If your client uses accrual accounting, your firm may be required to submit accrual estimates each month. This article explains what accruals are and why they matter to you as a vendor user.
What Is Accrual Accounting?
Accrual accounting records expenses in the month the legal work is performed — not when the invoice is submitted or paid.
Example
Your firm completes work in March.
The invoice is submitted in April.
Under accrual accounting, the expense must be recorded in March, because that is when the work was done.
This differs from cash-basis accounting, where expenses are recorded only when payment is made.
What Is an Accrual?
An accrual is an estimate of fees and expenses your firm expects to invoice for work already completed but not yet billed.
In simple terms:
If you have performed work this month but have not submitted the invoice yet, you may need to submit an accrual.
In some regions (particularly Europe), this may be referred to as WIP (Work in Progress).
Why Are Accruals Relevant to Your Firm?
If your client requires accruals, they rely on your estimate to:
Close their monthly financial records accurately
Report legal spend internally
Forecast future spend
Avoid large financial adjustments later
If accruals are not submitted — or are significantly inaccurate — it can create reporting and budgeting issues for your client.
When Would You Need to Submit an Accrual?
You may need to submit an accrual when:
You have completed work during the month
The invoice is not yet finalized or submitted
Your client has requested monthly accrual estimates
Key Takeaway for Law Firms
If you have performed work but have not yet invoiced it, your client may require you to submit an estimated amount so they can record the expense in the correct month.
If you are unsure whether accruals are required, contact your client directly.
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