Profits Settings: Accrual vs. Cash Basis

Profit settings control how BaseBuilders calculates and displays profitability, billed amounts, and related figures throughout the system — on either an accrual or cash basis. This determines what you see as your default view when reviewing project or firm profitability.

Accrual vs. Cash Basis

• Accrual basis calculates profits based on what you've invoiced, treating an issued invoice as income whether or not it's actually been collected.
• Cash basis calculates profits based on what you've actually received. Billed amounts (how much has been invoiced) still reflect issued invoices only, but the profit calculation itself only counts income that has actually come in.

In short: under Accrual, invoicing a client counts as earning that income immediately. Under Cash, invoicing shows up as billed activity, but profit isn't recognized until payment is actually received.

Choosing Which Invoices Count (Accrual Only)

When using Accrual basis, you also choose which invoice statuses are included in the calculation:

• Issued only
• Issued and Approved
• Issued, Approved, and Draft

This choice affects more than just profitability — it also feeds into how much of your fee shows as invoiced, and factors into related calculations like Work in Progress and Backlog.

Firms differ on this: many include Draft invoices in the calculation since they represent invoices that are effectively ready to go out, while others prefer to count only invoices that have actually been Issued, taking a more conservative view.

Setting Your Default

Choose Accrual or Cash as your default view, and if you select Accrual, choose which invoice statuses to include. This becomes the default view you see when logging into BaseBuilders — though it's not a permanent choice.

Toggling Between Views

Regardless of your default, you can toggle between Cash and Accrual at any time while using the system, letting you compare both perspectives on the same data whenever it's useful.

Best Practice

Choose the default that matches how you actually think about your firm's performance day to day — Accrual if you consider work "earned" the moment it's billed, Cash if you prefer to see profitability tied to money actually in hand. Since you can toggle between the two at any time, your default setting is really just a starting point, not a limitation on what you can see.

Summary

Profits settings determine whether profitability and related figures are calculated on an Accrual or Cash basis. Accrual counts invoiced amounts as income and lets you choose which invoice statuses (Issued only, Issued and Approved, or Issued/Approved/Draft) are included in the calculation. Cash basis only recognizes profit once income is actually received, though billed amounts still reflect issued invoices. You can set a default view and toggle between Cash and Accrual at any time while using the system.