The main difference between accrual and cash basis accounting lies in the timing of when revenue and expenses are recognized. With Accrual accounting, revenue and expenses are recognized and recorded when they occur. With Cash based accounting, revenues and expenses are not booked until cash exchanges hands.
Cash basis accounting is easier to maintain, whereas accrual accounting portrays a more accurate portrait of a company's health by including accounts payable and accounts receivable.
Greenback primarily focuses on cash-basis accounting as events happen. Here are a few examples:
- When you make a sale on Etsy, payment is immediately collected. When you issue a refund, the money is immediately sent to your original buyer.
- On Shopify, you can configure your shop to either collect payment immediately, or once it is fulfilled. Greenback will import unpaid sales, but they will be "open" and non-exportable on Greenback until payment is collected.
- For Amazon Seller, Greenback will only sync sales that match fulfillments. If you settle with Amazon in multiple currencies Greenback won't know the final exchange rates until a payout occurs. As such, the transaction will be displayed as "open". Learn more about how Greenback maintains transaction state for Amazon.
Each integration on Greenback is unique in how they provide and present transaction data. Greenback works to normalize your transaction data with careful attention to ensuring your transactions are in a state that is ready for export to an accounting program. For accrual based organizations, Greenback supports exporting transactions as "unpaid" invoices (bills or sales) to a target accounting system. Once a transaction has been exported, the responsibility lies with the user to mark them as paid within the accounting platform.
In addition, Greenback Mailbox (learn more about Mailbox here) can also create transactions as Bills or Invoices and export those as unpaid bills to QuickBooks Online or Xero.
Any expense/purchase on Greenback can be exported to your Xero account as either a "Bill" or "Bill + Payment". Exporting transactions as Bills will simply create an unpaid bill in Xero. The same logic applies for sales. Any sale on Greenback can be exported to your Xero account as either an "Invoice" or "Invoice + Payment". Exporting transactions as Invoice will simply create an unpaid Invoice in Xero.
Note: While you may want to sync unpaid invoices, we highly recommend you rethink the concept, especially if your business is not required to account in accrual mode.
Support for syncing unpaid invoices/bills to QuickBooks Online is an active feature request with our product team and will be supported in the coming months. The reason we don't sync unpaid invoices today is that instead of a single export from Greenback to QuickBooks, unpaid invoices will require multiple syncs as your data changes status several times prior to resting in a final state, resulting in multiple cash events on your books.