2 min read
Definition
The accruals basis is the accounting method that records income when earned and costs when incurred, regardless of when cash moves. It is required for limited-company accounts and underpins the matching principle.
In plain terms
Under the accruals basis a sale counts when you deliver, and a cost counts when you receive the benefit — not when the money actually changes hands. It gives a truer picture of performance than the cash basis.
Why it matters for your company
Because companies use the accruals basis, their reported profit differs from their cash position — which is why a profitable company can still be short of cash. Understanding this explains the need for working-capital finance.
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Read →Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.