Accrual vs Cash Accounting: Which is Right for Your Saudi Business?

When starting company bookkeeping, you'll face a fundamental question: cash-basis or accrual-basis accounting? Your choice affects reports, taxes, and business insights.

Cash Basis Accounting

Records revenue when cash is received, expenses when cash is paid.

Example:

Invoice sent for 10,000 SAR in January, paid in March:

• Cash basis: records revenue in March
• Accrual basis: records revenue in January

Accrual Basis Accounting

Records revenue when earned, expenses when incurred.

Advantages:

• Accurate business performance picture
• Required for most registered companies
• Matches international standards (IFRS)

Which Does ZATCA Require?

ZATCA requires accrual accounting for:

• Companies with annual revenue over 375,000 SAR (VAT-registered)
• Joint stock and limited companies
• Foreign companies

Small entities and freelancers can choose cash-basis for simplicity.

Which to Choose?

Choose cash if:

• You're a freelancer or small individual project
• Revenue below 375,000 SAR
• Simple operations

Choose accrual if:

• You have customers paying on credit
• You have employees and fixed expenses
• You have inventory
• You want growth and expansion

How Daqiq Supports Both

• Start with cash-basis if beginner
• Move to accrual as you grow
• Financial reports for both methods

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