FieldHub keeps its books on the accrual basis. Revenue is recorded when it is earned and expenses when they are incurred, not when cash changes hands. There is no cash-basis mode and no cash-basis Profit and Loss. You still see your cash position and cash movement, because the Balance Sheet and the Cash Flow Statement report actual cash by their nature.
What the difference means for a dealer or integrator
- Cash basis records a sale when the payment arrives and a cost when the bill is paid. It is simple, and many small companies start there in QuickBooks, but it tells you what happened to your bank balance rather than how the business performed.
- Accrual basis records the sale when the work is delivered and the cost when it is incurred, and carries the timing differences on the balance sheet as accounts receivable, accounts payable, and deferred revenue.
Why FieldHub is accrual only
- Recurring revenue is earned over time. Monitoring and service plans are billed in advance and earned month by month. Accrual books hold the unearned portion as deferred revenue and recognize it as the service is delivered, which is how recurring billing and recognition works in FieldHub. On a cash basis, an annual prepayment looks like one great month followed by eleven empty ones.
- Job costing needs matching. A multi-month install has equipment purchased in one month, labor in the next, and the invoice in a third. Accrual matches the cost of each job to its revenue so job costing and profitability reports are true, whatever the payment terms.
- RMR valuation and lending depend on it. Buyers of security accounts, lenders, and RMR-based lines of credit want accrual statements with attrition, deferred revenue, and receivables shown properly. Accrual is also what GAAP requires and what an outside accountant will produce anyway.
- One set of books. Running the operating system on accrual and reconciling to a separate cash-basis ledger doubles the bookkeeping and creates two versions of the truth. FieldHub keeps one ledger with a full set of financial statements.
You still see the cash
Accrual books do not hide cash. The Balance Sheet shows the cash you hold, what customers owe you, what you owe vendors, and the recurring revenue you have billed but not yet earned. The Cash Flow Statement shows where cash came from and where it went over the period, which is a cash-based view by definition. Together they answer the question a cash-basis P&L is usually reached for: did the business generate cash this month, and where is it?
If you file taxes on a cash basis
Many small businesses still file on a cash basis even when the books are accrual. FieldHub does not produce a cash-basis P&L, so your accountant makes the year-end conversion from the accrual P&L, the Balance Sheet, the Cash Flow Statement, and the AR and AP aging reports. Talk to your CPA about whether that is worth doing as your recurring revenue grows.
