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Cash vs. Accrual in Digits

Digits supports both cash and accrual accounting, so you can track your finances in the way that best fits your business.

What’s the Difference?

  • Cash accounting: Income and expenses are recorded when money moves in or out of your account.

  • Accrual accounting: Income and expenses are tracked when they’re earned or billed—even if the cash hasn’t moved yet.

Not sure which method is right for you? Check out our blog for a quick breakdown: Cash vs. Accrual Accounting for Startups

Accrual-Based Behavior in Digits

Many integrations post on an accrual basis by default:

  • Gusto: Payroll entries are posted based on the end of the pay period (accrual), not the payment date.

  • Ramp/Bill.com: Bills are recorded on the invoice date, regardless of when cash is paid.

  • Revenue Recognition: Prepaid contracts currently require manual journal entries to defer and recognize revenue over time.

  • Digits Pay & Invoicing: Automatically record entries to the ledger on an accrual basis. Once mappings are set in Settings, it’s truly “set it and forget it”—no manual entries needed.

These behaviors support firms that need audit-ready accrual financials.

When Digits Is Cash-Based

Some integrations always post on a cash basis:

  • Stripe: Entries are recorded when a cash transaction occurs in the Stripe account. We do not currently recognize Stripe invoicing.

  • Banks & Credit Cards: Transactions are recorded when cash moves in or out.

Note: ✨ Digits automatically categorizes transactions, but accrual-heavy items (like fixed asset purchases or prepaid expenses) may still need review.

Manual Adjustments You May Need

Accrual accounting often requires manual journal entries for items such as:

  • Prepaid expenses

  • Depreciation or amortization

  • Accrued expenses

  • Deferred revenue

  • Complex revenue recognition

You can create journal entries at: Accounting → Ledger → New Transaction

If you’re unsure whether adjustments are needed, reach out to your accountant or Digits Support.

Frequently Asked Questions

Can I switch between cash and accrual in Digits?

Absolutely—Digits gives you the power to work in cash or accrual-based accounting, no toggles required. Unlike QuickBooks, which simplifies the view with a switch, Digits gives you the real deal: a full general ledger. That means you or your team can book transactions exactly how you want, with no software-imposed limits. It's flexible, professional, and designed for firms to customize based on their clients’ needs.

If you’re not sure how your books are set up—or think something looks off—reach out to your accountant or contact us at [email protected]. We’re happy to help!