Retirement of stock
Financial Dictionary — Equity & Capital
Definition
Buy back shares previously issued by the company.
Detailed Explanation
Retirement of stock refers to buying back shares and removing them from circulation (treasury shares cancellation or similar).
Common Uses
- Used in the purchase-to-pay cycle to validate invoices, approvals, and supporting documents.
- Used to strengthen internal controls over purchasing and supplier payments.
- Used to strengthen internal controls over purchasing and supplier payments.
Practical Example
- Example: Before payment, the AP team applies **Retirement of stock** to confirm the invoice matches the approved purchase documentation.
Why This Term Matters
- Why it matters: Prevents incorrect/duplicate payments, reduces fraud risk, and improves accuracy of payables and expenses.