30 accounting and finance terms explained in plain English
Don't understand what DSO means? Unsure about EBITDA? Here is a simple glossary of the most important terms in Danish business finance — no jargon. And where it makes sense, we show you how Freja works with the term.
Accounting Class (Danish regulation)
Categorisation based on business size that determines reporting obligations. A: small (simplified). B: medium. C: large (management report required). D: very large.
Freja alerts when you approach a class threshold requiring more reporting. Se mere
Accounts Receivable Management
Keeping track of who owes you money, when, and getting paid on time. Includes reminder process, debt collection, and credit assessment of new customers.
Freja automates reminders and monitors debtor health. Se mere
Annual Financial Statement
The annual financial report showing the company's position and result for the year. All active Danish companies must file annual accounts with the Danish Business Authority.
Freja prepares data for your annual accounts and collaborates with your accountant. Se mere
Auditor's Report
The auditor's written statement on the correctness of the annual accounts. Required for accounting class B+ companies (except small ApS with opt-out of audit).
Freja helps you prepare documentation for auditor review. Se mere
Business Taxation Scheme (sole proprietors)
Tax scheme for sole proprietors and partnerships. Gives corporate tax rate (22%) on retained profit instead of personal tax (up to 52%). Only if you separate business and private correctly.
Freja assesses whether VSO is beneficial for your situation. Se mere
Budget Overrun
When actual expenses exceed budget. Can be monthly, quarterly, or annually. Early detection is critical — the sooner you know, the easier to correct.
Freja alerts on budget overruns from 10% variance. Se mere
Cash Flow
The money flowing in and out of the business. Different from profit — you can be profitable on paper but still lack money to pay bills.
Freja calculates your cash flow daily and alerts 30+ days before a possible crisis. Se mere
Cash on Hand
The money you actually have in the bank account and cash register right now. Not the same as equity or profit.
Freja tracks your cash on hand and compares with your upcoming expenses. Se mere
Corporate Tax Instalments
Prepayment of corporate tax in 2–3 instalments (March, November, possibly February of next year). If you underpay, you owe a late tax surcharge (~8% extra).
Freja calculates your optimal instalment and reminds you of deadlines. Se mere
Cash Flow Forecast
A projection of your liquidity weeks or months ahead, based on expected receipts and expenses. Critical for avoiding cash flow crises.
Freja updates your cash flow forecast daily from actual data. Se mere
Cash Flow Statement
An accounting statement showing the cash flow in and out of the business in three categories: operations, investing, financing. Part of the official annual accounts.
Freja generates the cash flow statement automatically for your annual accounts. Se mere
Days Sales Outstanding
Average number of days it takes to collect money from your customers after you send the invoice. The lower, the better for your cash flow.
Freja calculates your DSO and alerts if it rises above 45 days. Se mere
Days Payable Outstanding
Average number of days you take to pay your suppliers. Higher DPO = better cash flow for you, but watch the supplier relationship.
Freja analyses your DPO and recommends supplier credit negotiation. Se mere
Debt-to-Equity Ratio
The ratio of debt to equity. Higher gearing = more debt per krone of equity = more risk.
Freja calculates your gearing and compares to safe industry levels. Se mere
Debt Collection
The process of collecting debt from debtors who don't pay voluntarily. Can start with your own reminder process, then debt collection agency, and finally the bailiff's court.
Freja suggests when to escalate to debt collection. Se mere
Dunning Policy
Your systematic process for reminding customers who don't pay. Typically: 1st reminder 14 days after due date (DKK 100), 2nd reminder 10 days later (DKK 100), 3rd reminder = notice of debt collection.
Freja executes your dunning policy automatically. Se mere
EBITDA
Earnings Before Interest, Taxes, Depreciation and Amortisation. The company's operating profit before interest, tax, and depreciation. A measure of 'clean' operating profitability.
Freja calculates EBITDA, EBITDA margin, and compares with industry average. Se mere
Equity Ratio
Equity divided by total assets. Shows how robust your business is — the higher, the better prepared for bad times. Typically: >30% is good.
Freja tracks your equity ratio and alerts if it drops below 20%. Se mere
Entertainment vs. Advertising (Tax Deduction)
Entertainment (restaurant visits, client meetings) only gives 25% tax deduction. Advertising (marketing, ads) gives 100%. Reclassifying correctly can save significant tax.
Freja identifies entertainment expenses that might be reclassified as advertising. Se mere
Financial Ratios
Danish term for financial KPIs — equity ratio, liquidity ratio, profitability, return on assets etc. They are typically calculated from your annual accounts.
Freja calculates all standard financial ratios and explains what they mean. Se mere
Financial Health Score
A composite score from 0 to 100 that combines multiple dimensions of business health: liquidity, profitability, solvency, efficiency, growth, compliance.
Freja calculates your health score daily and shows trend. Se mere
Gross Margin
Revenue minus cost of goods, as percentage of revenue. Shows how much you earn on every krone of sales before all other expenses.
Freja tracks your gross margin per product and identifies low-margin products. Se mere
Interest Act (late payment)
The law on interest on late payment. You are entitled to interest (reference rate + 7%) on late payment from business customers 30 days after due date. Also entitled to DKK 100 compensation.
Freja automatically calculates interest and compensation on late payments. Se mere
Invoice Date
The day you send an invoice. The earlier, the faster you get paid. Tip: Invoice on the day the work is done, or the first of the month for retainer clients.
Freja analyses your billing patterns and suggests optimisation. Se mere
Key Performance Indicator
Key figures you use to measure business health. Examples: revenue, profit margin, DSO, number of customers. Choose 3–5 KPIs and track them systematically.
Freja tracks the 10 most important KPIs for your industry and shows them as traffic lights. Se mere
Liquidity
The ability to pay your due bills. High liquidity means you have enough money or quickly liquidatable assets to cover your short-term obligations.
Freja monitors your liquidity in real time and forecasts 90 days ahead. Se mere
Net Margin / Profit Margin
Net profit as percentage of revenue. Shows how much you actually earn from every krone of sales after all expenses.
Freja monitors your net margin and compares to industry benchmark. Se mere
Small Asset Purchases
Asset purchases under DKK 36,400 (2026 limit) can be deducted immediately. Above the limit they must be depreciated over several years. Tip: Buy 2 cheap instead of 1 expensive.
Freja checks whether your asset purchases are under the small purchase limit. Se mere
Scenario Planning
Modelling 'what if' situations: What if revenue drops 20%? What if we hire? Gives you a qualified decision base, not just gut feeling.
Freja runs scenario planning in real time based on your actual numbers. Se mere
VAT (Value Added Tax)
25% Danish VAT on most goods and services. You collect it from your customers and pay it to SKAT — minus the VAT you've paid on your own purchases.
Freja calculates your upcoming VAT payment and reminds you of deadlines. Se mere
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