Reference # Finance and AI glossary Plain-language definitions, connected to the archive. These explanations support reading and planning conversations, not accounting, tax or legal advice. Follow the cited article for examples and context; inherited product descriptions remain dated source material. - [FP&A](#fpa) - [Budget](#budget) - [Forecast](#forecast) - [Rolling forecast](#rolling-forecast) - [Variance analysis](#variance-analysis) - [Scenario planning](#scenario-planning) - [Cash-flow forecast](#cash-flow-forecast) - [Working capital](#working-capital) - [CapEx](#capex) - [OpEx](#opex) - [Consolidation](#consolidation) - [Month-end close](#month-end-close) - [Reconciliation](#reconciliation) - [AR aging](#ar-aging) - [Financial modeling](#financial-modeling) - [Power Query](#power-query) - [AI agent](#ai-agent) - [Data governance](#data-governance) - [Audit trail](#audit-trail) - [Common-size analysis](#common-size-analysis) ## FP&A Financial planning and analysis connects budgeting, forecasting, reporting and modeling to business decisions. It combines recorded results with assumptions about future activity, helping managers explain performance and consider resource choices. Its role is broader than producing a spreadsheet or reporting historical figures. Read more: [What is FP&A?](/post/what-is-fpa). ## Budget A budget is a financial plan for a period or activity. It expresses expected resources, revenue and spending using assumptions that people can discuss and approve. Comparing actual results with that plan helps teams investigate differences; the comparison is more useful when the original assumptions are understood. Read more: [The Guide to Creating a Variance Analysis Report in Excel](/post/creating-variance-analysis-report-in-excel). ## Forecast A forecast estimates future financial outcomes using available data and assumptions. Unlike a fixed plan, it can change as conditions and inputs change. The useful horizon and level of detail depend on the decision, such as meeting near-term payments or assessing a longer-term investment. Read more: [Short-Term vs Long-Term Cash Flow Forecasting](/post/short-vs-long-term-cash-forecasting). ## Rolling forecast A rolling forecast is refreshed as new information arrives and the planning horizon moves forward. Rather than stopping at the end of a fixed budget period, it continues to look ahead. Its value depends on maintained assumptions, reliable inputs and a process for explaining changes. Read more: [How to Choose the Best AI FP&A Software for Excel Users](/post/how-to-choose-the-best-ai-fpa-software-for-excel-users). ## Variance analysis Variance analysis compares actual results with a budget, forecast or other agreed reference. It examines both the size of a difference and the reasons behind it. Consistent periods, categories and source data matter because a calculated gap alone does not explain what caused performance to change. Read more: [The Guide to Creating a Variance Analysis Report in Excel](/post/creating-variance-analysis-report-in-excel). ## Scenario planning Scenario planning explores how different assumptions could affect financial outcomes. Teams can consider expected, upside and downside conditions to discuss risks and possible responses. A scenario is not a prediction that events will occur; it is a structured way to make uncertainty and choices visible. Read more: [What is FP&A?](/post/what-is-fpa). ## Cash-flow forecast A cash-flow forecast estimates receipts, payments and the resulting cash position over a chosen horizon. Short-term views help discuss immediate liquidity and commitments; longer-term views inform investment and funding plans. Payment timing, receivables and assumptions can matter as much as the total amount of revenue. Read more: [Short-Term vs Long-Term Cash Flow Forecasting](/post/short-vs-long-term-cash-forecasting). ## Working capital Net working capital is current assets minus current liabilities. Receivables and inventory are current assets tied to operations, while payables are amounts owed to suppliers. It differs from a cash balance because these assets and obligations include amounts not yet collected, sold or paid. Read more: [Top Working Capital Metrics to Monitor](/post/working-capital-metrics-guide). ## CapEx Capital expenditure concerns investment in assets used beyond the current operating period, such as equipment or buildings. It matters to budgeting because the project’s scope, timing and funding can affect future operations and cash needs. Classification and financial reporting depend on the asset and applicable accounting context. Read more: [What is CapEx?](/post/what-is-capex). ## OpEx Operating expenditure concerns costs of running day-to-day business activities, such as salaries, rent and utilities. Planning these costs involves understanding recurring commitments and variable drivers. The distinction from capital expenditure helps frame spending decisions, but it does not establish a universal tax or accounting treatment for every transaction. Read more: [CapEx vs. OpEx: What’s the Difference?](/post/capex-vs-opex-whats-the-difference). ## Consolidation Financial consolidation brings information from multiple entities or sources into a combined view. In reporting workflows, teams need consistent categories and reliable source data to interpret that view. Combining files is not the same as completing every accounting adjustment or review needed for consolidated financial statements. Read more: [Consolidated Financial Statements Definition and Examples](/post/consolidated-financial-statements-definition-and-examples). ## Month-end close Month-end close is the recurring process of gathering, checking and finalizing financial information for a month. Reconciliations, responsibilities and approvals support reporting quality. Automation can assist repeated collection and task handoffs, but a refreshed report is not by itself evidence that all close reviews are complete. Read more: [How to Improve Month End Close Using Financial Automation?](/post/how-to-improve-month-end-close-using-financial-automation). ## Reconciliation Reconciliation compares records from different sources to identify whether they agree and explain differences. Matching transactions can surface exceptions such as timing or format differences. Automated matching assists the process, while people still need clear rules, source traceability and a way to investigate items that do not match. Read more: [Python in Excel for FP&A](/post/python-in-excel-for-fpa). ## AR aging Accounts receivable aging groups outstanding amounts by how long they have remained unpaid. It helps finance teams discuss collection priorities and expected cash receipts. An aging view is a starting point for understanding payment timing and customer circumstances, rather than proof that every overdue balance will be uncollectible. Read more: [Short-Term vs Long-Term Cash Flow Forecasting](/post/short-vs-long-term-cash-forecasting). ## Financial modeling Financial modeling links inputs and assumptions through calculations to financial outcomes. FP&A uses models to discuss forecasts, investments and possible changes in business conditions. An understandable model makes its drivers and sensitivities visible, so readers can distinguish recorded data from estimates and see why results change. Read more: [What is FP&A?](/post/what-is-fpa). ## Power Query Power Query is Excel’s data connection and preparation technology. It records transformation steps so recurring data can be imported and shaped without repeating every manual edit. Its role is preparing inputs for analysis; the team must still understand sources, refresh behavior and the meaning of the resulting data. Read more: [Utilizing Spreadsheet Automation](/post/utilizing-spreadsheet-automation). [Microsoft: About Power Query in Excel](https://support.microsoft.com/en-us/excel/about-power-query-in-excel) ## AI agent An AI agent pursues a goal through multiple steps and potentially takes actions, rather than only producing a chat answer. In finance this raises questions about permitted operations, approvals and exception handling. An agent’s scope should be distinguished from an assistant that drafts analysis for a person to review. Read more: [Agentic AI in Finance](/post/agentic-ai-in-finance). ## Data governance Data governance defines how data is owned, accessed, maintained and used. Finance workflows rely on consistent definitions, permissions and traceability so teams can understand the figures behind reports and AI outputs. A tool’s governance features need to fit the organization’s actual responsibilities and review process. Read more: [How to Choose the Best AI FP&A Software for Excel Users](/post/how-to-choose-the-best-ai-fpa-software-for-excel-users). ## Audit trail An audit trail records relevant changes or actions, such as who changed a figure, when it was refreshed or who approved a workflow step. It supports traceability and investigation. Its usefulness depends on what the system records and how that history connects to the source data and process. Read more: [Getting Real FP&A Automation While Staying in Excel](/post/getting-real-fpa-automation-staying-in-excel). ## Common-size analysis Common-size analysis expresses financial statement items as percentages of an appropriate base. On a balance sheet it helps show composition and compare differently sized businesses. Percentages need consistent bases and business context; they complement rather than replace trend analysis and investigation of the underlying balances. Read more: [Vertical Analysis in the Balance Sheet](/post/vertical-analysis-balance-sheet). [Knowledge directory](/knowledge) · [Editorial methodology](/methodology)