When Finance Stops Waiting and Starts Looking Ahead
Most people think accounting is what happens after the fact. An invoice arrives, someone checks it, and Finance books the cost. But by then, the moment has passed. The work is done. The goods were delivered weeks ago. And the business already moved on.
That’s why high-performing Finance teams don’t rely on paperwork to catch up. They look ahead. They work in real time. And they use accruals not as a compliance task, but as a lens — one that sees financial activity as it happens, even when the documents lag behind.
Accruals aren’t just about timing. They’re about truth. About capturing what’s already in motion. And in fast-growing companies, that matters more than ever.
Accruals Are Radar, Not Rearview Mirrors
A good accrual process is like having radar before a storm. It picks up signals early, before the impact shows up on the reports. Maybe a delivery hit the dock. A repair was completed. A consultant wrapped up their project. The cost is already real. And if Finance doesn’t reflect it now, they’re not just being slow. They’re being inaccurate. It’s not about waiting for perfect numbers. It’s about showing an honest view of what’s happening in the business, even when the paperwork isn’t there yet. That’s what accruals offer: a forward-looking discipline that helps Finance stay close to reality, not just documentation.
The Real Risk of “We’ll Just Book It Next Month”
There’s a phrase you’ll hear too often:
“We’ll just book it next month”.
It sounds harmless, but that simple delay creates a ripple effect. One month looks artificially good, while the next one looks off. Trends shift, forecasts falter, and budget owners lose confidence. All because the cost was real, but Finance postponed it. When this happens regularly, the entire organization starts operating in the dark. Leadership decisions become disconnected from actual activity, and Finance finds itself explaining variances instead of informing action.
Accruals Are Built on Discipline, Not Perfection
Some teams avoid accruals because they think they need to be exact, but accruals aren’t about precision: they’re about realism. You don’t need the invoice to know a cost occurred. You have tools: the purchase order, the signed contract, the hours logged, and the email confirmation. Use them. Estimate sensibly. And, most importantly, document your assumptions. A disciplined accrual process builds continuity. It bridges the timing gap between real activity and financial reporting. It keeps the monthly view stable and believable — which is exactly what business leaders need.
Why “Rush Accruals” Are a Sign Something’s Broken
At many companies, accruals typically occur only at month-end. And even then, they’re rushed. People dig through email trails, guess numbers, or forget what hasn’t been invoiced. It’s messy, stressful, and it’s usually wrong. But this isn’t a Finance-only problem. It’s a process problem. Accruals work best when Finance is integrated into the day-to-day flow of the business. Controllers attend operations huddles. Analysts monitor delivery reports. AP stays in sync with Purchasing. That’s how Finance stays ahead: not behind. Good accruals are a reflection of good visibility.
What Makes a Good Accrual?
You don’t need a complex checklist. You need three things:
- A Source: Proof the cost is real (a PO, contract, delivery note, or confirmation).
- An Estimate: A simple calculation based on facts (e.g., rate × hours).
- A Reversal: So the accrual clears cleanly once the invoice lands.
If the invoice never shows up, the reversal becomes a red flag. It prompts follow-up. It keeps the process sharp. And it stops Finance from being caught off guard weeks later, wondering what happened.
Find the Patterns — Recurring vs. One-Off
Some accruals should be baked in: rent allocations, license fees, and software subscriptions. These should be automated and reviewed regularly, not rebuilt from scratch each month. Others are one-time events: a machine repair, a consulting project, a tooling order. These deserve more scrutiny. But even then, patterns emerge. If a “one-off” keeps happening, it’s not one-off anymore. Time to systematize it, or investigate why it’s recurring. Patterns tell a story. Accruals help you read it.
In Fast Companies, Invoices Can’t Keep Up
When a company is scaling, the flow of money gets faster—more vendors, more projects, more shipments. But paperwork doesn’t scale as fast as operations. That’s where accruals shine. They give Finance a living view of financial commitments, not just a delayed snapshot. That makes reporting tighter, forecasting stronger, and leadership more confident. Without accruals, fast-growing businesses quickly lose control.
Budget Owners Don’t Care About Invoices
Here’s something many Finance teams forget:
“Budget owners don’t care about when invoices arrive. They care about what actually happened”.
They want to know, “How much did we really spend this month?” Not what was invoiced: what was committed. If accruals are sloppy, Finance creates fake comfort. Then one day, a late invoice drops, and the budget explodes. Trust erodes. But if accruals are tight, those surprises vanish. Reports reflect reality. Budget owners feel in control. And the relationship between Finance and the business becomes a partnership, not a blame game.
Accruals Must Be Controlled to Be Trusted
When accruals feel like guesses, they cause more confusion than clarity. But with the right controls, they become a pillar of financial hygiene. Here’s how to make accruals reliable:
- Set clear thresholds for approval.
- Require documentation for every entry.
- Maintain clean audit trails.
- Reverse on time, every time.
- Automate wherever possible.
With those basics, your accruals become clean, auditable, and trustworthy.
Most Accrual Problems Start Outside Finance
If your accrual process is chaotic, look upstream. Are POs incomplete? Maybe delivery logs are missing? Do teams flag completed work on time? Too often, operational teams leave messes behind, and Finance ends up cleaning them up. But fixing accruals means improving how teams confirm, record, and communicate their work across the company. Train teams to flag finished jobs. Teach them to close POs properly. Make it normal to confirm a delivery the day it happens. That’s not just a Finance win: it’s a company-wide upgrade.
Accruals Are the Memory of the Business
People forget, especially in busy teams. A shipment arrives, projects are completed, but the invoice doesn’t show up for weeks — and no one remembers. That’s how duplicate payments, missed costs, and endless email chains happen. Accruals fix this. They mark the moment. They create a timestamp that says:
“We saw this coming. It’s in the books.”
That kind of memory protects the company from chaos, and keeps Finance one step ahead.
Teach Accruals Simply
Not everyone gets what accruals are. And that’s okay: don’t send them decks. Just ask the right questions:
- “The PO’s out: should we accrue?”
- “The delivery landed: what’s the value?”
These small, casual check-ins build awareness. Over time, they turn into habits. And when the business understands accruals, Finance doesn’t have to beg for updates: they come automatically.
When Accruals Work, Trust Follows
When accruals are sloppy, trust breaks; budgets don’t match, reports don’t feel right, and people start second-guessing the Finance team. However, when accruals are strong, people tend to believe the numbers. That belief drives better decisions. It gives Finance a voice early in the conversation, not just at the end.
“Good accruals aren’t about perfection: they’re about trust”.
Final Thought: Accruals Are Awareness
Accruals are more than a process. They’re a mindset. They say:
- “We’re paying attention.”.
- “We don’t wait for invoices to see the truth.”.
- “Finance is part of the action, not just the cleanup crew.”
If you want to lead a Finance team that’s trusted, accurate, and always a step ahead, you need to start with accruals. Because seeing the storm before it hits is what good Finance does best.
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