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Whether you pretend to understand burn rates or aren’t sure what your accountant means by “secured credit”, there is a wide variety of jargon that finds its way into the business world. But some of these words and phrases are more confusing than others, and misunderstanding these terms can even lead to wider consequences for business owners and their businesses.
To better understand the role of jargon, the team here at Capital on Tap surveyed over 250 UK business owners across a range of industries. Our goal was to uncover how well key business terms are understood and what impact this language has on day-to-day decision-making. We’ve also highlighted the most commonly misunderstood terms, revealing the sectors most affected by complex terminology. If you are also puzzled by these phrases, keep reading to the end of the article for our helpful debunking guide.
The most confusing business terms
Business jargon can feel like a language all of its own, and for plenty of business owners, a language they don’t feel very fluent in. In fact, one in four (25%) admit their business has been negatively impacted following a decision they made based on unclear jargon.
The top 10 most confusing business jargon terms:
|
Business Jargon |
% of business owners not confident in its meaning |
|
EBITDA |
41% |
|
OPEX |
39% |
|
CAPEX |
37% |
|
Amortisation |
36% |
|
Runway |
34% |
|
Burn Rate |
32% |
|
Revenue Recognition |
25% |
|
AER |
21% |
|
ROI |
18% |
|
Dividends |
11% |
Acronyms top the list when it comes to confusing business jargon. Leading the pack is EBITDA, short for "earnings before interest, taxes, depreciation, and amortisation", with 41% of business owners admitting they’re not confident in what it actually means. Although London is widely seen as a major hub for business, more than a third (36%) of business owners there admit they don’t understand this particular acronym. Even seasoned professionals with over ten years of experience under their belts struggle, with 44% admitting confusion over EBITDA.
Hot on its heels is OPEX, or "operating expenses," which leaves 39% feeling unsure. CAPEX, meaning "capital expenditure," isn’t far behind, tripping up 37% of respondents. These financial terms are more than just buzzwords. For small business owners, understanding the difference can affect decisions like whether to lease equipment, invest in a new location, or improve expense management and control monthly costs more effectively.
The impact of misunderstanding jargon for businesses
From incorrect budgeting to delayed decisions and even lost funding, unclear terminology can have real consequences.
The most common impacts of misunderstanding business jargon:
|
Impact on the business from misunderstanding business jargon |
% of business owners experiencing this impact |
|
Missed business opportunities |
52% |
|
Poor communication with suppliers |
48% |
|
Delay in making important decisions |
47% |
|
Increased reliance on external advisors |
43% |
|
Financial loss or incorrect budgeting |
42% |
|
Errors in legal or contractual agreements |
40% |
|
Onboarding delays with tools/services |
40% |
|
Difficulty securing funding or investment |
39% |
|
Reputational damage |
29% |
The most common area where confusion has taken a tangible toll is missed business opportunities. Over half of business owners (52%) feel that a lack of jargon knowledge has led them to miss out on crucial opportunities to further their business at least once before. For 10% of owners, this happens annually. That’s potentially five missed opportunities over five years, simply due to unclear language.
Another major consequence is poor communication with suppliers or partners. Nearly half (48%) of business owners admit that misunderstood jargon has caused issues in these relationships.
Misinterpreting key terms in contracts or negotiations, such as payment schedules, service expectations, or pricing structures, can result in delivery issues, financial disputes, and a breakdown in trust. Over time, this confusion not only disrupts operations but also damages the credibility and efficiency of the business. For the building and construction industry, this can make a huge impact, and yet business owners in this sector have noticed this happening almost twice a year.
The financial risks of misunderstood jargon are just as significant, and over two in five business owners (42%) report that unclear terminology has led to financial losses or budgeting errors. Whether it’s misreading line items in a financial statement, mismanaging invoicing customers, or misunderstanding how a cost category should be treated, these mistakes can disrupt cash flow, skew forecasts, and erode profitability. In more serious cases, they may even lead to overspending or under-investing in key areas.
The consequences also extend to credibility, compliance, and cost. A significant 40% of business owners have encountered errors in legal or contractual agreements due to confusing jargon. These types of mistakes can sometimes result in fines, disputes, or unintentional breaches. These misunderstandings are particularly concerning in regulated sectors where precision is non-negotiable. On the technology front, 40% also report onboarding delays with new tools and services due to unclear language during setup.
Alex Miles explains how to cut through the jargon
Understanding business terminology shouldn't require a dictionary or a degree. Yet for many business owners, confusing jargon continues to slow down decisions, complicate conversations, and create unnecessary barriers. Below are five simple, powerful actions from Alex Miles, Chief Operating Officer at Capital on Tap, to help you cut through the jargon, ask the right questions, and make confident decisions.
1. Ask for simple language
When faced with confusing terms, ask, “Can you explain that in simpler terms?” or “What does that mean in practice?” Clarity is essential for good decision-making, and any credible advisor or colleague should be willing to break it down. You can also use free tools like ChatGPT to quickly look up unfamiliar words and get explanations in seconds.
2. Prioritise the jargon that impacts your business
Focus on learning the jargon most relevant to your day-to-day operations, whether it’s finance, marketing, or legal. Start with terms that come up often in meetings, on invoices, or in reports, and build from there.
3. Clarify terms in meetings out loud
Don’t let jargon go unchecked. If a term comes up that’s unclear, ask for clarification there and then. Phrases like “Let’s make sure we’re all using that term the same way” help align everyone and avoid costly misunderstandings later.
4. Work with people who make things clear
Choose accountants, lawyers, and consultants who explain concepts clearly and invite questions. Avoid those who use jargon to sound impressive. Clear communication is far more valuable than complex language.
Business jargon debunked
Business lingo shouldn’t have to be a barrier to success, so we have created a business jargon guide to help demystify corporate language you may come across. Alongside clear definitions, we’ve included real-world examples and actionable advice to help business owners confidently navigate the language of finance, operations, and beyond.
EBITDA
Earnings before interest, taxes, depreciation, and amortisation
Example: EBITDA helps assess a company’s core profitability. For instance, a small retail chain might use EBITDA to compare performance across locations before accounting for local tax or property cost differences.
OPEX
Operating expenses or operational expenditures
Example: OPEX includes things like rent, utilities, and salaries. For example, a coffee shop’s OPEX would include its lease and barista wages, which are essential for keeping the doors open day-to-day.
CAPEX
Capital expenditure
Example: CAPEX covers major purchases like machinery or property. A bakery investing in a new oven is making a capital expenditure because it’s a long-term asset, not a daily expense.
Amortisation
The gradual reduction of a debt or the cost of an intangible asset over time
Example: Amortisation spreads the cost of an intangible asset. A business that buys a software license might amortise the cost over several years instead of recording it all at once.
Runway
The amount of time a company can operate before running out of cash
Example: Runway tells startups how long they can operate before needing more funds. If a tech startup has £50,000 and burns £10,000 a month, they have 5 months of runway.
Burn Rate
The rate at which a company is spending its capital
Example: Burn Rate shows how fast a business spends its cash. A startup spending £20,000 monthly with no revenue has a high burn rate, which can raise concerns if funding is limited. In these situations, tools like a Capital on Tap Business Credit Card can provide a helpful buffer—offering flexible access to funds and real-time expense tracking to help manage burn rate more effectively.
Revenue Recognition
An accounting principle that outlines when revenue is recognised and recorded
Example: Revenue Recognition is key in subscription models. A gym that sells a 12-month membership doesn’t recognise the full revenue upfront, it spreads it across the year.
AER
Annual Equivalent Rate, showing what the interest rate would be if interest were compounded yearly
Example: Understanding AER helps compare savings accounts. If a business puts cash into an account with an AER of 3%, it reflects how much interest it will earn in a year, compounded.
ROI
Return on Investment: a measure of profitability
Example: ROI evaluates efficiency. A marketing agency that spends £1,000 on a campaign and earns £2,000 from it sees a 100% ROI, a crucial metric for deciding future spending.
Dividends
A portion of a company's earnings paid to shareholders
Example: Dividends reward shareholders. If a company earns a profit, it might issue dividends such as £1 per share as a return to investors.
Methodology and sources
To find out the most confusing business jargon, we conducted a survey among 256 business owners across various industries. The survey was designed to assess perceptions, interpretations, and reactions to commonly used business jargon. Respondents were presented with a list of business buzzwords and asked to evaluate each term based on understanding.
