Accruals: Why Timing in Finance Tells a Bigger Story

Accruals in Finance Come First

A for Accrual — the first building block in our financial storytelling series, making accounting concepts easy from the very beginning.

A few years ago, I was helping a regional manager prepare for her first serious budget meeting.

She was sharp, people-smart, and led a strong team.

But paused every time someone mentioned “accruals.”

“I know it matters,” she said, “but I’m not sure I fully get it… and I’m not about to ask in front of everyone.”

She’s not alone.

“Accrual” is a word many nod at, but few really understand.

And yet it’s one of the most important concepts in finance.

What Is Accrual?

Accrual is about timing.

You record income or expenses when they happen.

Not when the cash moves.

If you deliver a service in March but get paid in April, the income still goes to March.

That’s when the work was done.

Same with expenses.

If something was used or incurred this month—even if the invoice hasn’t arrived—it still belongs in this month’s numbers.

This gives a more complete picture of what actually happened during the period.

What It Sounds Like in Real Life

Finance: “Have you included the training expenses from last week?”

Manager: “Yes, the session’s done. I’ll send over the estimate so it’s covered this month.”

You’re not waiting around for an invoice.

You’re making sure the work is recorded in the right period.

That’s what accruals are really about: timeliness.

Why Accruals Matter

When the numbers reflect when things actually happened, decisions get sharper.

You know what’s already been used, delivered, or earned

This helps you plan, respond, and lead with more clarity.

Accruals in finance help your reports match what the business actually did.

Not just what was paid or received.

Cash is real, but it doesn’t always tell the full story.

You might have delivered a project or used services that haven’t been paid for yet.

If you rely only on cash, your reports miss those parts of the story.

That’s why accruals give you a better grip on your performance.

They connect activity to the right period, so your numbers align with the work being done.

A Shift in How You See Your Financial Story

Understanding accruals helps shift the way you look at reports.

You stop reading them as a list of payments.

And start seeing them as a timeline of what’s happened in the business.

That shift makes financial reports more useful.

You get clearer insights, better forecasting, and stronger conversations with your team.

James

The Financial Storyteller

Ready to turn financial confusion into clarity?👉 If Once Upon a Balance Sheet resonates with you, we can change the way you see numbers.https://www.financialstorytelling.com/onceuponabalancesheet