About
This guide explains how to switch your accounting method from cash to accrual in Finaloop, what to expect, and how we ensure your books stay accurate and tax-ready throughout the process.
Can I switch from cash to accrual in Finaloop?
Yes. Finaloop supports both cash and accrual accounting, and we can help you transition between them.
Because your books in Finaloop are continuously reconciled and prepared for tax use, method changes are handled in a structured way to ensure accuracy and consistency.
A switch from cash to accrual is applied prospectively, starting from the beginning of a selected year.
How the process works
Here’s what to expect when switching methods:
Review and finalize any prior year open books
We’ll work with you to confirm that your previous year’s books are accurate and complete so we can close them first.Close the prior year
Once finalized, we officially close that period to create a clean cutoff point.Apply the new method going forward
Your account is transitioned to accrual accounting from the selected start date. Once the switch is completed, previously closed books under the old method cannot be reopened or adjusted.Ongoing books continue under the new method
From that point on, your books reflect accrual accounting consistently across all reports.
Viewing accounting methods across years
If your accounting method has changed over time, you can easily view which method was used for each year directly in your reports.
In your P&L and Balance Sheet reports, Finaloop displays the accounting method by year, so you always have clear visibility into how your financials were calculated for each period. If you click the settings icon, you’ll see the method for each relevant year.
This ensures:
Full transparency across historical and current reporting
Accurate comparisons within the same accounting method
Clear alignment with your year-end filings
Why the change is structured this way
If you’ve used tools like QuickBooks or Xero, you may be used to switching between cash and accrual instantly.
Those platforms primarily adjust how reports are displayed, based on:
When income is recognized
When expenses are recorded
Finaloop goes deeper.
Because we manage your books end-to-end, not just reporting, the accounting method impacts how key financial areas are handled, including:
COGS and inventory flows
Payroll and liabilities
Loans and balance sheet structure
We also perform a full year-end close to ensure your books are tax-ready. To maintain that level of accuracy:
Each year is finalized in a single method
There’s a clear, clean transition point
This approach ensures your numbers are reliable, not just flexible.
Timeline & Cost
Estimated timeframe: 2–4 weeks
This begins once:
All required data is submitted
Prior year books are reviewed and closed
Cost for switching
If you have no existing closed books in Finaloop, this switch to accrual accounting is free.
If you have existing closed books in Finaloop, the switch from cash to accrual is $750.
This fee covers the additional work required to:
Review and validate your finalized books
Ensure a clean and accurate cutoff between methods
Reconcile and align your financials for the new accounting structure
In other words, it’s not just a setting change, it’s a controlled transition to keep your books accurate, consistent, and tax-ready.
Important notes
Changes are applied from the start of a selected year (not mid-year)
Prior years must be fully closed before switching
Books that are closed for more than a year cannot be modified (for compliance and audit protection)
Best practice
Your accounting method in Finaloop should match how you file your taxes. his ensures your reports, financials, and filings all stay aligned throughout the year.
If you’re unsure which method you use, check here:
FAQ
Which accounting method does Finaloop use?
Which accounting method does Finaloop use?
Finaloop supports both cash and accrual accounting, depending on your business needs and tax setup.
How do I know if I file taxes on a cash or accrual basis?
How do I know if I file taxes on a cash or accrual basis?
Your tax filing method should guide your accounting method in Finaloop. If you’re unsure, this guide can help:
Can I convert accrual books to cash for tax filing?
Can I convert accrual books to cash for tax filing?
Yes. If you maintain accrual books but file taxes on a cash basis, adjustments may be required during year-end.
Why does Finaloop require a structured process to switch methods?
Why does Finaloop require a structured process to switch methods?
Because Finaloop maintains fully reconciled, tax-ready books (not just reports), switching methods impacts how your financials are built, not just how they’re displayed.
The structured process ensures accuracy, consistency, and compliance.
Need help?
If you’re considering switching methods or want help deciding what’s right for your business, reach out to our support team, we’ll guide you through the process.