How to Enable and Use Cash-Basis Accounting in Eemel
🔍 Overview of Cash-Basis Accounting
Businesses with annual revenue of up to €500,000 may report VAT on a cash basis.
Cash-basis accounting means that income and expenses are only recorded when payments are actually made or received — as opposed to accrual-based accounting (which is the default in Eemel), where transactions are recorded when invoices are issued or received.
This model is especially useful for small businesses and sole proprietors, offering better visibility into cash flow and simplifying VAT reporting, as taxes are paid only after actual payments.
In Eemel, revenue, expenses, and VAT are recorded only after full payment of sales or purchase invoices.
⚙️ How to Enable Cash-Basis Accounting
Go to Settings → General Settings
Check the box: "Use cash-basis accounting?"
Going forward, new accounting periods will default to cash-basis
To apply it to the current fiscal year:
Go to Accounting → Fiscal Years
Edit the current fiscal year and enable cash-basis accounting
⚠️ Changes apply only to future entries — already recorded entries will not be modified
🔄 Cash vs. Accrual Accounting: Key Differences
Event | Cash-Basis: Entry Date | Accrual-Based: Entry Date |
Invoice sent to customer | When the invoice is paid | When the invoice is sent |
Supplier invoice received | When the invoice is paid | When the invoice is received |
Income and expenses | When invoice is paid | When invoice is created |
VAT | When payment is made | Based on invoice issue date |
📌 Practical Differences in Posting
Sales and purchases are posted only after full payment
The posting date = payment date
This affects the income statement and VAT reporting, but receivables and payables are posted at invoice creation (still shown in the balance sheet)
💡 Example: Sales Invoice (Cash Basis)
Invoice: €1000 + 25.5% VAT = €1255
At invoice creation:
Accounts Receivable (Balance Sheet): +€1255
Revenue & VAT: not yet recorded
Customer pays €500:
Bank (Balance Sheet): +€500
Accounts Receivable: –€500
Revenue/VAT: no entry
Customer pays remaining €755:
Bank: +€755
Accounts Receivable: –€755 (cleared)
Revenue (P&L): +€1000
VAT Liability: +€255
💡 Example: Purchase Invoice (Cash Basis)
Invoice: €800 + 25.5% VAT = €1004
At invoice creation:
Accounts Payable (Balance Sheet): +€1004
Expenses & VAT: not yet recorded
You pay €400:
Bank: –€400
Accounts Payable: –€400
Expenses/VAT: no entry
You pay the remaining €604:
Bank: –€604
Accounts Payable: –€604 (cleared)
Expense (P&L): +€800
VAT Receivable: +€204
✅ Summary
Receivables and payables are recorded at invoice creation
Revenue and expenses are recorded only upon actual payment
VAT is recorded and reported only after the invoice is paid
You can switch between cash- and accrual-based accounting in Settings, depending on your business needs.