How to Set Up Accruals and Deferrals of Revenue


Accrual basis accounting allows businesses to recognises revenue when costs such as parts and labour are incurred, and not when the money actually changes hands. This increases the visibility of revenue and has the potential to help improve profitability.

Similarly if your company accepts payment upfront for work that is to be completed in the future you can now account for this with deferred revenue. This ensures that your income is automatically reconciled when work is completed and therefore gives you a more accurate report of what is being earned relative to when costs are incurred.

Learn more in How to Manage Accrual of Revenueand How to Manage Deferral of Revenue.

If you use Xero or QuickBooks Online you can transfer Accrual Journals to your accounting package, saving on double handling. Learn more in Cash versus accrual accounting explained.