Gross profit
What is left after the direct cost of delivering what you sold is subtracted from your revenue. Direct cost means the costs that move with the work itself — materials, subcontractor time, purchased stock — as opposed to the costs of running the business regardless of what you sold.
Why it matters in practice. It is the first honest look at whether the pricing is right, and it is only as good as the cost data put against it. A gross profit figure built on costs nobody recorded is worse than having no figure, because it looks authoritative.
Often confused with Gross margin, Cost accounting, Client profitability.
Gross margin
Gross profit expressed as a percentage of revenue, so that two businesses of different sizes can be compared on the same basis. It says how much of each rupee of revenue survives the direct cost of delivering it.
Why it matters in practice. One trap sits here: revenue that includes GST is not the same as revenue. Including tax in the base makes every margin look better than it is, so the tax treatment has to be settled before the percentage means anything.
Often confused with Markup vs margin, Net margin, Gross profit.
Net margin
What remains after every cost — direct and running — is subtracted from revenue, expressed as a percentage. It is the figure closest to what the business actually keeps.
Why it matters in practice. The gap between gross margin and net margin is your running cost base, and it is where most surprises live. A business can show healthy gross margin and still be unprofitable, and the reason is almost always in that gap.
Often confused with Gross margin, Cash flow vs profit.
Markup vs margin
Two percentages describing the same profit from opposite ends. A markup is the profit expressed against cost; a margin is the same profit expressed against price. They convert to each other: margin = markup ÷ (1 + markup).
Why it matters in practice. Example (illustrative only): a 50% markup on a ₹100 cost gives a ₹150 price and a 33.3% margin. Staff who quote "50% margin" on that same cost produce a ₹200 price and give away ₹50 a unit, and the discrepancy only shows up much later, in the margin report.
Often confused with Gross margin, Net margin.
Receivables
The value you have invoiced and not yet collected. On an allocation model it is the sum, across open invoices, of the invoice total minus the sum of the payments allocated to it.
Why it matters in practice. Receivables is the number most businesses cannot see clearly, because a stored "paid" flag hides part-settlements entirely. It is also the number that decides whether a busy month was a profitable one.
Often confused with Ageing, Payment promise, Cash flow vs profit.
Ageing
Bucketing what is outstanding by how long it has been outstanding — commonly 0–15, 16–30, 31–60, 61–90, and 90+ days. An ageing view is only meaningful alongside an explicit "as of" moment, because late-entered records move amounts between buckets after the fact.
Why it matters in practice. Ageing turns an old receivable into a visible exception instead of a rounding error inside a healthy-looking total. Two reports from different months are only comparable if they were produced the same way, and the as-of moment is how you know.
Often confused with Receivables, Overpayment and credit balance, Payment promise.
Cash flow vs profit
Profit is an accounting measure of work earned; cash flow is the movement of actual money. The two differ whenever money arrives after the work it belongs to, or before the invoice it will settle.
Why it matters in practice. Example (illustrative only): a ₹15,000 invoice settled as ₹5,000, then ₹7,000, then ₹3,000 is fully collected and fully profitable, but it produced cash on three different days. Day-end reconciliation and ageing both break if those are treated as the same event.
Often confused with Receivables, Net margin, Allocation.
Quoted-to-billed
The comparison of what was quoted for a client or a project against what was actually invoiced for it. The gap is work that was agreed and often delivered, but never put on an invoice.
Why it matters in practice. This is the most commonly missed loss in the chain, because nobody has to do anything wrong for it to happen — a project simply finishes and nobody raises the bill. A business that quotes by email cannot see this at all, because it has no quoted state to compare against.
Often confused with Quoted, billed, and collected, Receivables, Project profitability.
Client profitability
Reading one relationship's money as four separate states — quoted, billed, collected, outstanding — set against the costs you have genuinely recorded for that client's work. It is a commercial view of a relationship, not a full accounting of it.
Why it matters in practice. Its real use is turning "this client is important" into a specific number that can be argued with. Be honest about which costs are actually being captured: a client margin built on partial costs looks authoritative and is not, which is worse than not publishing it.
Often confused with Project profitability, Cost accounting, Receivables.
Project profitability
The commercial outcome of a single piece of work: what was quoted, plus approved changes, against what was billed, with direct cost and internal hours where they are recorded.
Why it matters in practice. Reading it per project rather than per year is what turns a bad engagement into a scoping lesson for the next similar job, instead of a general feeling that the team should try to be more careful.
Often confused with Client profitability, Quoted-to-billed, Change order.
Cost accounting
The discipline of systematically recording the costs of running the business so that true unit and product profitability can be determined — not just the direct costs that happen to appear on a bill.
Why it matters in practice. Naming it matters when you are deciding what to buy. An operations and billing system produces documents, movements, and money states; cost accounting is a different discipline, normally run in an accounting package, and treating the two as interchangeable is how a business buys the wrong tool.
Often confused with Client profitability, Gross profit, Ledger attachment.
Day-end close
The routine that closes a trading day: what was sold, the payment mix, expected cash, counted cash, the variance between them, discounts given, adjustments made, approvals given, and exceptions to review.
Why it matters in practice. Closing becomes a comparison with a recorded result rather than a reconstruction from memory. It also only works when somebody owns it, and when a variance is a number somebody can look at instead of an argument about the drawer.
Often confused with Audit trail, Receivables, Stock adjustment.