How is an accrual estimated when the invoice hasn't arrived?

Short answer

From the best evidence available for the period: contract or PO terms, usage or receiving records, or recent invoices from the same vendor.

An accrual records a cost incurred in the period before the bill arrives. Under accrual accounting, accrued expenses belong in the month the goods or services were received, so the amount is estimated at close and corrected when the invoice comes in.

Common estimation methods

Method	When it fits	Example
Contract or PO price	Agreed fees or unit prices, with quantity confirmed	40 consulting hours delivered at a contracted $150 per hour = $6,000
Recurring fixed amount	The same charge every month	A $4,000 monthly retainer with no invoice yet
Historical average	Variable but steady costs	Utilities averaging $2,300 over the last three months
Usage data	Usage-based pricing	A cloud usage report shows $11,800 consumed through month end
Work completed	Project or milestone work	A contractor 60% through a $25,000 phase = $15,000
Vendor confirmation	Large or unusual items	The vendor sends an estimate of unbilled work

Choosing between methods

Direct evidence beats history. A receiving record, timesheet, or usage report for the actual period is stronger support than a trailing average, which can miss a price change or an unusually heavy month. When no direct evidence exists, use the most recent comparable invoice and note why.

After the invoice arrives

The accrual is usually reversed on the first day of the next period, and the invoice is recorded as normal. Any difference between the estimate and the invoice lands in the period the invoice is booked. Small differences are expected. Large, repeated ones mean the method for that vendor needs to change.

Best practices

Record the basis: Note the method and source with each accrual, so a reviewer or auditor can recompute it.
Set a materiality threshold: Costs below it are expensed when invoiced.
Compare estimates to actuals: Review last month's accruals against the invoices that followed.

Can Ramp Stack use a different method for each vendor?

Yes. Each vendor's method is part of the setup, and the agent applies it vendor by vendor at close.

The methods are written into a skill in Stack > Knowledge > Skills, such as a three-month average for utilities or contract rate times hours for consultants. The agent also needs the inputs each method calls for. Stack reads text and tables from PDFs, including scanned timesheets through OCR, and opens usage exports and other spreadsheets in .xlsx or .csv.

The agent calculates each estimate in a workbook, one line per vendor, showing the method used and the source behind the number. An accountant reviews the estimates, edits any that look off, and signs off before the entry goes to the ledger. The skill can also include a check of last month's accruals against the invoices that followed, so a vendor whose estimates keep missing gets a new method.