How to run month-end accruals with an AI agent

Accruals record costs you have incurred but not yet been invoiced for. The agent finds candidates from receipted orders, recurring costs, contracts and payroll, estimates each with its basis, checks nothing is already invoiced and parks the journal with an automatic reversal. Budget holders confirm the estimates that need knowledge of the work, and the accountant approves the journal.

What are month-end accruals, and who owns them?

If a consultant worked for you in March but invoices in April, the cost belongs in March. An accrual puts it there, and reverses in April when the invoice arrives. Common accruals include goods received not invoiced, utilities, professional fees, rent and service charges billed in arrears, temporary staff, bonuses and holiday pay.

The accountant responsible for accruals, often in the general ledger or AP team, owns the process. Budget holders know what work was done and should confirm estimates. The financial controller sets the policy, including a threshold below which accruals are not booked. Accruals are a key task in the month-end close, and one where judgement and data meet. The bounds for finance agents doing this work are in AI agents for finance.

What are the steps, and at what depth?

1. Agent, depth 1: finds receipted, uninvoiced orders. Goods or services received against purchase orders with no matching invoice by period end.
2. Agent, depth 1: finds recurring costs. Costs billed regularly by the same supplier, such as utilities or managed services, with no invoice for the period yet.
3. Agent, depth 1: reads contracts and schedules. Fixed fees, rent, service charges and retainers due for the period.
4. Agent, depth 1: checks the inbox and the payables ledger. Invoices already received or posted for the period are excluded, so nothing is accrued twice.
5. Agent, depth 2: estimates each accrual. Order value for receipted goods, contract amount for fixed fees, an average or latest bill for recurring costs, each with the basis stated.
6. Agent, depth 2 or 3: asks budget holders. For estimates that need knowledge, such as consultancy days worked or project milestones reached, a specific question with the agent's estimate. Standard requests can be sent at depth 3 once certified.
7. Person, budget holder: confirms or corrects.
8. Agent, depth 2: parks the journal. With an automatic reversal on the first day of the next period and the workpaper attached.
9. Person, accountant: approves and posts.

What stays with a person, and what evidence does each control leave?

Two decisions stay with people: estimates that depend on knowledge of the work, which the budget holder confirms, and the journal, which the accountant approves. Bonus and other judgemental accruals, such as provisions for disputes, stay entirely with the controller; the agent can gather data but does not estimate them.

Basis on every line. Evidence: the workpaper line showing source and calculation. An accruals workpaper template gives a layout.

Duplicate check against invoices. Evidence: the invoice search result for each accrual.

Budget holder confirmation. Evidence: the confirmation or correction with identity.

Automatic reversal. Evidence: the reversal date on the journal.

Prior accrual follow-up. Each previous accrual is compared with the invoice that replaced it. Evidence: an accrual-to-invoice comparison.

What does an accrual look like?

Take an illustrative firm with a consultancy engaged at 1,200 a day. By month end no invoice has arrived. The agent finds the statement of work, sees no timesheet data, and asks the budget holder: "How many days did the consultants work this month? Last month was 15." The budget holder replies 18. The agent accrues 21,600 with the basis "18 days at 1,200, confirmed by budget holder", parks the journal with a reversal on day one, and next month compares the accrual with the invoice when it arrives.

Where does it usually go wrong?

Double counting. An invoice arrives and is posted on the last day, and the accrual is also booked. The duplicate check must run against both inbox and ledger, as late as possible.

Missing reversals. An accrual without automatic reversal sits for months. Require a reversal date on every accrual journal.

Stale accruals. Goods receipted months ago with no invoice are accrued every month. Some will never be invoiced; some were receipted in error. The agent should list accruals older than a set age for the accountant to clear.

Estimates never tested. Accruals that are always too high or too low distort every month. The accrual-to-invoice comparison shows bias by supplier and budget holder.

Receipts booked to trigger accruals. Goods receipts entered without delivery, to use up budget before period end, turn into accruals for costs not yet incurred. The agent should flag receipts entered in the last days of the period for large values and ask the receiving function to confirm.

Accruals that should be provisions. A possible legal claim is not an accrual. The agent should not create accruals without an incurred cost.

What should you measure?

• Accrual-to-invoice differences, by supplier and budget holder.
• Duplicates caught before posting.
• Accruals older than the age limit.
• Budget holder responses before the deadline.
• Close day by which accruals are posted.