Accrual Accounting
An accounting method that recognizes revenue and expenses when they occur economically, regardless of when cash actually changes hands.
Accrual accounting records transactions at the point the economic event happens — not when money moves. A travel expense is logged when the trip takes place, not when the employee submits the claim or the reimbursement clears. This technique gives a more accurate picture of a company's financial position at any given moment and is required under most accounting standards for businesses above a certain size.
Why it matters
For travel programmes, accrual accounting means costs appear in the period when travel actually occurs — not when claims are filed or cards are paid. This matters for budget tracking, period-end reporting, and reconciling monthly travel spend against departmental budgets. Delays in expense submission create reporting mismatches if the accrual is not handled correctly.
How it works in practice
At period end, finance teams accrue estimated travel costs for trips that have occurred but have not yet been reported or invoiced. A traveler on a week-long trip that straddles two reporting periods will have their costs split across both. Automated expense platforms help by timestamping transactions at the point of spend, making accrual calculations more precise and reducing manual adjustments.
The takeaway
Submitting expenses promptly and ensuring corporate card transactions post on time reduces the need for manual accruals and gives leadership cleaner travel spend data. Programme managers who understand accrual mechanics can communicate with finance more accurately and anticipate period-end close requirements.