Business Glossary

Accounts Payable
Money owed by the business to other businesses and individuals for services rendered and/or goods purchased

Accounts Receivable
Money owed to a business for services rendered and/or goods purchased. AKA Receivables.

Accrual System of Accounting
An accounting system of bookkeeping in which an invoice is credited as income when the work is completed. The system required by the IRS for corporations. See Cash System of Accounting.

Advance (or Deposit)
A partial payment in advance given by an advertising agency or design studio, usually only upon request, more common now than in previous years. Common to jobs with especially high expenses. Sometimes limited to the amount of estimated expenses.

Agency
Advertising agency, stock photo agency, model agency, etc.

All-Media Rights
The media that conveys your photograph can take many forms. Print media means the final photograph is printed from a press in the form of a book or magazine. Electronic media means it goes out in digital form, such as a CD or multimedia presentation. Television, radio and internet are other examples of media. Each one of these areas are valuable and worth compensation to the photographer. Contracts that ask for All-Media rights are, in essence, asking you to allow the buyer to distribute your work in all media, often adding the clause "now known or invented in the future".

All-Rights
While "all-rights" can mean different things to different publishers, under a typical All-Rights Contract, the publisher pays a fee (usually a single payment) and purchases the right to use and reuse the photograph, in any medium, any number of times, forever. The photographer, in exchange for that fee, gives up any and all interest in, and control over, the use of the image.

Appreciation
An increase in the value or price.

Art-Buyer
Person in an advertising agency or large design firm who (usually) is responsible for negotiating prices with a photographer or other supplier. Often this person is the first contact a photographer will have in showing a portfolio.

Art Director
The person responsible for the concept and execution of advertising. Usually teamed with a copywriter. Works in the creative department of an advertising agency or design studio.

Assets
Those items of value owned by you or your business.

Assignment
When an artbuyer (see "Artbuyer") contracts with the photographer to make a specific image(s)and agrees to certain uses of the image(s), in return for a fee plus reimbursement of expenses. All terms are generally agreed upon in advance. The resulting photo copyright(s) belong to the photographer unless otherwise stated in writing.

Assignment Confirmation
Can be a letter sent to the client by the photographer or also an estimate or bid outlining costs, terms and conditions, and signed by the client. Must be signed by a person of authority in the client's business.

Balance
The amount owed on a loan or credit card or the amount in a savings or investment account.

Balance Sheet
A financial statement showing a "snapshot" of the assets, liabilities and net worth of a business on a given date (a point in time).

Bankruptcy
A legal proceeding declaring that an individual is unable to pay debts. Chapters 7 and 13 of the federal bankruptcy code govern personal bankruptcy.

Break Even Point (B.E.P.)
The point that the income equals expenditures.

Billable Expense
Expenses directly related to a project which are to be passed to a client as opposed to expenses that are to be absorbed by the photographer. Can include film, processing, props, background, etc.

Bid
A competive quote based on the assumption that other photographers are also bidding on a job that may go to the lowest bidder. A firm statement of expenses given for a specific job and specific conditions of that job. Unlike an estimate, once a bid is accepted, the price is fixed - but so are the job parameters. Even small changes may incur additional charges. In these situations many photographers require changes to be approved in writing during the shoot. Many photographers elimate details of expenses and just submit a solid number. See Estimate and Quote.

Book
Portfolio.

Bond
Essentially an IOU. When you buy a bond, you are lending money to its issuer - either a company or the government, federal, state, or municipal, which agrees to pay it back with interest on a certain date, called the maturity date. Bonds are less safe than bank accounts or money market funds but generally safer than stocks.

Budget
An itemized summary of probable income and expenses for a given period. Or, the funds available for a project or assignment. May be specified by an estimate or bid. Also, the funds set aside for a complete job or project by the client which may include the media buy.

Business Plan
For the small business owner, a business plan is a set of documents that describe who you are, what you do, how you intend to do it, and what you need in order to accomplish your goals. Business plans are usually prepared for one of two reasons: as an aid or requirement to procuring a loan or as a guide to managing and developing the business. A business plan should work like a road map for your future.

Buy-out
An imprecise term for a complete transfer of all copyright rights to another party.

Buyer
Short for Art-Buyer above. Also refers to any buyer of the photographer's services.

Campaign
All of the advertising done for a specific client. Also, a group of print advertisements linked by some thematic device.

Capital
Cash or other resources accumulated and available for use in producing wealth.

Cash Disbursements
Also known as Cash Expenditures. The money spent by a business to cover the normal costs of doing business. A check to your landlord for rent or to your supplier for film are examples.

Cash Flow
What's left at the end of the month after a business or individual has paid all bills and done all spending. To find your cash flow, add up all expenses for a month and subtract that number from the monthly income.

Cash Receipts
Money received by a business for services rendered or goods purchased by other businesses or individuals. Example: a check for payment of an assignment received and deposited.

Cash System of Accounting
Bookkeeping system in which an invoice is credited as income only when it is paid (the check received and deposited by you). Preferred by most small businesses. Simpler than the accrual system of accounting.

Certificate of Deposit (CD)
A type of savings account that earns a fixed interest rate over a specified period of time

Circulation
The total print run on one issue of a magazine or newspaper. Advertising rates are based on circulation and readership demographics.

Client
Anyone buying services. A photographer working for an advertising or design agency would refer to the agency as his client but may also refer to the agency's client as the client also.

Clip Art
Collections of photographs or artwork sold (or given) to users the images of which are royalty free. The copyright is held by the corporation distributing the disk and all rights are given to anyone owning the disk. Typically, large quantities of photographs are purchased (including a copyright transfer) from photographers at a price substantially below market value per image. Anyone owning a disk can use any of the images for any purpose.

Client Direct
Working directly for a company without the involvement of an advertising agency or design studio. Often involves working with the client's internal design department.

Collateral
Assets pledged to secure a loan.

"Comp" (or Comprehensive)
A sketch or layout which is done to a higher degree of completion than the usual layout. Sometimes called a "tight layout."

Commission
The percentage paid to a representative for work obtained for the photographer. Usually 25% of the photo fee but sometimes higher.

Compound Interest (or Compounding)
Interest computed on the sum of the original principal and accrued interest. Occurs when earnings from savings or an investment are added back into the investment and used to generate further earnings. For example, on bank accounts that pay interest, the interest is typically added to the balance of the account each day, which means that the next day's interest is calculated on a slightly higher amount.

Contract
A legal document sent to a client stipulating terms and conditions of a job. Any document between two people describing terms of a project, etc. In order to be most enforceable, a contract must have three elements: 1) An offer to provide a service, 2) Acceptance by both parties and 3) consideration, or an exchange of something of value.

Copy
The written part of an advertisement or commercial.

Copyright
The legal concept that once an original expression of a creative process is fixed in a tangible medium, that expression belongs to the creator (not the person paying the fee) who has the exclusive right to control and authorize its reproduction, distribution (by sale, rental, lease, or lending), public display or performance, or derivation.

Copyright infringement
A use other than one specifically authorized by the copyright holder.

Copyright registration
The act of paying a small fee and submitting a copy (copies) of your work to the US Copyright Office for registration. The copies are kept on file and in the public record to reference for any future disputes and for assessing any penalties.

Copyright transfer
A term which means a photographer relinquishes all rights in an image(s) and turning them over to someone else. The photographer is giving up the copyright to, all control of, and the right to profit from, your image(s). Transfers of copyright must be in writting.

Corporation
A form of business owned by the shareholders. The important advantages are: 1- a shareholder's liability for actions by the corporate officers and employees is limited to the amount of the shareholder's investment in the corporation. 2- The life of the corporation extends beyond the life of the individual shareholders as, legally, the corporation has a life of its own. Disadvantages are: 1- they are more complicated and expensive to start up and maintain than a sole proprietor or partnership business. 2- Corporations require more services from bookkeepers, accountants and lawyers. 3- Taxes, for a small business, are more numerous and more difficult to compute. For instance, since the corporation is an entity it also must also pay income taxes. Therefore, the corporate form is not the ideal choice of beginning businesses. Many states have a simpler form of corporation (S-Corp) which is more suitable for small businesses. Typically these corporations are taxed similar to partnerships or sole proprietorships but offer corporate liability protection.

Creative Department
The department of an advertising agency or design studio in which creative services are performed. See art director, art buyer and copywriter.

Creative fee
This is the fee that a photographer charges for conceptualizing and creating images taking into account creativity, experience, degree of difficulty, specialized equipment, and usage. This term reflects photographer's desires to be paid based experience, ability, and on the benefit gained by the client from using the fruits of the photographer’s creative processes, rather than simply on how long we work.

Credit
The granting of money or something else of value in exchange for a promise of future repayment.

Credit Bureau
An organization that compiles credit information on individuals and businesses and makes it available to businesses for a fee.

Credit Card
Credit cards provide you with a revolving loan - or credit limit - based on your agreement to pay at least the minimum amount due on the amount of credit you use by the payment date. A finance charge is applied to the outstanding balance - the amount you do not pay by the due date. You can avoid paying finance charges by paying your balance in full. Typically, credit cards have a revolving credit limit. That means that as soon as you pay for credit you have used, it becomes available again. For example, if you had a credit limit of $500, then spent $100, your available credit would be $400 until you repaid the outstanding $100, when your available credit would be $500 again.

Credit Rating
A rating assigned to you by three major credit bureaus that indicates how likely you are to pay back a loan on time. The rating is based on your credit report, a detailed list of all of your past transactions with creditors, like the credit card payment you missed five years ago. Information on your credit reports generally remains there for seven years. Bankruptcies remain for ten.

Credit Report
A loan and bill payment history, kept by a credit bureau and used by financial institutions and other potential creditors to determine the likelihood a future debt will be repaid.

Creditor
A person, financial institution or other business that lends money.

Day Rate
Daily charge for services. An out-of-date term that use to signify the minimum amount a photographer would be paid when shooting for an editorial client, with additional money owed if multiple images were used or if images were used particularly large (see "Space Rate"). The term has come to mean the flat rate that photographers are offered for shooting for a publication, and disregards experience, ability, degree of difficulty, and benefit gained by the client. Photographers now prefer to charge according to the individual requirements and usage of a particular job instead of a blanket price for all jobs. (see "Creative Fee")

Deduction
A reduction of income taxes as sanctioned by the IRS. The value of the deduction is in proportion to the tax rate. For instance: the reduction of taxable gross income of a $100 deduction for individual in a 28% tax bracket would be $28.

Debt
Money owed; also known as a liability. Money borrowed from a lender. In addition to paying back the money borrowed, the borrower almost always has to pay interest. The rate of interest being charged on the debt affects the approach of how it should be paid off. Credit card debts generally carry the highest rates (sometimes over 20%) and should be paid off first. Debts with lower rates, like most student loans (5-10%), can be paid off more slowly, even while saving.

Debit Card
Debit cards look like credit cards and can be used in many places where a credit card is used. The difference between a credit card and a debit card is that a debit card accesses the money in your bank account to pay for purchases. The payment amount is transferred from your account to the merchant's account the same day - you do not have a "float" of a few days between the time of purchase and payment collection. An advantage of a debit card is that you can't spend money you don't have - you don't create debt - because you aren't buying on credit; you are paying with funds in your bank or investment account. A disadvantage is that debit cards are not subject to many of the consumer legal rights that apply to credit cards regarding returns, resolution of errors, fraud or other issues

Delinquency
The failure to make timely payments under a loan or other credit agreement.

Delinquent Accounts
Accounts (or invoices) which are overdue. Each individual business decides what period of time constitutes "overdue." Most would like to be paid within 30 days if not sooner.

Demographics
Term used in advertising research; the characteristics of a particular group of people. Age, income, buying habits, etc. See Advance.

Delivery memo
A document that should accompany any image that leaves the photographer's possession. It officially places the image(s)in the care of another person and binds them to abide by the photographer's stated terms and conditions. It also enables tracking of a photographer's images and know their location at any given time.

Design Firm
Often a small shop with one two or three designers and a secretary or account person. Some design firms are larger than small advertising agencies; some are one person shops. See Graphic Designer Typical design studio projects are annual reports, brochures, etc.

Directory, creative
A publication exclusively for the purpose of advertising photographers and other suppliers services and products. Usually given without cost to the art directors, editors and other buyers.

Dividend
A share of profits paid to a stockholder.

Electronic Rights
Many publishers are attempting to retain electronic publication rights, and photographers should consider this carefully when negotiating fees. Photographers should make every effort to retain these rights.

End user
The final purchaser of a product or service.

Embargo Period
A period of time often requested by publishers during which you agree not to re-license an image.

Employee
A status that for photographers means they do not own the copyright to their images. Most, if not all, employment contracts stipulate that because the employer is paying salary and all expenses, they own the copyright to any images the photographer creates while working for them. However, in exchange, the photographer does receive a regular salary, with benefits, sick days, paid vacation, and a retirement plan – all options not available as an independent contractor (see below).

Employer's ID# (EIN)
Businesses having full time employees must register with the IRS and pay withholding taxes on the employee's salaries. This number is used to identify the employer and track payments.

Equity
Ownership interest in an asset after liabilities have been deducted.

Estimate
Written statement of approximate fees and expenses of a specific job. A prediction of the costs of an assignment including fees for shooting and preparation, travel time, casting, usage of images and all related expenses. Usually, it is given in a non-competitive situation and is subject to a plus/minus 10% variance as normal trade practices. If both parties agree to and sign the estimate, it becomes a contract. (see "Bid" and "Quote")

Exclusivity
A description of rights granted which refers to the ability to re-license the image to another client. If a photographer grants the client exclusive rights to an image, he/she is agreeing not to re-license that image to anyone else. Exclusivity can have limitations of time, geography, or topic, for instance, but in all instances any grant of exclusivity should receive additional compensation.

Exclusive Use
No one except the purchaser of the image can use the image without permission of the purchaser.

Exclusive Limited Use
The client may use the image exclusively but for only a limited purpose.

Expenses
Costs of supplies and props, etc. for a job or jobs. Often billed to the client with a mark up.

Fair market value
The price a willing buyer will pay and a willing seller will accept for real or personal property.

Fee
Photographer's earning on a specific job as differentiated from the expenses of that job.

First North American Rights
An assignment of rights commonly used by magazines. The magazine has exclusive rights to the image in North America. Once this issue is out, or at any time outside North America, the photographer has unlimited use of the image.

First Publication Rights
The client has the right to be the first to publish the image with restrictions of duration, frequency, area, etc.

Fixed Expenses (Overhead)
The costs of doing business which remain relatively stable regardless of the extent of operations. Rent and utility payments, etc.

Foreclosure
The legal process used to force the payment of debt secured by collateral whereby the property is sold to satisfy the debt.

401(k) Plan
Also known as a defined contribution plan, a type of retirement plan offered by employers to their employees. Money taken out of your paycheck is typically invested in stock or bond funds, where it grows untaxed until you retire, at which point you pay taxes on it. Typically, your employer will allow you to choose your mix of funds and often will match your contribution up to a certain level. An excellent deal.

Fictitious Name
Or DBA (Doing Business As). Businesses that use a name other than the owner's must register the fictitious name with the county as required by the Trade Name Registration Act. This does not apply to corporations doing business under their corporate name or to those practicing any profession under a partnership name.

Freelance
A photographer who sells his/her services as an Independent contractor and is not an employee. (see "Independent Contractor" and "Self Employed")

Grace Period
The number of days between the time you use credit and the time you have to pay for it without incurring a finance charge. For example, some credit cards offer a grace period from the date a charge is made until the date the payment is due. During those days, you do not pay a finance charge. Usually a grace period applies only if there is no outstanding balance on the previous bill.

Graphic Designer
A designer in business for him/her self or employed in the "in house" design deparartment of a company, usually producing brochures, annual reports, and catalogs, etc. for a corporation of other client. See Design Firm.

Gross Profit
Remaining profit after direct or variable costs have been subtracted from gross income.