AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
Cash accounting records income when money is received and expenses when they are paid; accrual accounting records income when it is earned and expenses when they are incurred, whether or not cash has moved. Many very small businesses track cash day to day, but a Nigerian company's annual tax return rests on financial statements, and PwC's tax summary notes these are prepared under IFRS, which uses accruals.
The difference in one example
Example only. A printing business in Kano does ₦3,000,000 of work in March and invoices for all of it. Customers pay ₦1,800,000 in March and the remaining ₦1,200,000 in April. Its paper and ink for March jobs cost ₦1,600,000: it pays ₦1,200,000 in March and the last ₦400,000 in April. No new work is done in April.
| Cash basis | Accrual basis | |
|---|---|---|
| March income | ₦1,800,000 | ₦3,000,000 |
| March costs | ₦1,200,000 | ₦1,600,000 |
| March profit | ₦600,000 | ₦1,400,000 |
| April income | ₦1,200,000 | ₦0 |
| April costs | ₦400,000 | ₦0 |
| April profit | ₦800,000 | ₦0 |
| Two-month total | ₦1,400,000 | ₦1,400,000 |
Over the two months the totals agree. Month by month they tell different stories. Cash accounting says April was the better month, though no work was done. Accrual accounting says March earned everything, which is true, but does not show that ₦1,200,000 was still owed at the end of March. That is why accrual accounts come with a balance sheet listing money owed both ways.
Cash accounting: strengths and limits
- Simple: your bank statement and cash book are most of the record.
- Shows what you can spend: profit is roughly what has come in, less what has gone out.
- Misleading with credit: if you sell on credit or buy on supplier terms, profit swings with payment timing.
- Hides obligations: a supplier bill not yet paid does not appear, so you may think you are better off than you are.
Accrual accounting: strengths and limits
- Matches income with the costs of earning it, so you can see which months and products are profitable.
- Shows what is owed to you and by you, through receivables and payables.
- Expected by lenders and investors, and needed for a proper balance sheet.
- More work: you must record invoices raised and bills received, not just payments, and count stock.
What Nigerian tax rules expect
This section is information, not tax advice. Three points from sources checked in October 2026:
- Every company files. Section 11 of the Nigeria Tax Administration Act 2025 requires every company to file a self-assessment return at least once a year, whether or not it is liable to tax. A small company may submit a statement of accounts attested by the taxpayer instead of audited financial statements.
- Records must support the tax figure. Section 31 of the same Act requires books or records with enough information on all relevant transactions to determine tax liability, in English, for at least six years after the year of assessment.
- Financial statements follow IFRS. PwC's Nigeria tax summary (reviewed 29 May 2026) says annual filings include audited financial statements prepared under IFRS. IFRS financial statements are prepared on the accrual basis. The IFRS Foundation also publishes a simplified IFRS for SMEs standard, updated in February 2025 with the new edition effective for periods from 1 January 2027.
In practice, a company's year-end accounts and tax computation are built on accruals, even if the owner manages day to day by watching cash. Sole traders and partnerships file personal returns under different rules; ask a tax adviser how your accounts should be prepared.
Moving from cash to accrual
Most businesses start on cash and switch as they grow. The move is less work than it sounds if you do it at the start of a financial year.
- List every unpaid customer invoice on the first day of the year; that is your opening receivables.
- List every unpaid supplier bill; that is your opening payables.
- Count and value your stock at cost.
- From then on, record each invoice when you raise it and each bill when you receive it, and record payments against them.
- At month end, review anything earned or used but not yet invoiced, such as electricity consumed or work finished, and record it.
Your bank reconciliation does not change: cash is still cash. What changes is that your profit figure now includes what you are owed and what you owe. If you use software, it does most of this automatically once invoices and bills are entered. For the day-to-day routine, see a simple bookkeeping system.
Which should you use?
| Your business | Practical approach |
|---|---|
| Cash-only stall, no credit, no staff | Cash records daily; an accountant converts to accruals at year end if needed |
| Shop with supplier credit and some customer credit | Accrual books, or cash books plus a monthly list of debtors, creditors and stock |
| Registered company selling to businesses | Accrual accounting throughout |
| Any business seeking a loan or investor | Accrual accounts with a balance sheet |
Whatever you choose, keep a cash flow forecast alongside. Accrual profit tells you whether the business works; cash tells you whether it survives the next few weeks.
Where Pryme fits
Pryme's invoicing records invoices when raised and payments when received, which is the raw material for accrual books. The Finance agent can prepare a monthly list of unpaid invoices for you to review.
Questions people ask
What is the difference between cash and accrual accounting?
Cash accounting records transactions when money moves. Accrual accounting records income when earned and expenses when incurred, even if payment comes later.
Can a small business in Nigeria use cash accounting?
Many small businesses keep cash records day to day. Companies must still file an annual return supported by financial statements, which under IFRS are accrual-based. A small company may file attested accounts instead of audited ones.
Which is better for tax in Nigeria, cash or accrual?
Company accounts are generally prepared on an accrual basis under IFRS. Ask a tax adviser how your particular business should report.
Does accrual accounting mean I pay tax on money I have not received?
Income you have earned but not yet collected is counted as income in accrual accounts. If a debt becomes uncollectable, there are rules on writing it off; take advice.
Sources
- Nigeria Tax Administration Act 2025 (gazette copy), sections 11, 22 and 31 · accessed Oct 2026
- Nigeria: corporate tax administration (PwC Worldwide Tax Summaries, reviewed 29 May 2026) · accessed Oct 2026
- IFRS for SMEs Accounting Standard (IFRS Foundation) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.