Using the cash method of accounting, record income and expenditures according to actual cash flow. For example, if you bill a customer in May but don't receive payment until July, you don't record it as income until July. Likewise, you don't record an expenditure until the money actually leaves your hand or your bank account.
Difference Between Cash & Accrual Accounting Method Small business owners are often confused about the difference between cash and accrual basis accounting. This might sound like something that an accountant should show but this information is useful for business owner as well.