Accruals
Accruals are accounting entries that recognise expenses which have been incurred but not yet invoiced, so costs appear in the correct period.
When goods or services have been received but the supplier's invoice has not yet arrived, an accrual records the estimated cost so the expense lands in the period it relates to. This follows the matching principle of accrual accounting and prevents costs from being understated at month-end simply because paperwork is late. Once the invoice arrives, the accrual is reversed and the actual amount booked.
In procurement, accruals depend on accurate goods receipting — a reliable goods received note tells finance what has been delivered and therefore what to accrue. Good commitment and receipt data make accruals faster and more accurate, giving a truer view of spend against budget. Poor receipting, by contrast, leads to guesswork and surprises when invoices finally land.
Frequently asked questions
- What are accruals in procurement and finance?
- Accruals are accounting entries that recognise expenses already incurred but not yet invoiced, so costs are recorded in the correct period rather than only when the invoice arrives.
- How do accruals relate to goods receipting?
- Accruals rely on knowing what has been received; an accurate goods received note tells finance what to accrue, so strong receipting makes accruals timely and reliable.
Related terms
Goods Received Note (GRN)
A goods received note (GRN) is a document recording the goods actually delivered against a purchase order, used to confirm receipt before payment.
Read definitionCommitment Accounting
Commitment accounting is a method that records financial obligations at the point an order is placed, not only when the invoice is received or paid.
Read definitionAccounts Payable (AP)
Accounts payable (AP) is the money an organisation owes its suppliers for goods and services received but not yet paid for, and the team that manages those payments.
Read definitionBudget Control
Budget control is the process of monitoring and managing spending against an approved budget so that costs stay within planned limits.
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