Accrual Accounting
Accrual accounting records revenue when it's earned and costs when they're incurred, regardless of when cash moves. For an ecommerce business, the part that matters most is matching: COGS hits the P&L when the unit sells, not when you paid the supplier. It's the standard for any inventory business, the format every buyer and lender requires, and the only way monthly margins mean anything.
Cash-basis books swing with your purchasing calendar instead of your performance. Stock up for Q4 in October and cash books show a brutal October loss followed by a December profit that's partly fiction. Accrual books show what actually happened: steady margin, inventory converted to sales. When you're deciding whether to raise prices, cut a SKU or push ad spend, only one of those pictures is usable.
The stakes get higher at exit. Every acquirer and every quality of earnings team works from accrual financials, and sellers who show up with cash-basis books either pay for a rushed conversion mid-deal or watch the price get retraded. Converting two years of history after the fact is exactly the work our catch-up bookkeeping service exists for; keeping it accrual from the start is cheaper. Our take on what buyers actually check is in the QoE report guide.
Where this shows up in our work
This isn’t textbook material for us; it’s the day-to-day of keeping seller books right. See how we handle it in practice:
Monthly Ecommerce Bookkeeping→