Bookkeeping: Invoice / Accrual method

One of the decisions you should take before starting bookkeeping is whether or not to use the cash accounting method or invoice / accrual method.

Cash accounting method  you enter payments and receipts into the system when they are actually paid. 

Invoice / Accrual method  you enter invoices and receipts when they are raised and received and then enter the payments against them.

This sections details the Invoice / Accrual method.  Click here to view the cash accounting method.

Invoice / Accrual Method

This method recognises income and expenditure as soon as the invoice is raised, regardless of when it is paid. 

If you use the Invoice / Accrual method, you would recognise income and expenses when you raise an invoice or incur an expense. This is the most accurate bookkeeping method and provides a true reflection of the business performance. It is ideal for small to medium businesses who have few transactions or those that are paid soon after invoicing. You need to include unpaid invoices, outstanding expenses and bills, at the point they are incurred.  

Using this method, you will normally use the Invoicing, Expenses and Bills sections of the system.

Using the Invoice / Accrual Method

As this method is a little more involved than the cash accounting method, the guides are a little more detailed. It is recommended that you discuss this method with your accountant.  

• Adding a sales Invoice
• Paying a sales invoice
• Adding an expense
• Paying an expense
• Adding a bill
• Paying a bill