Accrual Accounting

Most businesses purchase and receive funds via credit. Traditionally, with cash accounting, you recognize income  when you receive payment, and you record expenses once you pay them. However, this accounting method does not provide a holistic view of your financial health because it doesn’t include transactions that either haven’t gone through or that you’ll receive payment for later.

With accrual accounting, you’ll track revenue and expenses when you earn them, regardless if money you’ve been paid yet.

This type of method helps businesses make informed decisions and understand true profitability because they have an accurate representation of their financial position.