Modern accrual accounting: Why it matters more than ever for e-commerce

For today’s finance teams, the battle isn’t just between cash and accrual accounting—it’s between outdated processes and modern efficiency. Accrual accounting offers the clearest lens into business performance, but the way it’s implemented can make or break its effectiveness.

We spoke with Andrew Gunter, Accounting Solutions Expert at Blue Onion, who works with our customers every day to help them modernize their accounting practices leveraging accurate financial data from the Blue Onion Subledger. We talked about why traditional accrual methods are falling short and how companies can transform their financial operations using automation. 

Let’s break down why accrual accounting is more critical than ever for D2C companies—and what it takes to modernize your practice.

<< Schedule a 1:1 consultation with Andrew to review your accounting workflows >>

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Accrual Accounting: The Backbone of Financial Truth

At its core, accrual accounting is about matching revenue and expenses to when business activity actually happens, not when the cash comes in or out. That makes it far more accurate than cash accounting when it comes to understanding performance over time.

Imagine recognizing a $100K sale when the invoice is paid three months later, even though the product was delivered and the expense incurred months before—that’s cash accounting. Accrual accounting reflects that activity in the period it occurred, giving you a true snapshot of profitability, efficiency, and growth.

This matters because:

• Investors, auditors, and boards rely on accrual-based financials
  
  
• Forecasting is far more accurate when timing aligns with activity
  
  
• It paints a clearer picture of gross margins and net income
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The Real-World Challenges of Accrual Accounting

While the theory of accrual accounting is straightforward, execution in the real world is far more complex. From my experience, even companies that say they use accrual accounting often have significant gaps. Here are a few reasons why:

• Manual workflows: Accruals often rely on spreadsheets, emails, and last-minute estimates.
  
  
• Inconsistent application: Different teams or departments may follow different logic for when to defer or recognize revenue and expenses.
  
  
• Partial accrual adoption: It’s common to see companies mix cash and accrual accounting, particularly in fast-moving environments like ecommerce or subscription billing.
  
  
• Untracked costs: Things like merchant fees, shipping, or revenue-sharing arrangements often slip through the cracks—leading to skewed financials.

One of the most common issues I see? Companies focusing heavily on cash flow without tracking how delayed payments or payment terms distort true profitability.

“From what I see, most D2C companies are 80% of the way to true accrual-based accounting—but it’s the final 20% that often holds the key to accuracy. Overlooking that last stretch can quietly create significant financial blind spots.”–Andrew Gunter, CMA

<< Connect with Andrew on LinkedIn for more advice >>

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The Case for Modernizing Accruals

Accrual accounting needs to evolve alongside your business. What worked for a small team with low transaction volume doesn’t scale to multi-channel, multi-system operations.

Here’s what modern accrual accounting looks like:

1. Activity-Driven Recognition

Revenue should be recognized when the liability is satisfied—not just when an invoice is paid. Similarly, expenses like fees or COGS should reflect the true timing of cost incurrence.

2. Standardized Processes

Internal controls around revenue and expense recognition across the organization reduce the risk of misstatements and prepares you for cleaner audits.

3. System Integration

The more you can connect operational data—like order systems, payment processors, or fulfillment platforms—to your accounting workflow, the more you can automate your accrual process.

4. Audit-Ready Documentation

Accrual entries need to be supportable, traceable, and consistent. This isn’t just for compliance—it’s to build trust in the numbers.

“Accrual accounting may seem more complex at the surface, but it’s vitally important to gauge the scalable health of your organization.”–Andrew Gunter, CMA

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From Reactive to Proactive with Blue Onion

Modernizing your accrual accounting process isn't just about automation—it's about accuracy, clarity, and the ability to focus on strategic insight rather than number wrangling. Whether you're using in-house tools, building custom solutions, or exploring platforms like Blue Onion that can help streamline your workflow, the goal is the same: get closer to the truth of your business’s performance.

If you’re still relying on spreadsheets and end-of-month guesswork, now’s the time to rethink how you’re handling accruals. The future of accounting isn’t just faster—it’s smarter.

Ready to future-proof your financial reporting? Let Blue Onion do the heavy lifting—so you can get back to strategic accounting.

>> Request a demo of the Blue Onion Subledger <<