{"id":29663,"date":"2026-04-21T10:43:25","date_gmt":"2026-04-21T09:43:25","guid":{"rendered":"https:\/\/www.sage.com\/en-gb\/blog\/?p=29663"},"modified":"2026-04-21T10:50:01","modified_gmt":"2026-04-21T09:50:01","slug":"accrual-basis-accounting","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-gb\/blog\/accrual-basis-accounting\/","title":{"rendered":"Accrual accounting: What it is, benefits and examples"},"content":{"rendered":"<header class=\"entry-header has-dark-background-color entry-header--standard entry-header--has-illustration entry-header--has-illustration--standard\">\n\t<div class=\"container\">\n\t\t<div class=\"entry-header__row row align-center\">\n\t\t\t<div class=\"col col-lg-7 col-xlg-6 entry-header__content\">\n\t\t\t\t\t\t\t<div class=\"component component-single-header\">\n\t\t\t\t\t\t\t\t\t\t<div class=\"entry-header__misc text--subtitle text--uppercase text--small\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-gb\/blog\/category\/money-matters\/\" class=\"entry-header__link\">Money Matters<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t<div class=\"entry-title-wrapper\">\n\t\t\t\t\t<h1 class=\"entry-title\">\n\t\t\t\t\t\tAccrual accounting: What it is, benefits and examples\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t<p class=\"entry-header__description\">\n\t\t\t\t\t\tLearn more about accrual accounting, including the benefits of this approach and why it might be the best accounting method for your business.\n\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n\t\t<div class=\"single-post-details container\">\n\t\t<div class=\"col\">\n\t\t\t<span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2026-04-21T10:43:25+01:00\">21 April, 2026<\/time><\/span><span class=\"reading-time\"> min read<\/span>\n\t\t<button\n\t\t\ttype=\"button\"\n\t\t\tclass=\"social-share-button button button--icon button--secondary js-social-share-button\"\n\t\t\tdata-share-title=\"Accrual accounting: What it is, benefits and examples\"\n\t\t\tdata-share-url=\"https:\/\/www.sage.com\/en-gb\/blog\/accrual-basis-accounting\/\"\n\t\t\tdata-share-text=\"Please read this interesting article\"\n\t\t>\n\t\t\t<span class=\"social-share-button__share-label\">Share<\/span>\n\t\t\t<span class=\"social-share-button__copy-label\" hidden>Copy Link<\/span>\n\t\t\t<span class=\"social-share-button__copy-tooltip\" aria-hidden=\"true\" hidden>Copied<\/span>\n\t\t<\/button>\n\n\t\t\t\t<\/div>\n\t<\/div>\n\t<\/header>\n\n\n\n<div class=\"wp-block-post-author has-dark-background-color alignfull\">\n\t<div class=\"container\">\n\t\t<div class=\"col\">\n\t\t\t\t\t\t\t<div class=\"co-authors\">\n\t\t\t\t\t\n\t\t<div class=\"entry-author-wrapper\">\n\t\t\t<a class=\"entry-author\" href=\"https:\/\/www.sage.com\/en-gb\/blog\/author\/laurencematone\/\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"40\" height=\"40\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2026\/03\/Profile_LM-350x350.jpeg\" class=\"entry-author__image\" alt=\"Laurence Matone\" \/>\t\t\t\t<span class=\"entry-author__name\">Laurence Matone<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n<\/div>\n\n\n\n<p>Accrual accounting (also known as the accrual basis) is a method of capturing the true picture of your business\u2019s finances\u2014recording income and expenses when they occur, not just when cash moves.<\/p>\n\n\n\n<p>It reveals a fuller, more accurate picture of financial health, making it easier to plan, grow, and make smart decisions.<\/p>\n\n\n\n<p>In this guide, we&#8217;ll dive into the essentials of accrual accounting, explore examples, key benefits, and show how it can streamline financial management for your business.<\/p>\n\n\n\n<p><strong>Key takeaways:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Accrual accounting records revenue when it&#8217;s earned and expenses when they&#8217;re incurred, giving a more accurate picture of financial health.<\/li>\n\n\n\n<li>This method relies on accounts like accounts receivable, accounts payable, and prepaid expenses to track upcoming cash transactions.<\/li>\n\n\n\n<li>Accrual-based accounting is ideal for businesses managing credit, inventory, or long-term projects and is required for compliance with accounting standards in larger companies.<\/li>\n\n\n\n<li>Whilst it provides detailed insights, accrual accounting can be complex and impact cash flow.<\/li>\n\n\n\n<li>Accounting software can simplify the process by automating entries and generating real-time reports.<\/li>\n<\/ul>\n\n\n\n<p><strong>In this article, we&#8217;ll cover:<\/strong><\/p>\n\n\n<?xml encoding=\"utf-8\" ?><div class=\"wp-block-yoast-seo-table-of-contents yoast-table-of-contents\"><ul><li><a href=\"#h-what-is-accrual-accounting\" data-level=\"2\">What is accrual accounting?<\/a><\/li><li><a href=\"#h-how-does-accrual-accounting-work\" data-level=\"2\">How does accrual accounting work?<\/a><\/li><li><a href=\"#h-core-principles-of-accrual-accounting\" data-level=\"2\">Core principles of accrual accounting<\/a><\/li><li><a href=\"#h-types-of-accrual-accounting-methods\" data-level=\"2\">Types of accrual accounting methods<\/a><\/li><li><a href=\"#h-cash-basis-vs-accrual-accounting-key-differences\" data-level=\"2\">Cash basis vs accrual accounting: Key differences<\/a><\/li><li><a href=\"#h-accrual-accounting-examples\" data-level=\"2\">Accrual accounting examples<\/a><\/li><li><a href=\"#h-when-to-use-accrual-accounting\" data-level=\"2\">When to use accrual accounting<\/a><\/li><li><a href=\"#h-advantages-of-accrual-accounting\" data-level=\"2\">Advantages of accrual accounting<\/a><\/li><li><a href=\"#h-disadvantages-of-accrual-accounting\" data-level=\"2\">Disadvantages of accrual accounting<\/a><\/li><li><a href=\"#h-is-accrual-accounting-the-right-method-for-your-business\" data-level=\"2\">Is accrual accounting the right method for your business?<\/a><\/li><li><a href=\"#h-accrual-accounting-best-practices\" data-level=\"2\">Accrual accounting best practices<\/a><\/li><li><a href=\"#h-how-accounting-software-can-help\" data-level=\"2\">How accounting software can help<\/a><\/li><li><a href=\"#h-accrual-accounting-faqs\" data-level=\"2\">Accrual accounting FAQs<\/a><\/li><\/ul><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-is-accrual-accounting\"><strong>What is accrual accounting?<\/strong><\/h2>\n\n\n\n<p>Accrual accounting is a method that recognises revenue and expenses when they are incurred rather than when cash actually changes hands. In accrual accounting, an &#8220;accrual&#8221; refers to recording revenues and expenses that are earned or incurred but haven&#8217;t yet been paid in cash.<\/p>\n\n\n\n<p>This approach follows two key principles. The matching principle, which records expenses in the same period as the revenue they support, and the revenue recognition principle, which recognises revenue when it&#8217;s earned.<\/p>\n\n\n\n<p>By aligning revenue with related expenses, accrual accounting offers a clearer view of profitability and provides a more accurate picture of assets and liabilities on the balance sheet. That&#8217;s why this accounting method is required by accounting standards for listed companies and is favoured by many businesses looking to get a clear view of their financial standing.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-does-accrual-accounting-work\"><strong>How does accrual accounting work?<\/strong><\/h2>\n\n\n\n<p>Accrual accounting captures the full financial picture by recording revenue when it&#8217;s earned and expenses when they&#8217;re incurred, regardless of when cash actually moves.<\/p>\n\n\n\n<p>This means anticipated payments, like unpaid customer invoices, appear on the balance sheet under &#8220;<a href=\"https:\/\/www.sage.com\/en-gb\/accounting-software\/accounts-receivable\/\">accounts receivable<\/a>.&#8221; Similarly, expected outgoing payments are noted under &#8220;<a href=\"https:\/\/www.sage.com\/en-gb\/accounting-software\/accounts-payable\/\" target=\"_blank\" rel=\"noreferrer noopener\">accounts payable.<\/a>&#8220;<\/p>\n\n\n\n<p>These <a href=\"https:\/\/www.sage.com\/en-us\/blog\/what-why-balance-sheets-important\/\" target=\"_blank\" rel=\"noreferrer noopener\">balance sheet<\/a> entries, called accruals, serve as placeholders that reflect upcoming cash transactions.<\/p>\n\n\n\n<p>By recognising income and expenses in this way, the accrual-based method of accounting ensures businesses have a timely and accurate view of profitability, helping them track financial health and make informed decisions\u2014even before cash exchanges hands.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-core-principles-of-accrual-accounting\"><strong>Core principles of accrual accounting<\/strong><\/h2>\n\n\n\n<p>At the heart of accrual-based accounting are two core principles. The revenue recognition principle and the matching principle. These concepts help create a clear, accurate picture of a business&#8217;s financial health by linking income and expenses to the periods they actually impact, regardless of cash movement.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-revenue-recognition-principle\"><strong>Revenue recognition principle<\/strong><\/h3>\n\n\n\n<p>This principle states that revenue is recorded when it&#8217;s earned, not when payment is received.<\/p>\n\n\n\n<p>For example, imagine you run a bespoke furniture business and complete a client&#8217;s order in August, but the client doesn&#8217;t pay until September.<\/p>\n\n\n\n<p>Under the revenue recognition principle, you would record the revenue in August, when you fulfilled your obligation by delivering the furniture, even though you haven&#8217;t been paid yet. This way, your income reflects the actual work done in that period.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-matching-principle\"><strong>Matching principle<\/strong><\/h3>\n\n\n\n<p>The matching principle requires that expenses be recorded in the same period as the revenue they help generate.<\/p>\n\n\n\n<p>Continuing with the furniture example, if you spent \u00a31,500 on materials and labour to complete the client&#8217;s order in August, those costs should also be recorded in August. This alignment ensures that revenue and related expenses are matched, giving a true sense of profitability for each period.<\/p>\n\n\n\n<p>By following these principles, accrual accounting helps you see the real economic activities of your business, offering a comprehensive view of financial performance and helping you make better-informed decisions.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-types-of-accrual-accounting-methods\"><strong>Types of accrual accounting methods<\/strong><\/h2>\n\n\n\n<p>The accrual-based method of accounting includes several techniques to track financial activities even before cash exchanges hands. These methods\u2014deferred revenue, accrued revenue, prepaid expenses, and accrued expenses\u2014are essential for accurately representing a business&#8217;s financial position.<br><\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-deferred-revenue\"><strong>Deferred revenue<\/strong><\/h3>\n\n\n\n<p>Deferred revenue, also called unearned revenue, is money a business receives before delivering a product or service. Think of it as an advance payment.<\/p>\n\n\n\n<p>For example, if a client pays upfront for a year-long software subscription, that payment is initially recorded as deferred revenue\u2014a liability\u2014since the service is ongoing.<\/p>\n\n\n\n<p>In accrual accounting, this advance payment is recorded as a liability because it represents a service the business still owes.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-example-of-deferred-revenue-entry\"><strong>Example of deferred revenue entry<\/strong><\/h4>\n\n\n\n<p><strong>In January (when the payment is received):<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Debit: cash \u00a31,200<\/li>\n\n\n\n<li>Credit: deferred revenue (liability) \u00a31,200<\/li>\n<\/ul>\n\n\n\n<p>This entry shows an increase in cash and recognises a liability for the unearned portion of the revenue.<\/p>\n\n\n\n<p><strong>In February (and each subsequent month as service is provided):<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Debit: deferred revenue \u00a3100 (reducing the liability)<\/li>\n\n\n\n<li>Credit: revenue \u00a3100 (recognising the earned revenue)<\/li>\n<\/ul>\n\n\n\n<p>Each month, \u00a3100 (1\/12 of the subscription) is moved from deferred to earned revenue, matching the service provided with the recognised revenue. This gives a clearer picture of actual income earned.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-accrued-revenue\"><strong>Accrued revenue<\/strong><\/h3>\n\n\n\n<p>Accrued revenue is income you&#8217;ve earned by providing a product or service, even though you haven&#8217;t been paid yet.<\/p>\n\n\n\n<p>Let&#8217;s say you complete \u00a3300 worth of consulting work in January, but the client won&#8217;t pay until February. Since the work is already done, you record the revenue in January to match when it was earned.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-example-of-accrued-revenue-entry\"><strong>Example of accrued revenue entry<\/strong><\/h4>\n\n\n\n<p><strong>In January (when the service is provided):<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Debit: accounts receivable \u00a3300 (to reflect what&#8217;s owed)<\/li>\n\n\n\n<li>Credit: revenue \u00a3300 (to record the earned income)<\/li>\n<\/ul>\n\n\n\n<p>This entry shows the revenue as earned, even though the payment is still pending.<\/p>\n\n\n\n<p><strong>In February (when payment is received):<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Debit: cash \u00a3300 (increasing cash)<\/li>\n\n\n\n<li>Credit: accounts receivable \u00a3300 (removing the outstanding amount)<\/li>\n<\/ul>\n\n\n\n<p>By recording accrued revenue, your financial statements show income in the period it was earned, helping you track profitability accurately, even if payment comes later.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-prepaid-expenses\"><strong>Prepaid expenses<\/strong><\/h3>\n\n\n\n<p>Prepaid expenses are payments you make in advance for goods or services you&#8217;ll use later. For example, if you pay \u00a31,200 upfront in January for a year-long insurance policy, that payment is recorded as a prepaid expense (an asset) since it covers future benefits.<br><\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-example-of-prepaid-expense-entry\"><strong>Example of prepaid expense entry<\/strong><\/h4>\n\n\n\n<p><strong>In January (when you make the upfront payment):<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Debit: prepaid expenses \u00a31,200 (recording the future benefit)<\/li>\n\n\n\n<li>Credit: cash \u00a31,200 (reflecting the cash payment)<\/li>\n<\/ul>\n\n\n\n<p>This entry shows that the insurance payment was made upfront, but you haven&#8217;t yet used the coverage.<\/p>\n\n\n\n<p><strong>Each month (February through December, as you &#8220;use&#8221; the insurance):<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Debit: insurance expense \u00a3100 (for each month&#8217;s portion of the policy)<\/li>\n\n\n\n<li>Credit: prepaid expenses \u00a3100 (reducing the prepaid amount)<\/li>\n<\/ul>\n\n\n\n<p>Each month, \u00a3100 (1\/12 of the \u00a31,200) is moved from prepaid expenses to insurance expenses, matching the cost to the benefit period. This way, your records accurately reflect the insurance cost over the entire year, giving a clear view of monthly expenses.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-accrued-expenses\"><strong>Accrued expenses<\/strong><\/h3>\n\n\n\n<p>Accrued expenses are costs you&#8217;ve incurred but haven&#8217;t paid yet. Let&#8217;s say you receive \u00a3200 worth of supplies in October, but the payment isn&#8217;t due until November. Even though you haven&#8217;t paid for the supplies, you record the expense in October to reflect when they were actually used.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-example-of-accrued-expense-entry\"><strong>Example of accrued expense entry<\/strong><\/h4>\n\n\n\n<p id=\"h-example-of-accrued-expense-entry\"><strong>In October (when you receive the supplies):<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Debit: supplies expense \u00a3200 (recording the cost of supplies)<\/li>\n\n\n\n<li>Credit: accounts payable \u00a3200 (showing the amount owed)<\/li>\n<\/ul>\n\n\n\n<p>This entry ensures your expenses match the month you used the supplies, even if payment hasn&#8217;t been made.<\/p>\n\n\n\n<p><strong>In November (when you make the payment):<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Debit: accounts payable \u00a3200 (clearing the amount owed)<\/li>\n\n\n\n<li>Credit: cash \u00a3200 (reflecting the cash outflow)<\/li>\n<\/ul>\n\n\n\n<p id=\"h-example-of-accrued-expense-entry\">Recording accrued expenses like this helps keep your finances accurate, showing the true costs in the periods they&#8217;re incurred.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-cash-basis-vs-accrual-accounting-key-differences\"><strong>Cash basis vs accrual accounting: Key differences<\/strong><\/h2>\n\n\n\n<p id=\"h-cash-basis-vs-accrual-accounting-key-differences\">The cash and accrual accounting methods differ in how they record income and expenses, impacting the financial picture they provide. Here is a table describing the key differences between <a href=\"https:\/\/www.sage.com\/en-gb\/blog\/cash-versus-accrual-accounting-what-is-the-difference\/\" target=\"_blank\" rel=\"noreferrer noopener\">cash vs. accrual-based accounting<\/a> to help you decide which accounting method is best for your business:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>Variable<\/strong><\/td><td><strong>Cash basis accounting<\/strong><\/td><td><strong>Accrual accounting<\/strong><\/td><\/tr><tr><td>Timing<\/td><td>Records transactions only when cash is exchanged (when payment is received or paid).<\/td><td>Records revenue and expenses when they are earned or incurred, regardless of when cash is actually exchanged.<\/td><\/tr><tr><td>Complexity<\/td><td>Simple, immediate, and easy to manage, often with minimal bookkeeping requirements.<\/td><td>Requires more detailed tracking, especially of receivables and payables, and is generally more complex to maintain.<\/td><\/tr><tr><td>Ideal for<\/td><td>Small businesses, freelancers, and sole traders with straightforward transactions.<\/td><td>Larger companies, businesses with inventory, and those seeking a long-term financial view or needing investor support.<\/td><\/tr><tr><td>View of financial health<\/td><td>Provides a short-term view of cash flow, showing only the current cash balance.<\/td><td>Offers a comprehensive view of financial health by accounting for all income and expenses, even if unpaid.<\/td><\/tr><tr><td>Cash flow management<\/td><td>Easier to track available cash since only cash transactions are recorded.<\/td><td>May show profitability even if cash is unavailable, requiring more careful monitoring of actual cash flow.<\/td><\/tr><tr><td>Legal requirements<\/td><td>Generally allowed for small businesses below a revenue threshold and for tax deferral on unpaid income.<\/td><td>Typically required for businesses preparing accounts under UK GAAP or IFRS, including larger or listed companies.<\/td><\/tr><tr><td>Tax implications<\/td><td>Taxes are paid only on income received, potentially reducing the tax burden in low-cash months.<\/td><td>Taxes may be due on earned revenue even if payment hasn&#8217;t been received, potentially impacting cash reserves.<\/td><\/tr><tr><td>Example<\/td><td>Similar to managing personal finances by tracking cash in and out with a banking app.<\/td><td>Like using a budgeting app that logs all expected income and expenses for a complete financial picture.<\/td><\/tr><tr><td>Pros<\/td><td>Simpler to manage, provides real-time cash flow insight, lower bookkeeping costs.<\/td><td>More accurate long-term view, supports financial planning, meets investor and lender requirements.<\/td><\/tr><tr><td>Cons<\/td><td>Doesn&#8217;t show full financial commitments; may miss unpaid revenue or expenses.<\/td><td>More complex, can be costly, requires careful cash management to avoid liquidity issues.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-accrual-accounting-examples\"><strong>Accrual accounting examples<\/strong><\/h2>\n\n\n\n<p id=\"h-accrual-accounting-examples\">Accrual accounting ensures that income and expenses are recorded in the period they&#8217;re earned or incurred, regardless of when cash exchanges hands. Here are some unique accrual accounting examples to illustrate how this method works for various types of transactions.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-revenue-example-project-based-services\"><strong>Revenue example: Project-based services<\/strong><\/h3>\n\n\n\n<p id=\"h-revenue-example-project-based-services\">BluePrint Design Studio is an interior design company that has completed a project for a client in September worth \u00a38,000. They invoice the client at the end of the month, with a payment deadline of 31 October. Under the accrual method, BluePrint records revenue in September, when the service is completed, not in October, when payment is received.<\/p>\n\n\n\n<p><strong>September entry:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Debit: accounts receivable \u00a38,000<\/li>\n\n\n\n<li>Credit: revenue \u00a38,000<\/li>\n<\/ul>\n\n\n\n<p>(This entry records the income earned, even though payment hasn&#8217;t been received yet.)<\/p>\n\n\n\n<p><strong>October entry (when payment is received):<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Debit: cash \u00a38,000<\/li>\n\n\n\n<li>Credit: accounts receivable \u00a38,000<\/li>\n<\/ul>\n\n\n\n<p>(This entry reflects the payment received and clears the outstanding amount.)<\/p>\n\n\n\n<p id=\"h-revenue-example-project-based-services\">This approach shows income in the month the service was provided, giving a clear view of September&#8217;s earnings.ws income in the month the service was provided, giving a clear view of September&#8217;s earnings.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-expense-example-utilities-billed-in-arrears\"><strong>Expense example: Utilities billed in arrears<\/strong><\/h3>\n\n\n\n<p>CityBuild Construction uses electricity for its operations in November, but the utility company invoices them in December. Although the bill won&#8217;t be paid until December, CityBuild records this as an expense in November to match when the electricity was used.<\/p>\n\n\n\n<p><strong>November entry:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Debit: utilities expense \u00a3400<\/li>\n\n\n\n<li>Credit: accounts payable \u00a3400<\/li>\n<\/ul>\n\n\n\n<p>(This entry recognises the expense in November, the month the utility was used.)<\/p>\n\n\n\n<p><strong>December entry (when the bill is paid):<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Debit: accounts payable \u00a3400<\/li>\n\n\n\n<li>Credit: cash \u00a3400<\/li>\n<\/ul>\n\n\n\n<p>(This entry clears the liability once payment is made.)<\/p>\n\n\n\n<p>Recording the expense in November provides an accurate view of costs aligned with operations.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-deferred-revenue-example-annual-subscription-service\"><strong>Deferred revenue example: Annual subscription service<\/strong><\/h3>\n\n\n\n<p>Ace Fitness offers an annual membership plan that requires customers to pay \u00a31,200 upfront in January. This payment covers access to services for the entire year. Initially, Ace records the payment as deferred revenue because the service hasn&#8217;t yet been provided.<\/p>\n\n\n\n<p><strong>January entry:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Debit: cash \u00a31,200<\/li>\n\n\n\n<li>Credit: deferred revenue \u00a31,200<\/li>\n<\/ul>\n\n\n\n<p>(This entry records the payment received as a liability, as services are still owed.)<\/p>\n\n\n\n<p><strong>Monthly entry (February through December):<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Debit: deferred revenue \u00a3100<\/li>\n\n\n\n<li>Credit: revenue \u00a3100<\/li>\n<\/ul>\n\n\n\n<p>(Each month, \u00a3100 is moved from deferred revenue to earned revenue as the service is delivered.)<\/p>\n\n\n\n<p>This monthly adjustment ensures income is recognised gradually, providing a clearer picture of earned revenue throughout the year.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-prepaid-expense-example-advertising-campaign\"><strong>Prepaid expense example: Advertising campaign<\/strong><\/h4>\n\n\n\n<p>SmartAds Ltd pays \u00a33,000 upfront in August for a six-month online advertising campaign. Since the service spans multiple months, the initial payment is recorded as a prepaid expense.<\/p>\n\n\n\n<p><strong>August entry:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Debit: prepaid expense \u00a33,000<\/li>\n\n\n\n<li>Credit: cash \u00a33,000<\/li>\n<\/ul>\n\n\n\n<p>(This entry records the advance payment as an asset, as the service hasn&#8217;t fully occurred yet.)<\/p>\n\n\n\n<p><strong>Monthly entry (September through February):<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Debit: advertising expense \u00a3500<\/li>\n\n\n\n<li>Credit: prepaid expense \u00a3500<\/li>\n<\/ul>\n\n\n\n<p>(Each month, \u00a3500 is moved from prepaid expense to advertising expense, aligning cost with the service period.)<\/p>\n\n\n\n<p>This approach spreads the cost over six months, accurately reflecting monthly expenses and avoiding a one-time expense that would distort the August budget.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-when-to-use-accrual-accounting\"><strong>When to use accrual accounting<\/strong><\/h2>\n\n\n\n<p>Accrual accounting is often essential or beneficial in certain situations, especially when detailed and standardised reporting is needed:<\/p>\n\n\n\n<p><strong>Regulatory compliance (accounting standards requirements): <\/strong>accrual accounting is required for filings that follow accounting standards. Many investors and lenders also prefer compliant financials for transparency and accuracy.<\/p>\n\n\n\n<p><strong>Complex revenue structures:<\/strong> if your business offers credit, long-term contracts, or subscriptions, accrual accounting helps by recording income and expenses in the periods they apply, giving a more accurate view of financial health.<\/p>\n\n\n\n<p><strong>HMRC rules and exceptions: <\/strong>Whilst many smaller businesses can use cash accounting for tax purposes, larger or more complex businesses typically adopt accrual accounting to comply with UK accounting standards and reporting requirements.<\/p>\n\n\n\n<p><strong>Preparing for growth:<\/strong> if your business plans to grow, attract investors, or go public, using accrual accounting from the start builds consistency, making financial comparisons easier down the line.<\/p>\n\n\n\n<p><strong>Inventory management: <\/strong>for businesses with inventory, accrual accounting better matches costs with related sales, providing a clearer picture of profit margins.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-advantages-of-accrual-accounting\"><strong>Advantages of accrual accounting<\/strong><\/h2>\n\n\n\n<p>Why use accrual accounting? Accrual accounting offers several practical benefits, making it a smart choice for many businesses.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-a-clearer-financial-picture\"><strong>A clearer financial picture<\/strong><\/h4>\n\n\n\n<p id=\"h-a-clearer-financial-picture\">By recording income and expenses when they&#8217;re earned or incurred, rather than when cash changes hands, accrual accounting gives a more accurate view of your business&#8217;s financial health. This is especially helpful for companies that work with credit or manage long-term projects, as it shows the true state of income and costs.<\/p>\n\n\n\n<p id=\"h-a-clearer-financial-picture\"><strong>Better for funding and investment<\/strong><\/p>\n\n\n\n<p id=\"h-a-clearer-financial-picture\">Many investors and lenders prefer accrual accounting because it meets accounting standards and provides a consistent financial picture. For businesses looking to grow or secure funding, accrual accounting can boost credibility and improve chances of attracting investment.<\/p>\n\n\n\n<p><strong>Informed financial planning<\/strong><\/p>\n\n\n\n<p>Accrual-based accounting helps match expenses directly to the revenues they support, giving you a clearer view of profitability. This accuracy is invaluable for budgeting, forecasting, and making strategic decisions about where to allocate resources.<\/p>\n\n\n\n<p><strong>Effective project tracking<\/strong><\/p>\n\n\n\n<p>For businesses managing long-term contracts, accrual accounting keeps revenue and expenses aligned with the actual work done. This makes it easier to track the financial progress of each project and understand profitability over time.<\/p>\n\n\n\n<p><strong>Budget control<\/strong><\/p>\n\n\n\n<p>Since accrual accounting shows which expenses support which revenues, it&#8217;s easier to see where you&#8217;re over or under budget and adjust as needed. This leads to better resource management and helps you stay on track financially.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-clearer-reporting-for-stakeholders\"><strong>Clearer reporting for stakeholders<\/strong><\/h4>\n\n\n\n<p>Accrual accounting provides a transparent view of your business&#8217;s operations and financial stability, giving investors, creditors, and other stakeholders confidence in your numbers and making it easier for them to make informed decisions.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-disadvantages-of-accrual-accounting\"><strong>Disadvantages of accrual accounting<\/strong><\/h2>\n\n\n\n<p id=\"h-disadvantages-of-accrual-accounting\">Whilst accrual accounting gives a detailed view of financial performance, it does come with some challenges that are important to consider.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-increased-complexity\"><strong>Increased complexity<\/strong><\/h4>\n\n\n\n<p>Accrual accounting requires a good understanding of accounting principles and accurate record-keeping. Small business owners or those without an accounting background may find it difficult to manage and often need specialised software or external help to handle the added workload.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-time-intensive-record-keeping\"><strong>Time-intensive record-keeping<\/strong><\/h4>\n\n\n\n<p id=\"h-time-intensive-record-keeping\">Since transactions are recorded when they\u2019re earned or incurred, even if cash hasn\u2019t changed hands, accrual accounting requires careful tracking of accounts receivable and accounts payable. This adds more administrative work, which can be tough for small businesses without dedicated accounting staff.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-potential-cash-flow-mismatch\"><strong>Potential cash flow mismatch<\/strong><\/h4>\n\n\n\n<p id=\"h-potential-cash-flow-mismatch\">One drawback of accrual accounting is that it records revenue when it\u2019s earned rather than when cash is received. This can sometimes make the business appear profitable on paper while it is actually facing a cash shortage. It\u2019s essential to monitor cash flow statements regularly to maintain a clear picture of cash on hand.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-delayed-cash-based-feedback\"><strong>Delayed cash-based feedback<\/strong><\/h4>\n\n\n\n<p id=\"h-delayed-cash-based-feedback\">In accrual accounting, a sale is recorded as soon as it\u2019s made, even if payment won\u2019t arrive until much later. This delay can make it harder for businesses to quickly address cash-based issues or seize opportunities, as the financials might not reflect the actual cash available.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-higher-costs-and-resources-needed\"><strong>Higher costs and resources needed<\/strong><\/h4>\n\n\n\n<p>Accrual accounting\u2019s complexity often means more time and costs, whether for software, accounting services, or additional team resources. For smaller businesses with simpler transactions, this extra investment may not be necessary or practical.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-is-accrual-accounting-the-right-method-for-your-business\"><strong>Is accrual accounting the right method for your business?<\/strong><\/h2>\n\n\n\n<p>Deciding if an accrual-based method of accounting is right for your business depends on how you operate and your future plans. Here are some key points to consider.<\/p>\n\n\n\n<p><strong>Cash versus credit transactions: <\/strong>if your business deals mainly in cash, accrual accounting may not be necessary. But if you extend credit to customers or buy on credit from suppliers, accrual accounting gives a more accurate picture of your finances.<\/p>\n\n\n\n<p><strong>Timing of payments:<\/strong> the longer the wait between making sales and getting paid, the more helpful accrual accounting becomes. It records income when it\u2019s earned, not received, showing profitability more clearly.<\/p>\n\n\n\n<p><strong>Inventory tracking: <\/strong>product-based businesses, even small ones, often benefit from accrual accounting to accurately manage inventory and cost of goods sold. This provides a clearer view of profit.<\/p>\n\n\n\n<p><strong>Revenue size and requirements:<\/strong> larger or more complex organisations or those that are publicly traded must use accrual accounting. As your business grows, this may become a requirement.<\/p>\n\n\n\n<p><strong>Growth and funding goals:<\/strong> if you\u2019re planning to expand or attract investors, accrual accounting is often preferred by lenders and investors, as it\u2019s compliant with UK accounting standards and shows financial health more clearly.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-accrual-accounting-best-practices\"><strong>Accrual accounting best practices<\/strong><\/h2>\n\n\n\n<p>Here are some straightforward ways to make accrual accounting work smoothly for your business.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-be-mindful-of-when-to-record-revenue\"><strong>Be mindful of when to record revenue<\/strong><\/h3>\n\n\n\n<p>If your business offers subscriptions or bundles of products and services, it\u2019s important to time <a href=\"https:\/\/www.sage.com\/en-us\/accounting-software\/revenue-recognition\/\" target=\"_blank\" rel=\"noreferrer noopener\">revenue recognition<\/a> accurately. You might record income over the subscription period or at key milestones. For bundled products, break down each part\u2019s value so you can log revenue correctly.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-standardise-recurring-expenses\"><strong>Standardise recurring expenses<\/strong><\/h3>\n\n\n\n<p>Set up a routine to track regular costs like rent, utilities, and payroll to ensure they\u2019re recorded accurately and on time. Use past data to estimate costs like bad debts or warranties, and keep your estimates updated.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-keep-an-eye-on-potential-liabilities\"><strong>Keep an eye on potential liabilities<\/strong><\/h3>\n\n\n\n<p>For any possible liabilities\u2014like warranties or legal claims\u2014have a process to track and record them. If a liability is likely, make sure it\u2019s recorded, and note any others in your financial statement footnotes to be fully transparent.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-separate-duties-for-accuracy-and-security\"><strong>Separate duties for accuracy and security<\/strong><\/h3>\n\n\n\n<p>Divide up tasks for approving, recording, and reconciling transactions to reduce mistakes and protect against fraud. This way, each part of the process is handled accurately.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-regularly-review-your-processes\"><strong>Regularly review your processes<\/strong><\/h3>\n\n\n\n<p>Schedule routine check-ups on your accrual accounting, including your estimates and entries, to catch any mistakes early. Keep clear records of your accounting policies and processes to support audits and stay transparent.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-use-data-for-insights\"><strong>Use data for insights<\/strong><\/h3>\n\n\n\n<p>Analysing data can help you spot trends, catch any unusual activity in revenue or expenses, and improve your forecasting. Tracking these patterns can lead to smarter financial planning.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-accounting-software-can-help\"><strong>How accounting software can help<\/strong><\/h2>\n\n\n\n<p>Accrual accounting requires detailed tracking of accounts receivable, accounts payable, and deferred revenue on a regular basis, which can be time-consuming for businesses without a dedicated accounting team.<\/p>\n\n\n\n<p>Good <a href=\"https:\/\/www.sage.com\/en-gb\/accounting-software\/\" target=\"_blank\" rel=\"noreferrer noopener\">accounting software<\/a>, like Sage Intacct, simplifies this process by automating accruals, tracking revenue and expenses, and generating reports in real time. This automation not only saves time but also reduces the risk of errors, ensuring accuracy across all accounts.<\/p>\n\n\n\n<p>With Sage Intacct, you can keep your books up to date effortlessly, allowing you to focus on growing your business with confidence in your financial data.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-accrual-accounting-faqs\"><strong>Accrual accounting FAQs<\/strong><\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1776763147882\"><strong class=\"schema-faq-question\"><strong>What is an accrual in simple terms?<\/strong><\/strong> <p class=\"schema-faq-answer\">An accrual is money that a business has earned or owes but hasn\u2019t yet received or paid. It\u2019s a way to keep track of income and expenses as they happen, even if the cash hasn\u2019t moved yet, giving a clearer picture of what\u2019s owed.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1776763160034\"><strong class=\"schema-faq-question\"><strong>What is the difference between accruals and actuals?\u00a0 \u00a0<\/strong><\/strong> <p class=\"schema-faq-answer\">Accruals are amounts that a business expects to receive or pay but hasn\u2019t yet. Actuals are amounts that have already been received or paid. Accruals show what\u2019s due, while actuals show what\u2019s been completed.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1776763170379\"><strong class=\"schema-faq-question\"><strong>When is revenue recognised in accrual accounting?<\/strong><\/strong> <p class=\"schema-faq-answer\">In accrual accounting, revenue is recorded when it is earned, and the business has fulfilled its performance obligation, even if the payment hasn\u2019t arrived yet. This amount shows up as revenue on the income statement, and any unpaid amount is listed as accounts receivable on the balance sheet, either as a short-term or long-term asset depending on when it\u2019s due.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1776763182925\"><strong class=\"schema-faq-question\"><strong>Is accrual accounting required by UK GAAP? \u00a0 \u00a0<\/strong><\/strong> <p class=\"schema-faq-answer\">Yes, UK GAAP requires most companies, especially public ones, to use accrual accounting. This method records income and expenses when they happen, not when cash is exchanged, giving a clearer view of financial performance. While companies might use other methods internally, only accrual accounting aligns with UK GAAP and IFRS requirements for financial reporting.<br><\/p> <\/div> <\/div>\n\n\n\n<p><br><\/p>\n\n<section class=\"more-topics alignfull has-grey-light-background-color wp-block-sage-post-topics\">\n\t<div class=\"container\">\n\t\t<div class=\"row\">\n\t\t\t<div class=\"col col-12 col-lg-4\">\n\t\t\t\t<h3 class=\"more-topics__title h2\">Browse more topics from this article<\/h3>\n\t\t\t<\/div>\n\t\t\t<div class=\"col col-12 col-lg-8\">\n\t\t\t\t<ul class=\"post-tags__list\">\n\t\t\t\t\t\t\t\t\t\t\t<li class=\"post-tags__item\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-gb\/blog\/tag\/bookkeeping\/\" class=\"post-tags__link button button--secondary\">\n\t\t\t\t\t\t\t\tBookkeeping\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t\t\t\t<li class=\"post-tags__item\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-gb\/blog\/tag\/business-finances\/\" class=\"post-tags__link button button--secondary\">\n\t\t\t\t\t\t\t\tBusiness finances\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t\t\t\t<li class=\"post-tags__item\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-gb\/blog\/tag\/financial-education\/\" class=\"post-tags__link button button--secondary\">\n\t\t\t\t\t\t\t\tFinancial education\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t\t\t\t<li class=\"post-tags__item\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-gb\/blog\/tag\/reporting\/\" class=\"post-tags__link button button--secondary\">\n\t\t\t\t\t\t\t\tReporting\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t\t<\/ul>\n\t\t\t<\/div>\n\t\t<\/div>\n\t<\/div>\n<\/section>\n\n<div class=\"alignfull wp-block-sage-related-posts\">\n\t<section class=\"related-posts card-grid has-dark-background-color\">\n\t<div class=\"container\">\n\t\t\t\t\t<div class=\"row\">\n\t\t\t\t<div class=\"col\">\n\t\t\t\t\t<h2 class=\"related-posts__heading related-posts__heading--featured h1\">Explore more wisdom<\/h2>\n\t\t\t\t<\/div>\n\t\t\t<\/div>\n\n\t\t\t<div class=\"row related-posts__featured\">\n\t\t\t\t<div class=\"col card-grid__item\">\n\t\t\t\t\t<article\n\t\tclass=\"card-post related-post related-post-0 post-30318 post type-post status-publish format-standard has-post-thumbnail hentry category-money-matters tag-bookkeeping tag-payments business_type-small-business business_type-medium-sized-business card-post--is-clickable\"\n>\n\t<div class=\"card-post__media-wrapper\">\n\t\t<figure class=\"card-post__media\">\n\t\t\t\t\t\t\t<img decoding=\"async\" width=\"1215\" height=\"810\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-1128201585-1215x810.jpg\" class=\"card-post__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-1128201585-684x384.jpg 684w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-1128201585-768x512.jpg 768w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-1128201585-1215x810.jpg 1215w\" sizes=\"auto, (min-width: 48em) 250px, (min-width: 30em) 100vw, 100vw\" \/>\t\t\t\n\t\t\t\n\t\t\t\t\t<\/figure>\n\t<\/div>\n\n\t<div class=\"card-post__content\">\n\t\t\t\t\t<div class=\"card-post__label\">Recommended<\/div>\n\t\t\n\t\t\t\t\t<div class=\"card-post__meta\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"card-post__meta-text\"><span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2026-06-02T16:58:53+01:00\">2 June, 2026<\/time><\/span><\/span>\n\t\t\t\t\t\t\t\t\t\t\t<span class=\"card-post__meta-text\"><span class=\"reading-time\">11 min read<\/span><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\n\t\t<p class=\"card-post__title h3\">\n\t\t\t\t\t\t\t<a\n\t\t\t\t\tclass=\"card-post__title-link\"\n\t\t\t\t\thref=\"https:\/\/www.sage.com\/en-gb\/blog\/what-is-ap-automation\/\"\n\t\t\t\t>\n\t\t\t\n\t\t\tAccounts payable automation: How it works, key benefits, and why your business needs it\n\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t<\/p>\n\n\t\t\n\t\t\t\t\t<p class=\"card-post__description\">\n\t\t\t\tLearn how AI-powered accounts payable automation works and how your invoices flow seamlessly from capture to payment, giving you real-time visibility and faster decision-making.\n\t\t\t<\/p>\n\t\t\n\t\t\t<\/div>\n\n\t<\/article>\n\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t\n\t\t\t\t\t<div class=\"row related-posts__non-featured\">\n\t\t\t\t<div class=\"col col-12\">\n\t\t\t\t\t<h2 class=\"related-posts__heading related-posts__heading--more h4\">More on this Topic<\/h2>\n\t\t\t\t<\/div>\n\n\t\t\t\t\n\t\t\t\t\t<div class=\"col col-6 col-lg-3 card-grid__item\">\n\t\t\t\t\t\t<article\n\t\tclass=\"card-post related-post related-post-1 post-30315 post type-post status-publish format-standard has-post-thumbnail hentry category-money-matters tag-bookkeeping tag-e-invoicing business_type-small-business business_type-medium-sized-business\"\n>\n\t\t\t<a\n\t\t\tclass=\"card-post__link\"\n\t\t\thref=\"https:\/\/www.sage.com\/en-gb\/blog\/what-is-an-electronic-invoice\/\"\n\t\t\t\t\t>\n\t\t\t<figure class=\"card-post__media\">\n\t\t\t\t\t\t\t<img decoding=\"async\" width=\"684\" height=\"384\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-875247398-684x384.jpg\" class=\"card-post__image\" alt=\"Dealing with payroll tasks for the business\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-875247398-684x384.jpg 684w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-875247398-768x513.jpg 768w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-875247398-1214x810.jpg 1214w\" sizes=\"auto, (min-width: 48em) 250px, (min-width: 30em) 100vw, 100vw\" \/>\t\t\t\n\t\t\t\n\t\t\t\t\t<\/figure>\n\n\t\t\n\t\t\t\t\t<div class=\"card-post__meta\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"card-post__meta-text\"><span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2026-06-02T16:16:14+01:00\">2 June, 2026<\/time><\/span><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"card-post__meta-text\"><span class=\"reading-time\">9 min read<\/span><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\n\t\t<p class=\"card-post__title h5\">\n\t\t\tWhat is e-invoicing? Advantages and disadvantages of electronic invoicing\t\t<\/p>\n\n\t\t\t<\/a>\n\t\n\t\n\t\t\n\t\n\t<\/article>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t<div class=\"col col-6 col-lg-3 card-grid__item\">\n\t\t\t\t\t\t<article\n\t\tclass=\"card-post related-post related-post-2 post-30313 post type-post status-publish format-standard has-post-thumbnail hentry category-money-matters tag-bookkeeping tag-payments business_type-small-business business_type-medium-sized-business\"\n>\n\t\t\t<a\n\t\t\tclass=\"card-post__link\"\n\t\t\thref=\"https:\/\/www.sage.com\/en-gb\/blog\/what-is-an-automated-billing-system\/\"\n\t\t\t\t\t>\n\t\t\t<figure class=\"card-post__media\">\n\t\t\t\t\t\t\t<img decoding=\"async\" width=\"684\" height=\"384\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-580503469-1-684x384.jpg\" class=\"card-post__image\" alt=\"Running a business\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-580503469-1-684x384.jpg 684w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-580503469-1-768x432.jpg 768w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-580503469-1-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 250px, (min-width: 30em) 100vw, 100vw\" \/>\t\t\t\n\t\t\t\n\t\t\t\t\t<\/figure>\n\n\t\t\n\t\t\t\t\t<div class=\"card-post__meta\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"card-post__meta-text\"><span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2026-06-02T15:54:42+01:00\">2 June, 2026<\/time><\/span><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"card-post__meta-text\"><span class=\"reading-time\">10 min read<\/span><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\n\t\t<p class=\"card-post__title h5\">\n\t\t\tWhat is an automated billing system?\t\t<\/p>\n\n\t\t\t<\/a>\n\t\n\t\n\t\t\n\t\n\t<\/article>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t<div class=\"col col-6 col-lg-3 card-grid__item\">\n\t\t\t\t\t\t<article\n\t\tclass=\"card-post related-post related-post-3 post-15795 post type-post status-publish format-standard has-post-thumbnail hentry category-money-matters tag-accountant-accounting tag-accountant-automation tag-brexit-business tag-business-finances business_type-small-business business_type-medium-sized-business\"\n>\n\t\t\t<a\n\t\t\tclass=\"card-post__link\"\n\t\t\thref=\"https:\/\/www.sage.com\/en-gb\/blog\/what-is-account-reconciliation\/\"\n\t\t\t\t\t>\n\t\t\t<figure class=\"card-post__media\">\n\t\t\t\t\t\t\t<img decoding=\"async\" width=\"684\" height=\"384\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/08\/GettyImages-1325244864-1-684x384.jpg\" class=\"card-post__image\" alt=\"man in office\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/08\/GettyImages-1325244864-1-684x384.jpg 684w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/08\/GettyImages-1325244864-1-768x432.jpg 768w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/08\/GettyImages-1325244864-1-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 250px, (min-width: 30em) 100vw, 100vw\" \/>\t\t\t\n\t\t\t\n\t\t\t\t\t<\/figure>\n\n\t\t\n\t\t\t\t\t<div class=\"card-post__meta\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"card-post__meta-text\"><span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2026-06-02T15:28:18+01:00\">2 June, 2026<\/time><\/span><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"card-post__meta-text\"><span class=\"reading-time\">10 min read<\/span><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\n\t\t<p class=\"card-post__title h5\">\n\t\t\tAccount reconciliation: What it is and best practices\t\t<\/p>\n\n\t\t\t<\/a>\n\t\n\t\n\t\t\n\t\n\t<\/article>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t<div class=\"col col-6 col-lg-3 card-grid__item\">\n\t\t\t\t\t\t<article\n\t\tclass=\"card-post related-post related-post-4 post-30307 post type-post status-publish format-standard has-post-thumbnail hentry category-money-matters tag-bookkeeping tag-make-receive-payments business_type-small-business business_type-medium-sized-business\"\n>\n\t\t\t<a\n\t\t\tclass=\"card-post__link\"\n\t\t\thref=\"https:\/\/www.sage.com\/en-gb\/blog\/what-are-the-most-important-accounts-receivable-metrics-to-track\/\"\n\t\t\t\t\t>\n\t\t\t<figure class=\"card-post__media\">\n\t\t\t\t\t\t\t<img decoding=\"async\" width=\"684\" height=\"384\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-1464824741-684x384.jpg\" class=\"card-post__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-1464824741-684x384.jpg 684w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-1464824741-768x512.jpg 768w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-1464824741-1215x810.jpg 1215w\" sizes=\"auto, (min-width: 48em) 250px, (min-width: 30em) 100vw, 100vw\" \/>\t\t\t\n\t\t\t\n\t\t\t\t\t<\/figure>\n\n\t\t\n\t\t\t\t\t<div class=\"card-post__meta\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"card-post__meta-text\"><span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2026-06-02T14:26:09+01:00\">2 June, 2026<\/time><\/span><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"card-post__meta-text\"><span class=\"reading-time\">10 min read<\/span><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\n\t\t<p class=\"card-post__title h5\">\n\t\t\tWhat are the most important accounts receivable KPIs to track?\t\t<\/p>\n\n\t\t\t<\/a>\n\t\n\t\n\t\t\n\t\n\t<\/article>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<\/div>\n\t\t\t<\/div>\n<\/section>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Learn more about accrual accounting, including the benefits of this approach and why it might be the best accounting method for your business.<\/p>\n","protected":false},"author":1911,"featured_media":16334,"menu_order":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sage_video":false,"post_featured_image_hide":false,"sage_hide_published_date":false,"sage_hide_read_time":false,"sage_hide_share_buttons":false,"footnotes":""},"categories":[6],"tags":[23,135,127,401],"business_type":[],"lilypad":[],"context":[],"industry":[],"persona":[68,71,74],"imagine_tag":[287,77,254,107],"coauthors":[752],"class_list":["post-29663","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-money-matters","tag-bookkeeping","tag-business-finances","tag-financial-education","tag-reporting"],"sage_meta":{"region":"en-gb","author_name":"Laurence Matone","featured_image":"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-1185859128.jpg","imagine_tags":{"287":"Accounting Individual","77":"Accounting 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UK","distributor_original_site_url":"https:\/\/www.sage.com\/en-gb\/blog","push-errors":false,"_links":{"self":[{"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/posts\/29663","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/users\/1911"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/comments?post=29663"}],"version-history":[{"count":3,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/posts\/29663\/revisions"}],"predecessor-version":[{"id":29676,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/posts\/29663\/revisions\/29676"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/media\/16334"}],"wp:attachment":[{"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/media?parent=29663"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/categories?post=29663"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/tags?post=29663"},{"taxonomy":"business_type","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/business_type?post=29663"},{"taxonomy":"lilypad","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/lilypad?post=29663"},{"taxonomy":"context","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/context?post=29663"},{"taxonomy":"industry","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/industry?post=29663"},{"taxonomy":"persona","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/persona?post=29663"},{"taxonomy":"imagine_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/imagine_tag?post=29663"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/coauthors?post=29663"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}