{"id":76206,"date":"2026-05-15T12:46:05","date_gmt":"2026-05-15T10:46:05","guid":{"rendered":"https:\/\/www.sage.com\/en-za\/blog\/?p=76206"},"modified":"2026-05-15T12:46:07","modified_gmt":"2026-05-15T10:46:07","slug":"accrual-basis-accounting","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-za\/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\">\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-za\/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 about accrual accounting, including the benefits of this approach and why it may be the best accounting method for your South African business today. \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 class=\"col col-8 col-lg-4 entry-header__image\">\n\t\t\t<figure class=\"entry-header__thumbnail js-hero-section\">\n\t\t\t\t<img decoding=\"async\" width=\"1215\" height=\"810\" src=\"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2023\/09\/GettyImages-1316107530-1215x810.jpg\" class=\"entry-header__thumbnail-image\" alt=\"\" fetchpriority=\"high\" srcset=\"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2023\/09\/GettyImages-1316107530-1215x810.jpg 1215w, https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2023\/09\/GettyImages-1316107530-768x512.jpg 768w, https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2023\/09\/GettyImages-1316107530.jpg 1440w\" sizes=\"(max-width: 1215px) 100vw, 1215px\" \/>\t\t\t<\/figure>\n\t\t<\/div>\n\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 \">Published <time class=\"entry-date published\" datetime=\"2026-05-15T12:46:05+02:00\">May 15, 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-za\/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-za\/blog\/author\/yassirmalik\/\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"40\" height=\"40\" src=\"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2024\/03\/Yassir-Malik.jpg\" class=\"entry-author__image\" alt=\"yassir-malik-profile-picture\" \/>\t\t\t\t<span class=\"entry-author__name\">Yassir Malik<\/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<section class=\"wp-block-sage-container is-constrained\"><div class=\"sage-container__inner\">\n<h3 class=\"wp-block-heading\" id=\"h-key-takeaways\">Key takeaways<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Accrual basis accounting records revenue when it&#8217;s earned and expenses when they&#8217;re incurred<\/strong>, giving a more accurate picture of financial health.<\/li>\n\n\n\n<li><strong>This method relies on accounts such as <\/strong>accounts receivable, accounts payable, and prepaid expenses to track upcoming cash transactions.<\/li>\n\n\n\n<li><strong>Accrual-based accounting records revenue when it&#8217;s earned and expenses when they&#8217;re incurred<\/strong>, giving a more accurate picture of financial health. <\/li>\n\n\n\n<li><strong>Businesses preparing financial statements under IFRS<\/strong> use this approach.<\/li>\n\n\n\n<li><strong>While it provides detailed insights, accrual accounting<\/strong> can be complex and impact cash flow.<\/li>\n\n\n\n<li><strong>Accounting software can simplify the process<\/strong> by automating entries and generating real-time reports.<\/li>\n<\/ul>\n<\/div><\/section>\n\n\n\n<p class=\"wp-block-paragraph\">Accrual basis accounting is all about capturing the true story of your business&#8217;s finances\u2014recording income and expenses right when they happen, not just when cash hits or leaves your account.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">By doing so, 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 class=\"wp-block-paragraph\">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 class=\"wp-block-paragraph\"><strong>Here&#8217;s what 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-basis-accounting-work\" data-level=\"2\">How does accrual basis accounting work?<\/a><\/li><li><a href=\"#h-core-principles-of-accrual-basis-accounting\" data-level=\"2\">Core principles of accrual basis 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-versus-accrual-basis-key-differences\" data-level=\"2\">Cash basis versus accrual basis: 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-basis-accounting\" data-level=\"2\">When to use accrual basis 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-basis-accounting-the-right-method-for-your-business\" data-level=\"2\">Is accrual basis 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-faqs\" data-level=\"2\">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 class=\"wp-block-paragraph\">Accrual accounting is a method that recognises revenue and expenses when they are incurred rather than when cash changes hands.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">&nbsp;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 class=\"wp-block-paragraph\">This approach follows two key principles.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">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 class=\"wp-block-paragraph\">By aligning revenue with related expenses, accrual basis accounting offers a clearer view of profitability and provides a more accurate picture of assets and liabilities on the balance sheet.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This accounting method is required under IFRS financial reporting standards, which are used by publicly listed companies in South Africa and many businesses that prepare formal financial statements.<\/p>\n\n\n\n<div class=\"single-cta gated-content\">\n\t<div class=\"single-cta__positioner on-scroll-highlight__target\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Budget Speech: 2026\/2027<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p><!-- wp:paragraph --><\/p>\n<p>Download the guide to the 2026\/27 Budget to review key tax, payroll, and employment changes for South African businesses.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-a2a54612-83e6-4a6c-b6a6-d71baac631c1\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Download now<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1064\" height=\"810\" src=\"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2019\/07\/resize-1675x1275-41-1064x810.jpg\" class=\"single-cta__image\" alt=\"Smiling businessman using tablet\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2019\/07\/resize-1675x1275-41-1064x810.jpg 1064w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-does-accrual-basis-accounting-work\"><a><\/a><strong>How does accrual basis accounting work?<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Accrual basis 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 class=\"wp-block-paragraph\">This means anticipated payments, like unpaid customer invoices, appear on the balance sheet under &#8220;<a href=\"https:\/\/www.sage.com\/en-za\/accounting-software\/accounts-receivable\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>accounts receivable<\/strong><\/a>&#8220;. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Similarly, expected outgoing payments are noted under &#8220;<a href=\"https:\/\/www.sage.com\/en-za\/accounting-software\/accounts-payable\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>accounts payable<\/strong><\/a>&#8220;.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">These balance sheet entries, called accruals, serve as placeholders, reflecting upcoming cash transactions.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">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-basis-accounting\"><a><\/a><strong>Core principles of accrual basis accounting<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">At the heart of accrual-based accounting are two core principles.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">&nbsp;The revenue recognition principle and the matching principle.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">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\"><a><\/a><strong>Revenue recognition principle<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">This principle states that revenue is recorded when it&#8217;s earned, not when payment is received.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For example, imagine you run a custom 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 class=\"wp-block-paragraph\">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.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">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\"><a><\/a><strong>Matching principle<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">The matching principle requires that expenses be recorded in the same period as the revenue they help generate.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Continuing with the furniture example, if you spent R18,000 on materials and labour to complete the client&#8217;s order in August, those costs should also be recorded in August.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">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 class=\"wp-block-paragraph\">By following these principles, accrual basis 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<div class=\"single-cta gated-content\">\n\t<div class=\"single-cta__positioner on-scroll-highlight__target\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Budget Speech: 2026\/2027<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p><!-- wp:paragraph --><\/p>\n<p>Download the guide to the 2026\/27 Budget to review key tax, payroll, and employment changes for South African businesses.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-a2a54612-83e6-4a6c-b6a6-d71baac631c1\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Download now<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1064\" height=\"810\" src=\"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2019\/07\/resize-1675x1275-41-1064x810.jpg\" class=\"single-cta__image\" alt=\"Smiling businessman using tablet\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2019\/07\/resize-1675x1275-41-1064x810.jpg 1064w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-types-of-accrual-accounting-methods\"><a><\/a><strong>Types of accrual accounting methods<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The accrual-based method of accounting includes several techniques to track financial activities even before cash exchanges hands.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">These methods\u2014deferred revenue, accrued revenue, prepaid expenses, and accrued expenses\u2014are essential for accurately representing a business&#8217;s financial position.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-deferred-revenue\"><a><\/a><strong>Deferred revenue<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Deferred revenue, also called unearned revenue, is money a business receives before delivering a product or service.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Think of it as an advance payment.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">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 class=\"wp-block-paragraph\">In accrual basis 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\"><a><\/a><strong>Example of deferred revenue entry<\/strong><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>In January (when the payment is received):<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Debit: cash R12,000<\/li>\n\n\n\n<li>Credit: deferred revenue (liability) R12,000<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">This entry shows an increase in cash and recognises a liability for the unearned portion of the revenue.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><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 R1,000 (reducing the liability)<\/li>\n\n\n\n<li>Credit: revenue R1,000 (recognising the earned revenue)<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Each month, R1,000 (1\/12 of the subscription) is moved from deferred to earned revenue, matching the service provided with the recognised revenue.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This gives a clearer picture of actual income earned.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-accrued-revenue\"><a><\/a><strong>Accrued revenue<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">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 class=\"wp-block-paragraph\">Let&#8217;s say you complete R3,000 worth of consulting work in January, but the client won&#8217;t pay until February.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">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\"><a><\/a><strong>Example of accrued revenue entry<\/strong><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>In January (when the service is provided):<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Debit: accounts receivable R3,000 (to reflect what&#8217;s owed)<\/li>\n\n\n\n<li>Credit: revenue R3,000 (to record the earned income)<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">This entry shows the revenue as earned, even though the payment is still pending.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>In February (when payment is received):<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Debit: cash R3,000 (increasing cash)<\/li>\n\n\n\n<li>Credit: accounts receivable R3,000 (removing the outstanding amount)<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">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\"><a><\/a><strong>Prepaid expenses<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Prepaid expenses are payments you make in advance for goods or services you&#8217;ll use later.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For example, if you pay R12,000 upfront in January for a year-long insurance policy, that payment is recorded as a prepaid expense (an asset) since it covers future benefits.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-example-of-prepaid-expense-entry\"><a><\/a><strong>Example of prepaid expense entry<\/strong><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\"><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 R12,000 (recording the future benefit)<\/li>\n\n\n\n<li>Credit: cash R12,000 (reflecting the cash payment)<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">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 class=\"wp-block-paragraph\"><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 R1,000 (for each month&#8217;s portion of the policy)<\/li>\n\n\n\n<li>Credit: prepaid expenses R1,000 (reducing the prepaid amount)<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Each month, R1,000 (1\/12 of the R12,000) is moved from prepaid expenses to insurance expenses, matching the cost to the benefit period.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">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\"><a><\/a><strong>Accrued expenses<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Accrued expenses are costs you&#8217;ve incurred but haven&#8217;t paid yet.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Let&#8217;s say you receive R2,000 worth of supplies in October, but the payment isn&#8217;t due until November.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">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\"><a><\/a><strong>Example of accrued expense entry<\/strong><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>In October (when you receive the supplies):<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Debit: supplies expense R2,000 (recording the cost of supplies)<\/li>\n\n\n\n<li>Credit: accounts payable R2,000 (showing the amount owed)<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">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 class=\"wp-block-paragraph\"><strong>In November (when you make the payment):<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Debit: accounts payable R2,000 (clearing the amount owed)<\/li>\n\n\n\n<li>Credit: cash R2,000 (reflecting the cash outflow)<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">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<div class=\"single-cta gated-content\">\n\t<div class=\"single-cta__positioner on-scroll-highlight__target\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Budget Speech: 2026\/2027<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p><!-- wp:paragraph --><\/p>\n<p>Download the guide to the 2026\/27 Budget to review key tax, payroll, and employment changes for South African businesses.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-a2a54612-83e6-4a6c-b6a6-d71baac631c1\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Download now<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1064\" height=\"810\" src=\"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2019\/07\/resize-1675x1275-41-1064x810.jpg\" class=\"single-cta__image\" alt=\"Smiling businessman using tablet\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2019\/07\/resize-1675x1275-41-1064x810.jpg 1064w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-cash-basis-versus-accrual-basis-key-differences\"><a><\/a><strong>Cash basis versus accrual basis: Key differences<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The cash and accrual accounting methods differ in how they record income and expenses, impacting the financial picture they provide.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Here is a table describing the key differences between cash vs. accrual-based accounting 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 basis accounting<\/strong><\/td><\/tr><tr><td><strong>Timing<\/strong><\/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><strong>Complexity<\/strong><\/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><strong>Ideal for<\/strong><\/td><td>Small businesses, freelancers, and sole proprietors 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><strong>View of financial health<\/strong><\/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><strong>Cash flow management<\/strong><\/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><strong>Legal requirements<\/strong><\/td><td>Generally allowed for small businesses below a revenue threshold and for tax deferral on unpaid income.<\/td><td>Required for businesses preparing financial statements under IFRS or IFRS for SMEs, including listed companies and many larger entities.<\/td><\/tr><tr><td><strong>Tax implications<\/strong><\/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\u2019t been received, potentially impacting cash reserves.<\/td><\/tr><tr><td><strong>Example<\/strong><\/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><strong>Pros<\/strong><\/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><strong>Cons<\/strong><\/td><td>Doesn\u2019t 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\"><a><\/a><strong>Accrual accounting examples<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Accrual basis accounting ensures that income and expenses are recorded in the period they&#8217;re earned or incurred, regardless of when cash exchanges hands.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">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\"><a><\/a><strong>Revenue example: Project-based services<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">BluePrint Design Studio is an interior design company that completed a project for a client in September worth R80,000.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It invoices the client at the end of the month, with a payment deadline of 31 October.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Under the accrual basis, BluePrint records the revenue in September when the service was completed, not in October when payment is received.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>September entry:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Debit: accounts receivable R80,000<\/li>\n\n\n\n<li>Credit: revenue R80,000<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">(This entry records the income earned, even though payment hasn&#8217;t been received yet.)<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>October entry (when payment is received):<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Debit: cash R80,000<\/li>\n\n\n\n<li>Credit: accounts receivable R80,000<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">(This entry reflects the payment received and clears the outstanding amount.)<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This approach shows 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\"><a><\/a><strong>Expense example: Utilities billed in arrears<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">CityBuild Construction uses electricity for its operations in November, but the utility company invoices it in December.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">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 class=\"wp-block-paragraph\"><strong>November entry:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Debit: utilities expense R4,000<\/li>\n\n\n\n<li>Credit: accounts payable R4,000<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">(This entry recognises the expense in November, the month the utility was used.)<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>December entry (when the bill is paid):<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Debit: accounts payable R4,000<\/li>\n\n\n\n<li>Credit: cash R4,000<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">(This entry clears the liability once payment is made.)<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">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\"><a><\/a><strong>Deferred revenue example: Annual subscription service<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Ace Fitness offers an annual membership plan that requires customers to pay R12,000 upfront in January.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This payment covers access to services for the entire year.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Initially, Ace records the payment as deferred revenue because the service hasn&#8217;t yet been provided.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>January entry:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Debit: cash R12,000<\/li>\n\n\n\n<li>Credit: deferred revenue R12,000<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">(This entry records the payment received as a liability, as services are still owed.)<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Monthly entry (February through December):<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Debit: deferred revenue R1,000<\/li>\n\n\n\n<li>Credit: revenue R1,000<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">(Each month, R1,000 is moved from deferred revenue to earned revenue as the service is delivered.)<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This monthly adjustment ensures income is recognised gradually, providing a clearer picture of earned revenue throughout the year.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-prepaid-expense-example-advertising-campaign\"><a><\/a><strong>Prepaid expense example: Advertising campaign<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">SmartAds Inc. pays R30,000 upfront in August for a six-month online advertising campaign.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Since the service spans multiple months, the initial payment is recorded as a prepaid expense.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>August entry:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Debit: prepaid expense R30,000<\/li>\n\n\n\n<li>Credit: cash R30,000<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">(This entry records the advance payment as an asset, as the service hasn&#8217;t fully occurred yet.)<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Monthly entry (September through February):<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Debit: advertising expense R5,000<\/li>\n\n\n\n<li>Credit: prepaid expense R5,000<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">(Each month, R5,000 is moved from prepaid expense to advertising expense, aligning cost with the service period.)<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">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<div class=\"single-cta gated-content\">\n\t<div class=\"single-cta__positioner on-scroll-highlight__target\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Budget Speech: 2026\/2027<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p><!-- wp:paragraph --><\/p>\n<p>Download the guide to the 2026\/27 Budget to review key tax, payroll, and employment changes for South African businesses.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-a2a54612-83e6-4a6c-b6a6-d71baac631c1\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Download now<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1064\" height=\"810\" src=\"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2019\/07\/resize-1675x1275-41-1064x810.jpg\" class=\"single-cta__image\" alt=\"Smiling businessman using tablet\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2019\/07\/resize-1675x1275-41-1064x810.jpg 1064w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-when-to-use-accrual-basis-accounting\"><a><\/a><strong>When to use accrual basis accounting<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Accrual basis accounting is often essential or beneficial in certain situations, especially when detailed and standardised reporting is needed:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-regulatory-compliance-ifrs-requirements\">Regulatory compliance (IFRS requirements):<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Accrual accounting is required for filings that follow IFRS, such as financial statements for JSE (Johannesburg Stock Exchange)-listed companies.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Many investors and lenders also prefer IFRS-compliant financials for transparency and accuracy.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-complex-revenue-structures\">Complex revenue structures:<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">&nbsp;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<h3 class=\"wp-block-heading\" id=\"h-sars-rules-and-exceptions\">SARS rules and exceptions<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">The South African Revenue Service (SARS) generally requires businesses to report income on an accrual basis for tax purposes, although some smaller businesses may use cash-based accounting depending on their structure and reporting requirements.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-preparing-for-growth\">Preparing for growth<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">if your business plans to grow, attract investors, or list on the JSE, using accrual accounting from the start builds consistency, making financial comparisons easier down the line.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-inventory-management\">Inventory management<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">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\"><a><\/a><strong>Advantages of accrual accounting<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Why use accrual accounting? Accrual accounting offers several practical benefits, making it a smart choice for many businesses.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-a-clearer-financial-picture\"><a><\/a>A clearer financial picture<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">By recording income and expenses when they&#8217;re earned or incurred, rather than when cash changes hands, accrual basis accounting gives a more accurate view of your business&#8217;s financial health.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">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<h3 class=\"wp-block-heading\" id=\"h-better-for-funding-and-investment\"><a><\/a>Better for funding and investment<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Many investors and lenders prefer accrual accounting because it meets IFRS accounting standards and provides a consistent financial picture.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For businesses looking to grow or secure funding, accrual accounting can boost credibility and improve chances of attracting investment.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-informed-financial-planning\"><a><\/a>Informed financial planning<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Accrual-based accounting helps match expenses directly to the revenues they support, giving you a clearer view of profitability.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This accuracy is invaluable for budgeting, forecasting, and making strategic decisions about where to allocate resources.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-effective-project-tracking\"><a><\/a>Effective project tracking<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">For businesses managing long-term contracts, accrual accounting keeps revenue and expenses aligned with the actual work done.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This makes it easier to track the financial progress of each project and understand profitability over time.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-budget-control\"><a><\/a><strong>Budget control<\/strong><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">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.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This leads to better resource management and helps<\/p>\n\n\n\n<div class=\"single-cta gated-content\">\n\t<div class=\"single-cta__positioner on-scroll-highlight__target\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Budget Speech: 2026\/2027<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p><!-- wp:paragraph --><\/p>\n<p>Download the guide to the 2026\/27 Budget to review key tax, payroll, and employment changes for South African businesses.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-a2a54612-83e6-4a6c-b6a6-d71baac631c1\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Download now<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1064\" height=\"810\" src=\"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2019\/07\/resize-1675x1275-41-1064x810.jpg\" class=\"single-cta__image\" alt=\"Smiling businessman using tablet\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2019\/07\/resize-1675x1275-41-1064x810.jpg 1064w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-disadvantages-of-accrual-accounting\"><a><\/a><strong>Disadvantages of accrual accounting<\/strong><strong><\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">While accrual basis accounting gives a detailed view of financial performance, it does come with some challenges that are important to consider.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-increased-complexity\"><a><\/a>Increased complexity<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Accrual accounting requires a good understanding of accounting principles and accurate record-keeping.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">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<h3 class=\"wp-block-heading\" id=\"h-time-intensive-record-keeping\"><a><\/a>Time-intensive record-keeping<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">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. <strong><\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This adds more administrative work, which can be tough for small businesses without dedicated accounting staff.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-potential-cash-flow-mismatch\"><a><\/a>Potential cash flow mismatch<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">One drawback of accrual accounting is that it records revenue when it\u2019s earned rather than when cash is received.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This can sometimes make the business look profitable on paper while actually facing a cash shortage.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It\u2019s essential to monitor <a href=\"https:\/\/www.sage.com\/en-za\/blog\/cash-flow-statement-explained\/\" target=\"_blank\" rel=\"noreferrer noopener\">cash flow statements<\/a> regularly to maintain a clear picture of cash on hand.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-delayed-cash-based-feedback\"><a><\/a>Delayed cash-based feedback<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">In accrual basis accounting, a sale is recorded as soon as it\u2019s made, even if payment won\u2019t arrive until much later.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">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<h3 class=\"wp-block-heading\" id=\"h-higher-costs-and-resources-needed\"><a><\/a>Higher costs and resources needed<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Accrual-based accounting\u2019s complexity often means more time and costs, whether for software, accounting services, or additional team resources.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">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-basis-accounting-the-right-method-for-your-business\"><a><\/a><strong>Is accrual basis accounting the right method for your business?<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Deciding if an accrual-based method of accounting is right for your business depends on how you operate and your future plans.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Here are some key points to consider:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-cash-versus-credit-transactions\">Cash versus credit transactions<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">If your business deals mainly in cash, accrual accounting may not be necessary.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">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<h3 class=\"wp-block-heading\" id=\"h-timing-of-payments\">Timing of payments<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">The longer the wait between making sales and getting paid, the more helpful accrual accounting becomes.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It records income when it\u2019s earned, not received, showing profitability more clearly.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-inventory-tracking\">Inventory tracking<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Product-based businesses, even small ones, often benefit from accrual accounting to accurately manage inventory and cost of goods sold.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This provides a clearer view of profit.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-revenue-size-and-requirements\">Revenue size and requirements<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Larger companies, listed entities, and businesses preparing formal financial statements typically use accrual accounting to comply with IFRS reporting standards.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-growth-and-funding-goals\">Growth and funding goals<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">If you\u2019re planning to expand or attract investors, accrual accounting is often preferred by lenders and investors, as it\u2019s IFRS-compliant and shows financial health more clearly.<\/p>\n\n\n\n<div class=\"single-cta gated-content\">\n\t<div class=\"single-cta__positioner on-scroll-highlight__target\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Budget Speech: 2026\/2027<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p><!-- wp:paragraph --><\/p>\n<p>Download the guide to the 2026\/27 Budget to review key tax, payroll, and employment changes for South African businesses.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-a2a54612-83e6-4a6c-b6a6-d71baac631c1\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Download now<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1064\" height=\"810\" src=\"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2019\/07\/resize-1675x1275-41-1064x810.jpg\" class=\"single-cta__image\" alt=\"Smiling businessman using tablet\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2019\/07\/resize-1675x1275-41-1064x810.jpg 1064w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-accrual-accounting-best-practices\"><a><\/a><strong>Accrual accounting best practices<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">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\"><a><\/a>Be mindful of when to record revenue<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">If your business offers subscriptions or bundles of products and services, it\u2019s important to time <a href=\"https:\/\/www.sage.com\/en-za\/blog\/balance-sheet-reconciliation\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>revenue recognition<\/strong><\/a> accurately.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">You might record income over the subscription period or at key milestones.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">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\"><a><\/a>Standardise recurring expenses<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Set up a routine for tracking regular costs like rent, utilities, and payroll to help ensure they\u2019re accurately recorded on time.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">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\"><a><\/a>Keep an eye on potential liabilities<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">For any possible liabilities\u2014like warranties or legal claims\u2014have a process to track and record them.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">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\"><a><\/a>Separate duties for accuracy and security<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Divide up tasks for approving, recording, and reconciling transactions to reduce mistakes and protect against fraud.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">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\"><a><\/a>Regularly review your processes<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Schedule routine check-ups on your accrual basis accounting, including your estimates and entries, to catch any mistakes early.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">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\"><a><\/a><strong>Use data for insights<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Analysing data can help you spot trends, catch any unusual activity in revenue or expenses, and improve your forecasting.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">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\"><a><\/a><strong>How accounting software can help<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Accrual basis 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 class=\"wp-block-paragraph\">Good <a href=\"https:\/\/www.sage.com\/en-za\/accounting-software\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>accounting software<\/strong><\/a> simplifies this process by automating accruals, tracking revenue and expenses, and generating reports in real time.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This automation not only saves time but also reduces the risk of errors, ensuring accuracy across all accounts.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">With <a href=\"https:\/\/www.sage.com\/en-za\/sage-business-cloud\/intacct\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Sage Intacct<\/strong><\/a>, 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-faqs\">FAQs<\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1778769460622\"><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.<br><br>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-1778769503059\"><strong class=\"schema-faq-question\"><strong>What is the difference between accruals and actuals?\u00a0\u00a0\u00a0<\/strong><\/strong> <p class=\"schema-faq-answer\"><br>Accruals are amounts that a business expects to receive or pay but hasn\u2019t yet.<br><br>Actuals are amounts that have already been received or paid.<br><br>Accruals show what\u2019s due, while actuals show what\u2019s been completed.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1778769528267\"><strong class=\"schema-faq-question\"><strong>When is revenue recognised in accrual accounting?<\/strong><\/strong> <p class=\"schema-faq-answer\"><br>In accrual accounting, revenue is recorded as soon as a sale is made or a service is completed, even if the payment hasn\u2019t arrived yet.<br><br>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-1778769545050\"><strong class=\"schema-faq-question\"><strong>Is accrual accounting required by IFRS?\u00a0\u00a0\u00a0 \u00a0<\/strong><\/strong> <p class=\"schema-faq-answer\"><br>Yes, IFRS requires most companies, especially public ones, to use accrual accounting. <br><br>This method records income and expenses when they happen, not when cash is exchanged, giving a clearer view of financial performance. <br><br>While companies might use other methods internally, only accrual accounting meets IFRS standards for official financial reporting.<\/p> <\/div> <\/div>\n\n\n\n<div class=\"single-cta\">\n\t<div class=\"single-cta__positioner on-scroll-highlight__target\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Subscribe to the Sage Advice enewsletter<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p>Get a roundup of our best business advice in your inbox every month.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-84fe79b5-668d-41f8-a0cc-6229018c4ac9\"\n\t\t\t\t\t\tclass=\"single-cta__button button 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class=\"post-tags__item\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-za\/blog\/tag\/accountants\/\" class=\"post-tags__link button button--secondary\">\n\t\t\t\t\t\t\t\tAccounting 101\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-za\/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-za\/blog\/tag\/business-intelligence\/\" class=\"post-tags__link button button--secondary\">\n\t\t\t\t\t\t\t\tbusiness intelligence\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-za\/blog\/tag\/financial-insights\/\" class=\"post-tags__link button button--secondary\">\n\t\t\t\t\t\t\t\tfinancial insights\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-za\/blog\/tag\/profit-loss\/\" class=\"post-tags__link button button--secondary\">\n\t\t\t\t\t\t\t\tprofit &amp; loss\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-76618 post type-post status-publish format-standard has-post-thumbnail hentry category-people-leadership category-trends-insights tag-business-intelligence tag-business-management tag-business-strategy tag-employee-benefits tag-hr-payroll business_type-small-business business_type-medium-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=\"1440\" height=\"720\" src=\"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2026\/09\/HPF_Static_Danielle_Option1-Final-1440x720-1.jpg\" class=\"card-post__image\" alt=\"A woman stands in front of the Sage glowline with a black background.\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2026\/09\/HPF_Static_Danielle_Option1-Final-1440x720-1-684x384.jpg 684w, https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2026\/09\/HPF_Static_Danielle_Option1-Final-1440x720-1-768x384.jpg 768w, https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2026\/09\/HPF_Static_Danielle_Option1-Final-1440x720-1.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\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=\"2026-09-09T15:29:07+02:00\">September 9, 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\">10 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-za\/blog\/what-is-employee-experience\/\"\n\t\t\t\t>\n\t\t\t\n\t\t\tWhat is employee experience and why is HR struggling to deliver 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\tDiscover the biggest barriers to improving employee experience and practical steps to create more time for people-focused work.\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-72952 post type-post status-publish format-standard has-post-thumbnail hentry category-money-matters category-strategy-legal-operations tag-business-intelligence tag-electronic-payments tag-financial-insights tag-international-payments tag-making-financial-decisions tag-payment-processing tag-profit-loss tag-revenue business_type-small-business\"\n>\n\t\t\t<a\n\t\t\tclass=\"card-post__link\"\n\t\t\thref=\"https:\/\/www.sage.com\/en-za\/blog\/how-to-write-an-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-za\/blog\/wp-content\/uploads\/sites\/9\/2022\/04\/GettyImages-962338720-684x384.jpg\" class=\"card-post__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2022\/04\/GettyImages-962338720-684x384.jpg 684w, https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2022\/04\/GettyImages-962338720-768x432.jpg 768w, https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2022\/04\/GettyImages-962338720-1440x810.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=\"2026-09-03T12:19:47+02:00\">September 3, 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\">12 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\tHow to write an invoice and what to include\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-68990 post type-post status-publish format-standard has-post-thumbnail hentry category-business-planning category-compliance tag-bookkeeping tag-business-strategy tag-compliance tag-tax business_type-small-business\"\n>\n\t\t\t<a\n\t\t\tclass=\"card-post__link\"\n\t\t\thref=\"https:\/\/www.sage.com\/en-za\/blog\/do-these-3-things-before-launching-your-small-business\/\"\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-za\/blog\/wp-content\/uploads\/sites\/9\/2021\/02\/iStock-1134062212-684x384.jpg\" class=\"card-post__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2021\/02\/iStock-1134062212-684x384.jpg 684w, https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2021\/02\/iStock-1134062212-768x513.jpg 768w, https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2021\/02\/iStock-1134062212-1214x810.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=\"2026-09-02T13:48:52+02:00\">September 2, 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\">8 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\tDo these 3 things before launching your small business\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-72451 post type-post status-publish format-standard has-post-thumbnail hentry category-strategy-legal-operations category-trends-insights tag-business-intelligence tag-business-management tag-financial-insights tag-making-financial-decisions tag-profit-loss tag-staying-competitive tag-trending-topics business_type-small-business business_type-medium-business\"\n>\n\t\t\t<a\n\t\t\tclass=\"card-post__link\"\n\t\t\thref=\"https:\/\/www.sage.com\/en-za\/blog\/what-is-depreciation\/\"\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-za\/blog\/wp-content\/uploads\/sites\/9\/2023\/09\/GettyImages-1177851223-684x384.jpg\" class=\"card-post__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2023\/09\/GettyImages-1177851223-684x384.jpg 684w, https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2023\/09\/GettyImages-1177851223-768x512.jpg 768w, https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2023\/09\/GettyImages-1177851223-1215x810.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=\"2026-09-02T13:44:45+02:00\">September 2, 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\tA guide to understanding depreciation\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-74360 post type-post status-publish format-standard has-post-thumbnail hentry category-money-matters category-strategy-legal-operations tag-accountants tag-business-intelligence tag-profit-loss tag-staying-competitive tag-trending-topics business_type-small-business business_type-medium-business business_type-accountants\"\n>\n\t\t\t<a\n\t\t\tclass=\"card-post__link\"\n\t\t\thref=\"https:\/\/www.sage.com\/en-za\/blog\/what-is-markup-percentage\/\"\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-za\/blog\/wp-content\/uploads\/sites\/9\/2025\/08\/Mar2025_Construction-Commerical_0777-684x384.jpeg\" class=\"card-post__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2025\/08\/Mar2025_Construction-Commerical_0777-684x384.jpeg 684w, https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2025\/08\/Mar2025_Construction-Commerical_0777-768x512.jpeg 768w, https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2025\/08\/Mar2025_Construction-Commerical_0777-1214x810.jpeg 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=\"2026-06-25T12:53:32+02:00\">June 25, 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\">12 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\tMarkup calculator: how to calculate markup\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 about accrual accounting, including the benefits of this approach and why it may be the best accounting method for your South African business today. <\/p>\n","protected":false},"author":1774,"featured_media":71242,"menu_order":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_yoast_wpseo_is_cornerstone":"","_yoast_wpseo_meta-robots-noindex":"","_yoast_wpseo_meta-robots-nofollow":"","_yoast_wpseo_opengraph-title":"","_yoast_wpseo_opengraph-description":"","_yoast_wpseo_opengraph-image":"","_yoast_wpseo_opengraph-image-id":"","_yoast_wpseo_twitter-title":"","_yoast_wpseo_twitter-description":"","_yoast_wpseo_twitter-image":"","_yoast_wpseo_twitter-image-id":"","_yoast_wpseo_schema_page_type":"","_yoast_wpseo_schema_article_type":"","_sage_video":false,"_yoast_wpseo_focuskeywords":"[{\"keyword\":\"accrual basis accounting\",\"score\":81},{\"keyword\":\"cash vs accrual accounting\",\"score\":61},{\"keyword\":\"accrual accounting examples\",\"score\":61},{\"keyword\":\"what is accrual 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