Cash or Accrual? Here’s Why Your QuickBooks Settings Matter More Than You Think

If you’re in charge of finances, you’ve probably heard about “cash accounting” and “accrual accounting.”

At first, it might sound like complicated accounting jargon — but the truth is, choosing the right method in QuickBooks can completely change how you see your business’s financial health.

If you’re unsure which method you’re using — or why it even matters — keep reading. This could be the key to getting a clearer, more accurate picture of your money.

Cash vs. Accrual — What’s the Difference?

• Cash Accounting; You record income only when money actually hits your bank account, and expenses only when you pay them.

• Accrual Accounting; You record income when you earn it (even if payment comes later) and expenses when you incur them (even if you haven’t paid yet).

In simple terms:Cash accounting tracks actual cash movement. Accrual accounting tracks earned income and owed expenses, whether or not cash has changed hands yet.

Why Does This Matter?

Because it changes how you understand:

• Your true profitability — not just the cash sitting in your account

• How much money you actually have versus what you expect to receive or owe

• When your business really made money, and where costs happened

For example, with cash accounting, you might see a very profitable month because a big client finally paid — but accrual accounting shows when you actually earned that income, which might have been months earlier.

How QuickBooks Helps You

The best part? QuickBooks lets you:

• Switch easily between cash and accrual views in reports

• Set your preferred method for official financial statements

• Get both views when you want — so you’re never guessing what your numbers really mean

One of our clients, a small consultancy in Kisumu, used cash accounting without realizing it.

They thought the business was doing well because their bank balance looked good. But when we switched their reports to accrual accounting, they saw unpaid invoices that hadn’t yet cleared, revealing which clients were slow to pay.

This gave them a clearer picture of cash flow risks and helped them plan better — like chasing payments earlier and managing expenses more carefully.

What to Watch in QuickBooks

• Income reports; See whether you’re counting unpaid invoices (accrual) or just payments received (cash).

• Expense tracking; Check if bills you owe but haven’t paid yet are included (accrual).

• Cash flow; Matches the actual money in your bank (cash), helping you manage payments and bills.

• Profit & Loss reports; Know which accounting method you’re using — the results will look different depending on cash or accrual.

Switching views in QuickBooks is just a click away under the Reports section. You don’t have to guess what your numbers mean.

Get Your Financial Picture Right

Choosing cash or accrual accounting is more than a technical step — it’s about how you understand and grow your business.

At Remotix, we:

• Review your QuickBooks setup and recommend the best accounting method

• Clean up your data to ensure reports match reality

• Train you to use both cash and accrual views so you can plan smarter

Ready to stop guessing and start seeing your real numbers clearly? Contact us today - info@remotixkenya.com