The words a trades business runs on.

ACH (bank transfer)

A bank-to-bank payment over the Automated Clearing House network, the rail most large bills already travel on. It typically costs a fraction of a card fee and settles in a few business days.

Callback

A return visit to fix work already done, usually at no charge under the workmanship warranty. Callbacks are the hidden cost of a rushed install or a mismatched part.

Card processing fee

What a payment processor charges to accept a card: a percentage of the payment plus a small fixed amount per transaction. Typical card processing for a small business is about three percent.

Change order

A written amendment to an accepted quote that changes the scope, the price or the schedule, approved by the customer before the extra work is done. Verbal approval is the start of most disputes.

Chargeback

A card payment reversed by the cardholder’s bank after the customer disputes the charge. The contractor has a short window to submit evidence, and the bank decides.

Deposit

A partial payment collected at acceptance that covers material bought before the job starts and secures the booking. Some states cap the deposit allowed on home improvement contracts.

Diagnostic fee

A charge for finding the problem before any repair is quoted, often credited against the repair if the customer goes ahead.

Estimate

An approximation of what a job will cost, given before the full scope is known. It is not a fixed offer; a quote or bid is.

Flat rate

A fixed price for a defined job, quoted in advance from a price book regardless of the hours it actually takes. The contractor carries the risk of the estimate; the customer gets certainty.

Gross margin

Revenue minus the direct costs of the job, labor and materials, expressed as a share of revenue. It is what is left to pay overhead and profit.

Invoice

The request for payment for completed work: the lines, any tax, what has already been paid, and the amount due.

Labor burden

What an employee costs beyond wages: payroll taxes, workers’ compensation, insurance, benefits, the truck and the tools. A labor rate that ignores burden loses money on every hour.

Labor rate

The hourly price charged for a technician’s time. It carries wages, labor burden, a share of overhead and profit, which is why it is well above the wage.

Lien waiver

A document a contractor or supplier signs giving up the right to file a lien for the amount paid. Conditional waivers take effect once the payment clears; unconditional ones are effective on signing.

Markup

The amount added to a cost to reach the selling price, as a percentage of the cost. A 30 percent markup is roughly a 23 percent margin, because margin is measured against the price, not the cost.

Materials markup

The percentage added to a supplier’s price for the time spent choosing, buying and carrying materials, the warranty on them, and profit.

Mechanic’s lien

A legal claim against a property for work or materials that were not paid for. Filing rules and deadlines vary by state.

Milestone payment

A scheduled partial payment tied to a defined stage of the job: acceptance, material delivery, rough-in, completion. A schedule keeps either side’s exposure to one stage at a time.

Net terms

Payment due a fixed number of days after the invoice date, written as Net 15 or Net 30. Common with commercial customers and property managers.

Overhead

The costs of running the business that no single job carries: insurance, rent, software, phones, advertising and the time spent on the books. Priced into the labor rate.

Permit

Authorization from the local building department to do regulated work, followed by an inspection. Passed through on the quote at cost, plus the time to pull it and meet the inspector.

Price book

The contractor’s own list of jobs, parts and labor with the price of each, so every quote is built from the same numbers.

Punch list

The list of small remaining items at the end of a job, agreed with the customer before the final payment.

Quote (bid, proposal)

A fixed-price offer to do a defined scope of work. Once the customer accepts it, it is the contract.

Retainage

A percentage withheld from each progress payment until the work is complete, common on commercial and general-contractor jobs.

Sales tax

Tax collected on materials and, in some states, on labor. What is collected belongs to the state and is booked as a liability, never as income.

Scope of work

The written description of what the job includes and, just as importantly, what it does not.

Service agreement

A recurring contract for scheduled visits, such as seasonal tune-ups, usually with a discount on repairs and priority scheduling.

Service call fee

The charge for sending a technician to the property, covering travel and the first block of time on site. Sometimes called a trip or dispatch fee.

Statement descriptor

The business name that appears on a customer’s card statement. A descriptor the customer does not recognize is the most common cause of a chargeback.

Surcharge

A fee added to the bill when the customer pays by credit card, to cover the processing cost. Allowed in some states and not others, and it must be disclosed before the customer chooses.

Time and materials (T&M)

Billing for the hours worked and the materials used, at a rate agreed in advance. Suits open-ended work where nobody can see the whole job yet.

Warranty

The promise to fix a defect for a stated period. The manufacturer’s warranty covers the equipment; the workmanship warranty covers the install, and a quote should state the two separately.

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