic output is on the rise. Economic growth is usually expressed as a percentage change in GDP, the gross domestic product. GDP is defined as the total market value of all products and services which the inhabitants of a country generate within one year.
Effective interest rate
As opposed to nominal interest, effective interest rates also take into account the total costs of a loan, including such items as fees, commissions and other charges. Both types of interest are usually stated per year (p. a., which means “per annum”, or annually).
Endowment insurance
If you take out an endowment insurance policy, you pay monthly insurance premiums during the term of the insurance. At the end of the term, you get the agreed amount plus a profit share. You can opt for lump sum payment or annuities (monthly pay-out over a longer time period). If the insured person dies before the end of the term, the beneficiary receives the capital and profit share accumulated until this point in time.
Entry in the land register
Land register entries record the acquisition and loss of ownership and other titles (=rights) to land. The registration concludes the transfer of title from its previous holder to another.
Equity
Equity is that part of a company’s capital which the owner(s) put(s) up, as opposed to loan capital (debt). Profits which the company has earned and which have been retained, i.e. which have not been paid out to the owner(s), count towards the company’s equity position.
Euribor
The abbreviation stands for “Euro Interbank Offered Rate”, which is the average interest rate at which major European banks lend each other euro money. There is not just one Euribor, but a set of eight different rates for different maturities.
Exchange rate
The rate at which one currency can be exchanged against another. It may be stated as the price of a foreign currency, quoted in units of the home currency (direct or price quotation), or the other way round – price of the home currency, quoted in units of the foreign currency (indirect or quantity quotation). The latter has been more common since the introduction of the euro.
Exchange rate fluctuations
The exchange rates of currencies are said to fluctuate when they move up and down. These fluctuations are an important factor which businesses have to take into account when planning for the future. If the value of a currency rises, is said to appreciate. For example, if the euro appreciates against the US dollar, the effects on businesses may be considerable.
F
Family allowance
All families that live in Austria and are covered by the Austrian social insurance system receive family allowance payments for children and minors up to their 18th birthday. Family allowance payments are continued beyond that age for young people who are in higher education or vocational training. They continue to receive family allowance up to their 24th (in some cases, 25th) birthday.
Fed
“Fed” is the abbreviation that is commonly used for the Federal Reserve System, the central bank system of the United States. Its functions are broadly the same as those of the ECB (European Central Bank): supervision of the US banking sector, management of the currency through monetary policies, and pursuit of economic policy goals such as price stability and moderate interest rates.
Fixed costs
Fixed costs are all expenses that have to be covered regularly and under all circumstances. In a household, rent payments are a fixed cost item (whereas spending on clothes is a variable expense item). In a company, fixed costs include items such as wages for regular employees, depreciation and amortisation costs, as well as rent, heating and lighting.
Fixed interest rate
If you pay fixed interest on a loan, the interest rate stays the same throughout the term of the loan.
Fixed repayment rate
Paying back a loan with a fixed repayment rate means you pay the same amount each month during the whole term of the loan. With each monthly payment, you pay both interest and a share of the principal (the loan amount). At the beginning of the loan term, most of each monthly payment goes towards covering the interest owed. Later on, when you have paid off more, the share of capital repayment rises as less interest is charged on the lower amount of principal still owed.
Fully comprehensive cover
A type of car insurance that covers all types of damage, including damage caused through the policyholder’s own fault.
Fund of funds
A “fund of funds” invests in several other investment funds to achieve a particularly high degree of diversification (i.e., spreading of risk).
G
GDP
The Gross Domestic Product, or GDP, is a measure of the performance of a national economy. It represents the total market value of all products and services which the inhabitants of a country generate within one year. The GDP is determined regularly to measure economic growth. If it rises, that means that the national economy is growing.
Gender quota
Under a quota system, women can be preferentially employed by an institution or company until the number of women has reached a certain percentage of the total staff. The gender quota is used as an instrument to achieve gender equality, i.e. equality of women and men.
Globalisation
The meaning of “global” is “around the world”. Globalisation means the phenomenon that all regions across the world are becoming more interconnected and interdependent, particularly in their economic relations, but also in politics and culture.
Gold standard
A currency is said to be on the gold standard when it is backed by the gold reserves of the nation that issues the currency.
H
Home savings account
A special form of savings account that is offered by building societies. The account has a minimum term of at least six years, during which you make regular payments. In addition to interest on your growing deposit, you also receive a state-subsidised premium up to a fixed maximum amount. After the end of the term, you are entitled to a loan at a low interest rate.
Household budget
With a budget, you can plan how to cover all necessary expenses, plus any additional spending, within the limits of the income that you have. When making a budget, you compare your income, for example your salary, with your expenses to establish a balance between the two sides.
Household insurance
If you have an apartment, you also need household insurance. When you suffer damage, for example as a result of a burglary, the insurance will cover the damage. Most household insurance policies also cover major accidents, for example fires and the effects of natural disasters. It is important to match the policy to the size of your apartment and the value of its furnishings.
Housing allowance
Government payments to help with the cost of housing. People on low incomes can apply for this form of support.
I
IBAN
Every account on earth is identified by a unique International Bank Account Number (IBAN). Use of IBANs was made mandatory for money transfers in the EU in 2014.
IMF
The International Monetary Fund (IMF) is a special organisation of the United Nations (U.N.) and has its headquarters in Washington, D.C., USA. The IMF supports member states in times of crisis by extending loans to them, it monitors international monetary policy and supports the stability of the financial markets. Austria is a full member of the IMF.
Income tax
The tax that is imposed on the working incomes of people. How much tax has to be paid depends on the amount of income earned.
Inflation
Inflation means that the value of money is going down, so you can buy less for the same amount of money. Purchasing power is therefore declining. The inflation rate is determined in monthly surveys based on the total cost of a weighted mix of products and services called the “market basket”. If the cost of the market basket is higher than in previous months, the economy is in inflation.
Insolvency
Insolvency is the state of being unable to pay one’s debts. A company may become insolvent, but so may an individual. The law provides for insolvency procedures in which all creditors of the insolvent party can state their claims. The procedures aim at distributing the remaining assets of the insolvent debtor fairly among the creditors.
Insurance
Insurance means that one party agrees to bear a risk for another in return for payment. Risks are thus “covered” by insurance in return for payment of insurance premiums.
Insurance premium
Premiums are the regular payments which you have to make to the insurance company if you have taken out insurance. Under the terms of insurance contracts (called “policies”), premiums often have to be paid monthly, but there are also insurance companies that collect premiums once per year.
Interest
If you take out a loan, i.e. borrow money from the bank, you pay interest on the loan amount (the “principal”) during the term of the loan. How much this is depends on the size of the loan and the interest rate, which is stated in the loan contract. If you overdraw your current account, you are also borrowing money and have to pay interest, often at quite high rates. On the other hand, you can also earn interest: Interest accrues on savings accounts and home savings accounts, as well as on other investments such as fixed-interest securities.
Interest penalty
If you open a savings account for a fixed term, but then decide to withdraw your money before the end of the term, the bank will charge an interest penalty, which reduces the interest you earn.
Intrinsic value
The value which a company has in itself, also called “fundamental” or “fair” value. Methodological tools to determine an intrinsic value range for a company are applied in business management.
Investment fund
An investment fund, sometimes called simply a fund, is an investment vehicle. The fund bundles holdings in different asset classes, for example shares, which are administered by a fund manager. Investors can buy shares, or units, in the fund and participate in the profits which the fund may earn. However, they also share in the risk if the fund makes losses.
K
Key interest rates
The interest rates at which a central bank lends money to banks.
L
Land register
The land register is an official register of all the land in a given jurisdiction. It provides reliable information about who owns what and records all transfers of ownership and other rights over real estate. If you want to know who owns a house or an apartment, you can look it up in the land register. In Austria, all land registers are electronic and can be accessed via computer systems.
Lease
A lease is a contract under which one party (the lessor) makes real estate or movable property available for use by another party (the lessee) in return for lease payments.
Liability insurance
Liability insurance cover is often included in household insurance policies. What are the benefits? For example, if you inadvertently break something in a friend’s apartment, the insurance will cover the damage.
Liquidity
Availability of “liquid assets”, i.e. ready cash or assets that can be easily converted into cash. Financial markets are said to be liquid if assets can be readily traded. The cash and cash equivalents on a company’s balance sheet indicate the amount of liquidity it has.
Loan
A loan is a sum of money which is lent to someone for a certain term (=time period). At the end of the loan term, the money has to be repaid. During the term of the loan, the borrower usually has to pay interest on the loan amount.
Loan capital
The capital which a company has borrowed, as opposed to its equity or own funds; i.e., its debt. Loan capital has to be repaid over a defined period and subject to the agreed conditions of the loan.
Loan shark
“Loan shark” is a colloquial expression that describes someone who offers credit at unfair conditions and operates outside the regulated banking system. A loan shark may grant credit quickly and without asking for security, but the borrower will usually have to pay excessively high interest.
M
Management board
The directors of a company; the top decision-makers who run the company’s operations and are responsible for its business strategy and results.
Margin
A margin, literally “border”, usually denotes a differential in business and finance. For example, a company’s profit margin is the difference between its expenses and earnings. In trade, the margin is the difference between the lower price at which goods are bought and the higher selling price. Banks earn interest margins: the difference between the interest which the bank has to pay to fund itself in the money market, and the higher interest it charges on its customers’ loans.
Mortgage loan
A loan secured by real estate. If you want to take out a loan, you have to be able to provide security (collateral) for the bank. Mortgage loans are often used to buy property (e.g. a family home), which at the same time is pledged as security for the loan that finances the purchase. If the borrower defaults on the loan payments, the bank can seize the property and sell it at auction.
N
Nominal interest rate
The interest rate on the nominal value of a deposit or a debt. It does not take into account any other items, such as commission fees or compound interest. Such additional items are only included in the calculation of effective interest rates.
Nominal value
The nominal value, or face value, of shares or other issued securities, including currency, is the value stated on the face of the banknote, coin or security certificate.
Notary
A notary is a professional licenced by the state to ensure that contracts, last wills and other deeds are properly made out and executed. Notaries also officiate in inheritance proceedings. In Austria, all notaries are trained lawyers. Both private individuals and companies need the services of notaries for legal transactions.
O
Ombudsman
An ombudsman or ombudswoman is an independent official appointed to protect the public interest vis-à-vis government authorities. Sometimes also called a public advocate, he or she can take up cases in which citizens feel they have been unfairly treated by authorities and attempt to find a solution through mediation.
Overdraft
When you “overdraw” your account, you pay out more than you have in your account. As a result, your account goes “into the red” and you have to pay interest on the overdraft, which is usually higher than for other forms of credit.
P
Pawnbroker
A pawnbroker or pawn shop, sometimes also called a “loan office”, offers short-term credit, taking personal property, typically valuable items such as jewellery, as security. The debtor can redeem the pawn, usually after one to three months, by repaying the loan within the agreed term. If the loan is not paid off in time, the pawn is sold at auction.
Policy
In the context of insurance, a policy is the document that certifies that you have taken out insurance. The insurance policy contains all contractual agreements and arrangements. Just like any other document, an insurance policy has to be treated with care and kept in a safe place.
Private pension insurance
In addition to mandatory social insurance, you can also take out private pension insurance during your time in employment. Once retired, you will receive private pension payments in addition to your state pension. Private pension insurance is subsidised by a state premium.
Productivity
Productivity is a measure of the efficiency of economic production. Put simply, it is the ratio between the output of a production process and the input that is needed for this process.
Profitability
A company’s ability to earn profits relative to its expenses. More generally, the profit generation of any investment. Profitability is high when expenses are low in comparison to earnings.
Property
Something that belongs to you, something of which you are the owner. “Real property” is a term for land and buildings. If you are the owner of a house, it belongs to you, including all rights and duties that come with ownership. You have to keep your house in good repair, but you may also rent it to someone else.
Q
Quarter
A quarter is a quarter, i.e. a period of three months. The four quarters of the year are very often abbreviated as Q1 (January, February, March), Q2 (April, May, June), Q3 (July, August, September) and Q4 (October, November, December).
R
Real estate
Another term for real property. A piece of real estate is a piece of land, including buildings.
Redemption
The payment of the necessary money to clear a debt; specifically, the repayment of a bond or other security at the maturity date, as well as repayment of a loan to regain possession of a pawn.
Refinancing
Refinancing means that an existing loan is replaced with a new one that has different terms and conditions; these are usually more favourable from the debtor’s perspective, such as a lower interest rate.
Reminder
If you fail to pay a bill when it is due, you will be sent a reminder. This will usually mean that you have to pay additional collection charges on top of the amount owed.
Rescheduling
If you have taken out a loan, money may get tight at some point so that you have problems servicing your debt, i.e. paying your monthly loan rates. To avoid defaulting on payments yet still be able to pay for your livelihood, you can ask your bank to reschedule your loan. Rescheduling usually means that monthly payment amounts are reduced and the term of the loan is extended.
Respite
If a creditor grants a debtor respite, this means that the due date of the debt is postponed for a certain period.
Return
Gain or loss, expressed as a percentage, on an investment, especially on securities.
Right to a current account
The right to a personal current account was introduced in the European Union in autumn 2016. Without a current account, it is nearly impossible to live a normal life in our modern society. Everybody needs a current account to be able to receive wage payments and to pay rent, mobile phone bills and so on.
Risk diversification
In asset management, risk is said to be diversified if the assets under management are spread out among different asset classes, e.g. different types of securities, such as shares/stocks, bonds, investment funds, etc. Diversification reduces the risk of losing the invested money.
S
Sales revenue
The sales revenue, or turnover, is the sum of all earnings which a company has made from selling its products or services during a given period of time. Sales revenue is commonly stated for months, quarters of a year and full (business or calendar) years.
Savings account
An account with a bank to hold funds that are not used for financial transactions, but as savings deposits. Money can be paid into and withdrawn from the account through cashless transfers.
Savings book
The traditional document that goes with savings accounts in Austria (now increasingly replaced by savings cards). To have access to your savings, you present the savings book (and password) at the counter of your bank branch.
SEPA
SEPA stands for Single Euro Payments Area, an EU initiative to simplify banking transactions denominated in euro. Bank transfers, direct debiting and other forms of transactions under SEPA remain the same, but can be made across Europe in a standardised manner.
Shares/stocks
Companies issue shares that represent fractions of their capital. The buyers of the shares (also called stocks, or shares of stock) are called shareholders. They own an interest in the company, giving them certain rights to participate in the company’s profits and management. Stock prices are the prices at which shares are traded in the market.
Social insurance
The Austrian social insurance system includes accident, health and retirement insurance. Social insurance is mandatory for everyone in gainful employment. Contributions are in proportion to the monthly salary earned, from which they are deducted
Stagflation
The term is a mix of inflation and stagnation, just like the economic situation it describes: rising prices with little or no economic growth, often accompanied by growing unemployment.
Standing order
In the context of banking, a standing order means that an account holder instructs her or his bank to pay a certain sum of money at regular intervals to the same recipient. A standing order can be made, for example, to pay club membership fees.
Student grants
Financial support available to students whose parents are on low incomes. To qualify for a student grant, Austrian students have to show that they are progressing with their study programme in the minimum specified time (plus a grace period of one semester).
Subsidies
Financial support which the government (the state) provides for companies and other organisations. Subsidies are instruments of economic and cultural policy.
Supervisory board
The supervisory board is a group of persons appointed to monitor and control the management of a big company in the two-tier management system common in German-speaking Europe. Its main functions are to appoint and dismiss the members of the management board and monitor the management board’s work to ensure good governance. Depending on the size of the company, the supervisory board may have three to 21 members.
Suretyship
“Standing surety” means that you assume liability for a loan that someone else is taking out, i.e. you guarantee it. If the original borrower cannot pay back the loan, the surety (guarantor) has to step in instead. The suretyship contract is binding on the guarantor until the loan has been repaid in full.
T
TAN
TAN stands for transaction number and is a one-time password that replaces the customer's signature in electronic payment transactions. A TAN usually consists of digits and can only be used once.
Term
The “term” of a contract is the time period during which it is in force. In finance, the contract may be for a loan, or it may be an insurance policy or a savings plan, to name just a few examples. At the end of the term the contract is said to “expire” or to reach its “maturity date”. In the case of a loan this means that it is due for full and final repayment; in the case of a home savings account the account holder is now entitled to withdraw his/her savings and take out a loan.
Trade embargo
A trade embargo is a ban, introduced by a government, on trade with another state. It may apply to imports and exports of goods and/or capital. The purpose of embargoes is to exert political pressure on the target state.
V
Variable costs
The share of total production costs that changes in proportion to the production output volume. Major variable cost items are input material costs and that portion of wage costs that can be directly attributed to additional production units.
Variable interest rate
An interest rate that is linked to a reference interest rate and changes over time in line with changes in the reference rate. Effective rate adjustments are made at regular intervals (six months or a year in most cases). If a loan contract is based on variable interest, both the lender and the borrower accept the risk that interest rates may change during the term of the loan.
Venture capital
Capital that is invested in the founding phase of a company. Venture capitalists often support start-ups not only by investing money, but also provide valuable business contacts and management advice.
W
Variable costs
The share of total production costs that changes in proportion to the production output volume. Major variable cost items are input material costs and that portion of wage costs that can be directly attributed to additional production units.
Variable interest rate
An interest rate that is linked to a reference interest rate and changes over time in line with changes in the reference rate. Effective rate adjustments are made at regular intervals (six months or a year in most cases). If a loan contract is based on variable interest, both the lender and the borrower accept the risk that interest rates may change during the term of the loan.
Venture capital
Capital that is invested in the founding phase of a company. Venture capitalists often support start-ups not only by investing money, but also provide valuable business contacts and management advice.