Cash Accounting vs. Accruals Accounting
Clubtreasurer uses a modified cash accounting system by default, which suits the needs of most small clubs and community organisations.
What is Cash Accounting?
With cash accounting, you only record income or expenses when money is actually received or paid out. For most clubs, simply using Receipts and Payments to track money moving in and out is all that’s needed.
What is Accruals Accounting?
Some organisations prefer to use accruals accounting to get a more accurate picture of their financial position by matching income and expenses to the period they relate to, rather than when the cash is exchanged.
- Prepayments = Money paid or received in advance, for goods or services that relate to a future period.
- Accruals = Money owed or due (costs or income that have occurred but not yet paid or received).
Please note that even cash-based organisations may require simple accruals accounting at their year-end to correctly account for monies received for next year’s income, or payments due now but not paid until next year.
Example:
- Club A receives new kit on 1st January but pays the supplier on 5th February.
- Cash Accounting: Records the payment in February (when cash leaves the bank).
- Accruals Accounting: Records the cost in January (when the kit is used), and shows the payment in February as a reduction in the outstanding liability.
Recording Accruals & Prepayments in Clubtreasurer
Clubtreasurer supports both simple and advanced methods for tracking accruals and prepayments.
Which method is right for you?
Simple Method (Recommended for most)
Best if your organisation primarily uses cash-based accounting but needs to make occasional adjustments—such as adjusting for a large annual insurance bill at year-end.
Advanced Method
Designed for larger or more complex organisations that operate on a full-time accrual accounting basis, where every monthly income and expense must be precisely matched to the period it belongs to.