What is Accrued Expenses?
Costs you have already used but have not yet paid - captured so the period reflects what it truly consumed.
Accrued Expenses: definition
At month-end you have often consumed services - utilities, contractor hours, interest, wages - that no invoice has arrived for yet. Accruing them records the expense now (matching principle) with an offsetting accrued liability, so the period is not understated. When the bill arrives next month, the accrual reverses and the actual payable takes its place.
- Common examples: wages earned but unpaid, interest, utilities, contractor work, bonuses
- Booked as debit expense / credit accrued liabilities at period end
- Usually reversed the next period when the real invoice posts
- Keeps the P&L honest for the period the cost was actually incurred
How Fintra handles it
Fintra supports recurring and one-off accruals with automatic reversal. You (or the AI, from historical patterns) set an accrual at month-end; Fintra posts it and schedules the reversing entry for the following period, so the actual bill does not double-count. The close checklist confirms accruals are recorded before books are locked.
Worked example
Frequently asked questions
What is the difference between accrued expenses and accounts payable?
Accounts payable is a cost you have been invoiced for but not yet paid. Accrued expenses are costs you have incurred but not yet been invoiced for. Accruals are estimates that convert to AP once the real bill arrives.
Do accrued expenses reverse?
Typically yes. Because an accrual is an estimate booked before the invoice, it is usually reversed the following period so the actual invoice can post without double-counting. Fintra schedules the reversal automatically.
Why accrue expenses at all?
To keep each period accurate. Without accruals, a cost you consumed in March but paid in April would understate March profit and overstate April. The matching principle requires expenses to land in the period they helped generate revenue.
Can AI suggest accruals?
In Fintra, yes. From your recurring vendors and historical patterns, the AI can propose month-end accruals for review. A named human approves before anything posts - AI proposes, a person confirms.
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