# Core Concepts Glossary Understanding these concepts can help you to easily use CrewCost, as they form the foundation of the application's financial management capabilities. {% hint style="info" %} If you have any questions, please contact our team at **.** {% endhint %} {% tabs %} {% tab title="A" %} ### Accounts Receivable Accounts receivable refers to the money owed to a company by its clients for completed work or delivered goods. In CrewCost, managing accounts receivable involves tracking invoices, payments, and outstanding balances. Proper accounts receivable management ensures steady cash flow and financial stability. It involves timely invoicing, payment follow-up, and accurate record-keeping. ### Accounts Payable Accounts payable represent the money a company owes to its vendors or subcontractors for services rendered or goods received. It includes bills, purchase orders, and other financial obligations. Managing accounts payable is crucial for maintaining good vendor relationships and ensuring all project expenses are recorded and paid on time. {% endtab %} {% tab title="B" %} ### Bills A bill is an invoice from a vendor or subcontractor requesting payment for goods or services. In CrewCost, bills can be associated with specific jobs, allowing for accurate tracking of project-specific expenses. Bills are typically recorded when received and are marked as paid once the payment is issued. Tracking bills accurately is essential for managing accounts payable and ensuring all project costs are accounted for. {% endtab %} {% tab title="C" %} ### Cash Flow Management Cash flow management tracks cash inflows and outflows to ensure that a business can meet its financial obligations. Effective cash flow management in CrewCost helps contractors maintain liquidity, cover expenses, and avoid financial difficulties during project execution. ### Cost Codes Cost codes are unique identifiers that categorize and track project expenses. Each cost code corresponds to a specific type of work or material, which helps organize and manage the project budget. In CrewCost, cost codes allocate expenses accurately, ensuring that each cost is assigned to the correct part of the project. This helps in analyzing budget adherence and financial performance. ### Commitments: Purchase Orders and Subcontracts Commitments represent the costs you expect to spend on a job before any actual payments are made. In CrewCost, the two main types are **Purchase Orders (POs)** and **Subcontracts**. Both reserve part of the job’s budget and help you track financial obligations. A Purchase Order is used when you need to buy **materials, equipment, or rentals** from a vendor. * Defines what you’re buying, the cost, and delivery details. * Best for material-focused cost codes. * Once issued, it becomes a commitment and reduces the available budget for that cost code. A Subcontract is used when you hire another company to perform labor or trade work on the job. * Defines the scope of work, contract value, and terms. * Best for labor-based cost codes. * As the subcontractor bills for completed work, the commitment decreases and actual costs increase. ### **Cost of Goods Sold (COGS)** The direct costs associated with producing the goods or services sold by your company {% endtab %} {% tab title="E" %} ### Expenses Expenses refer to costs that have already been incurred and paid. This might include credit card purchases for materials, petty cash expenses, or other out-of-pocket costs. If a project manager purchases $500 worth of materials using a company credit card, the expense would be recorded in CrewCost, since the payment has already been made. Unlike bills, which represent amounts owed but not paid, expenses are already settled costs. This distinction is essential for accurate financial reporting and budgeting. {% endtab %} {% tab title="G" %} ### **Gross Profit Margins** The difference between revenue and COGS, showing the percentage of profit made before deducting overhead expenses. {% endtab %} {% tab title="J" %} ### Job Costing Job costing tracks all costs associated with a specific project or job. This includes labor, materials, subcontractor expenses, and overhead costs. CrewCost uses job costing to help contractors monitor project expenses against budgets, ensuring that each job remains profitable and within financial targets. {% endtab %} {% tab title="N" %} ### **Net Profits** The actual profit after all expenses, including overhead, have been deducted. {% endtab %} {% tab title="P" %} ### Profitability Analysis Profitability analysis involves evaluating the financial performance of a project or the entire business to determine the profit generated. In CrewCost, profitability analysis tools allow contractors to assess the revenue generated from projects versus the costs incurred, helping to identify areas for improving profit margins {% endtab %} {% tab title="O" %} ### **Overhead** The ongoing business expenses not directly tied to specific jobs, such as rent, utilities, and salaries. {% endtab %} {% tab title="R" %} ### **Revenue** The total income generated from your construction projects. ### Retainage in Construction Accounting Retainage is a portion of the agreed-upon contract price withheld from payment until the work is substantially complete. This practice is common in construction to ensure that contractors fulfill all contractual obligations before receiving full payment. Retainage protects project owners by providing leverage to ensure that all work is completed to the required standards. For contractors, understanding retainage is crucial for managing cash flow and ensuring that they can cover expenses while waiting for final payment. Example: If a contractor is owed $100,000 for a project, a 10% retainage might be withheld, meaning they will receive $90,000 upfron {% endtab %} {% endtabs %} With these core financial concepts in mind, you’re better equipped to navigate CrewCost and make informed decisions that strengthen your project and company financials. ### See also Keep exploring our platform by taking the next step: * [Dashboard Overview](https://docs.crewcost.com/documentation/getting-started/dashboard-overview): Learn how to read the primary financial metrics on the dashboard, focusing on cash flow and profitability. * [Setting Up Multi-Factor Authentication](https://docs.crewcost.com/documentation/security-and-team-settings/set-up-multi-factor-authentication-mfa): Guide users through enabling and managing advanced security protocols for their accounts. ###