Temp hours worked but not yet invoiced
How an agency accrues income for temp hours worked before month end but invoiced after it, undoes the accrual, and checks it against timesheets.
By Achekam · · 4 min read · For Recruitment businesses in South Africa, Nigeria, Kenya
Months rarely end on a Friday. When the last day of the month falls on a Wednesday, your temps have worked three days that belong to this month, and the weekly invoice that covers them will not go out until next week. If the books close without dealing with those days, this month's income is understated and next month's overstated, even though nothing went wrong in the business.
For a small desk the distortion is minor. For an agency with hundreds of temps billing every week, it can swing a month's result enough to mislead the directors, the bank or the person deciding bonuses. The fix is an ordinary accrual journal, and Achekam's month-end controls make sure it is in place before the month is locked.
Wages already posted, income not yet invoiced
The two sides of a temp week do not always reach the books at the same moment.
The cost side is fast. When a pay run is approved, Achekam posts it to your own ledger as a wages journal, including the amounts owed to the tax authority and statutory funds. If your temps are paid weekly in arrears, a week that straddles the month end may already be in the wages, or the following run may cover it.
The income side is slower. The weekly invoice for the same hours is issued after the timesheet is signed, which may be in the next month.
The mismatch shows up in your management accounts, which present an income statement for the period beside the period before, added up from your own journals. A month whose wages include days that its revenue does not will show a margin that looks worse than the work really earned.
An accrual journal for the unbilled hours
The answer is to recognise the income in the month the work was done. AccountingTools explains this in its article on the accruals concept: revenue and expenses belong to the period in which they are earned or incurred, with accrued revenue recorded at period end and reversed afterwards.
In Achekam, a business can post manual journals. An unbalanced journal is refused, and so is one dated in a closed month. The accounts you need can be added to your chart, so ask your accountant to set up an asset account such as "Accrued temp income" if you do not already have one.
The month-end journal, dated the last day of the month:
| Account | Debit | Credit |
|---|---|---|
| Accrued temp income (asset) | The unbilled value of the hours | |
| Your income account for temp hours | The same amount |
Value the hours at the client's charge rate, before VAT. VAT belongs on the invoice when it is issued, not on the accrual.
If the same days have not yet reached payroll either, ask your accountant whether to accrue the wages too, with a similar journal to an accrued wages liability. Accruing both sides keeps the month's margin honest; accruing only the income flatters it.
Undoing it when the invoice goes out
Next month the weekly invoice is issued and posts its full amount to revenue, including the days you already accrued. Without an adjustment, those days count twice.
So the accrual must be taken out in the new month. Post an equal and opposite journal dated the first day of the new month: debit revenue, credit the accrued income account. Achekam corrects a posted journal only by a reversal, and that rule is a useful discipline here as well: every accrual has a matching journal that undoes it, and nobody edits figures after the event.
Check the accrued income account at the end of the following month. If the invoices went out, it should be back to nothing, apart from the new month's accrual.
Closing the month only after the accrual
Months in Achekam can be soft-closed, hard-closed and locked. A closed month refuses postings from every source, and reopening a hard close needs a second approver. Before closing, the screen checks the ledger balances and that no posting suggestions, unposted bills or unmatched bank lines are waiting.
That checklist does not know about your unbilled hours. Add the accrual to your own month-end routine, in this order:
- Collect the signed timesheets for days up to month end that are not yet invoiced.
- Value them and post the accrual journal, dated in the month.
- Post the matching journal dated in the new month.
- Soft-close the month and review the management accounts.
- Hard-close once your accountant is satisfied.
If you hard-close first and remember the accrual later, the journal will be refused, and reopening needs a second person. Better to build the step in before the close.
Checking the accrual against signed timesheets
An accrual is an estimate, so tie it to evidence:
- Only signed hours. Accrue hours the client has signed off. Hours still in dispute stay out until they are agreed.
- The right rate. Use the charge rate on the client's terms for that week, including any overtime premium the client pays.
- Keep the working. A short schedule per client, listing the temps, the days, the hours and the rate, filed with the journal.
- Compare next month. When the actual invoices go out, compare them with what you accrued. Large differences mean the estimate method needs work.
The weekly invoices that settle each accrual are covered in invoicing clients weekly for temp hours, and how the corrected monthly figures feed into margin analysis is in reading your temp margin from the ledger.
At the next month end, before anyone presses close, ask the temp desk for the list of signed but uninvoiced hours, and post the accrual first.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
