Why Accrual Accounting Still Causes So Much Manual Work
Accrual accounting is foundational to accurate financial reporting, yet it remains one of the most manual, error-prone parts of the close. Finance teams spend countless hours calculating accruals, chasing invoices, posting adjusting entries, and reversing them the following month. Even in companies with modern accounting systems, accruals often live in spreadsheets rather than the ledger itself.
Accrual accounting automation aims to eliminate this inefficiency by embedding accrual logic directly into accounting software—reducing reliance on manual calculations while improving accuracy and auditability.
The Common Problems With Manual Accruals
Manual accrual processes create predictable challenges:
- Accruals calculated outside the system and keyed in by hand.
- Inconsistent assumptions between periods or team members.
- Missed or duplicated accruals when staff change or volume spikes.
- Reversals forgotten or posted incorrectly.
- Limited audit trails tying accruals back to source activity.
These issues compound as transaction volume increases.
What Accrual Accounting Automation Actually Means
Automation does not eliminate judgment—it eliminates repetitive execution. In modern accounting software, accrual automation typically includes:
- Rules-based accrual calculations tied to dates, amounts, or usage.
- Automatic creation of accrual journal entries.
- Scheduled reversals posted without manual intervention.
- Linkage between accruals and source transactions.
Finance teams review exceptions instead of rebuilding accruals every month.
Accruals by Function: Where Automation Delivers the Most Value
Accrual automation has outsized impact in several areas:
- Accounts payable: accruing expenses when invoices arrive late.
- Payroll: accruing wages, bonuses, commissions, and benefits.
- Revenue: aligning revenue recognition with service delivery.
- Prepaids: amortizing expenses over contract periods.
Each of these areas benefits from predictable rules.
Recurring Accrual Templates and Schedules
Modern accounting platforms support recurring accrual templates that:
- Define calculation logic once.
- Post accruals automatically each period.
- Handle reversals consistently.
This eliminates repetitive setup and reduces reliance on tribal knowledge.
Accrual Automation and the Month-End Close
Accrual automation directly improves close performance by:
- Reducing the number of manual journals.
- Minimizing last-minute adjustments.
- Improving consistency between periods.
- Supporting faster preliminary closes.
Audit and Compliance Benefits
Automated accruals improve audit readiness by:
- Maintaining consistent logic period over period.
- Linking entries to source transactions.
- Providing clear approval and change histories.
KPIs That Show Accrual Automation Is Working
- Reduction in manual journal entries.
- Fewer post-close adjustments.
- Close cycle time improvement.
- Audit questions related to accruals.
Final Thoughts
Accrual accounting automation removes one of the most persistent sources of inefficiency in finance. By embedding accrual logic into accounting software, organizations close faster, reduce errors, and improve confidence in their numbers—without sacrificing control.