Cash or Accrural

Do you setup Manager to be Cash Basis or Accrual? If so where?

Manager automatically does accounting on both cash and accrual basis side-by-side. When you generate a report such as Profit & Loss Statement, you can specify whether you need figures on accrual or cash basis.

No need to do anything up-front.

@lubos is, of course, correct about what Manager does. You can get reports on either basis. But there is a different perspective depending on how you want to run your business. If you will use cash accounting, you don’t enter income and expenses until actually received or paid. But, if you plan to use accrual accounting, you will enter income when earned, that is, when goods or services are delivered to the customer, even though you may not receive payment until some time in the future. This gives rise to accounts receivable. Likewise, under accrual accounting, expenses are recorded when incurred, not when they are paid. For example, a credit card purchase is entered immediately as an expense, although you may not pay until the monthly statement arrives.

This causes some people confusion, especially at the change of accounting years, because you may end up reporting and paying tax on income you haven’t received yet and deducting expenses you have not paid.

In my education business the received payment always runs ahead of the services delivered since the payment is collected in advance. So a service delivered for 10000 over 12 months may be paid using 4 installments of 2500 using post dated cheques. How do I setup accrual basis accounting for such a scenario in the manager

First, please know that post-dated cheques are illegal in some jurisdictions. Check with your bank to confirm whether they are allowed. If they are not legal, you need to get multiple payments from your customers. You could split this into multiple sales invoices. Otherwise, aged receivables will be off, showing that customers owe you money they don’t yet owe. But you could also add a payment schedule into the notes. I would not recommend this approach.

If they are legal, I recommend creating multiple sales invoices anyway, all but one with future due dates. Manager will not count them as overdue until the future due date comes around. Enter the cheques when you receive them and allocate them to Customer Credits (with the appropriate customer’s sub account). When the invoice issue date comes around, Manager should match things.

Others may have different suggestions that would work just as well.


Thanks for taking the time to answer that. Much appreciated. Post dated cheques are quite legal in India and are in fact a standard way of dealing with loan repayment. The idea behind a post dated cheque is that if the customer does not make a payment in time, the cheque can be deposited. It is a way of providing deferred payment schedule to a customer but taking the guarantee in the form of post dated cheques. It could be that it is not valid in other countries so I will not comment on that.

Ours is an education business where the entire fees is supposed to be paid upfront to block the sear since one the course starts one cannot replace it with another student. Some parents, however, request for an installment. In such scenarios a 4 month EMI may be provided for a 10 months course. However the income is earned only at a rate of 1/10 per month even though the complete cash may be received by the 4th month.

I would like to use the software tracking both - parents that have not provided all the cheques (some provide 2/4 and rest later if they have run out of leaves). I would, however, calculate the income based only on accrual when the classes for the student is conducted.

I did some tests and your method works because the customer credit gets accounted against the future customer invoice. However, I still have not figured how to track if the customer is late on providing the post dated cheques.

Thank you for the additional detail, @aditya_lists. Given that post-dated cheques are legal for you, I think you can handle all situations in a common manner, which is always the easiest thing to do if you can manage it.

The only variable is how many payments will be made for a student. This should always be known when they register for the class. It might be a single payment in full, or up to the four payments you mentioned. But since the full amount is ultimately owed, even if the student does not complete the course, you can create sales invoices for each planned payment. Indicate the desired due date on each invoice, beginning with an immediate due date on the first to reserve the seat.

The customer owes you the full amount from the beginning, and each of these several invoices will create an account receivable. Manager will track the invoices individually. If you have been given post-dated cheques, you can deposit them when the appropriate invoices come due. If you are waiting for payment, and a payment does not arrive, Manager will show it as overdue on either the aged receivables report or a customer statement.

The only hard part, if you will pardon my attempt at humor, will be remembering where you stored the post-dated cheques. But, if you are like me, that will be an easy problem to solve. :grinning: