The accrual basis of accounting records income and expenses when they are incurred, rather than when cash is received or paid. In external workforce management, this method is particularly relevant for tracking project costs, contractor payments, or vendor invoices over time, even if actual disbursement occurs later.

Using the accrual basis provides a clearer picture of an organization’s financial health and obligations. For example, if a freelancer completes a project in one quarter but is paid in the next, the expense is recorded in the quarter the work was done, ensuring alignment with project timelines and financial accountability.