A company receives a service in September, but the supplier sends its invoice in October. Waiting for the invoice before considering the expense can put the work into the wrong reporting period under accrual accounting.
IAS 37’s discussion of liabilities distinguishes accruals for goods or services received but not yet paid, invoiced or formally agreed from other obligations. The applicable accounting framework and company policies determine the actual treatment.
Start with evidence that the work was received
In an illustrative example, a company has received 1,200 currency units of monthly maintenance services by period end, but has no invoice yet. Its accounting team considers an expense and corresponding accrued liability using the relevant policy and available evidence.
The figure should come from a defensible basis, such as the contract and work received, rather than an amount chosen to make the month’s results look convenient. A purchase order for future work does not automatically establish that an expense has already occurred.
Record the supplier, service period, calculation, supporting documents and person responsible for the estimate. Flag uncertainty instead of presenting an unsupported number as exact.
Close the loop when the invoice arrives
The later invoice must be reconciled with the accrual. Otherwise, the same service may be counted twice or an old liability may remain in the ledger after the transaction is settled.
Companies use different posting and reversal procedures. Follow the established process and investigate a material difference between the estimate and invoice rather than assuming the original number must be correct.
A useful month-end schedule shows each accrual’s origin, age and resolution. It should be possible for another reviewer to understand why the balance exists without searching through a private message thread.
This is a conceptual example, not a jurisdiction-specific bookkeeping instruction. Tax treatment and financial-reporting requirements can differ; the company’s accountant should confirm the appropriate entries and presentation.