Choosing the right accounting method changes how your revenue, expenses, and profit look — and how you make decisions. Here’s a plain-English guide to picking the approach that reflects reality for your business.
1) Cash Accounting (Simple & Immediate)
You record income when money lands in your bank and expenses when you pay them. Easy to manage and great for very small, cash-based businesses.
2) Accrual Accounting (Accurate & Scalable)
You record income when earned and expenses when incurred — even if cash hasn’t moved yet. Better for growing businesses, credit terms, and inventory.
3) How Your Choice Affects Decisions
Cash can look healthy while invoices are unpaid; accrual shows the true picture of performance and obligations.
4) Tax & Compliance Notes (SA context)
Speak to your accountant about thresholds and VAT implications before switching methods.
5) When to Switch
If you offer terms, carry stock, or seek funding, accrual usually wins.
The takeaway:
Cash is simple; accrual is strategic. Pick the method that matches your operations — not just your current admin capacity.
Not sure which is right for you? Beancounter365 can assess your workflow and set you up correctly from day one.