Switching to accrual: When should production expenses be recorded?

[Callum20]

I need to learn accrual so I can switch to an LLC soon or at least be prepared for it but the whole thing is very confusing to me.

I have a small wholesale clothing design and manufacturing business and a standard order will look something like this:

• January: Customer places order, I pay the factory upfront straight away.
• March: Products are shipped and delivered to the customer, I pay shipping fees and import VAT
• April: Customer is invoiced and pays 30 days after delivery

At what point should all the expenses and customer payments count on the books?

I saw someone explain accrual accounting as this, someone paints your house and you won't be invoiced until next month but they've done it so you know that expense is coming so you can make an accrual for it this month that will trigger next month.

That makes sense so I can understand it but I don't know if in my case everything should count on the month the order is placed (but I won't accurately know the delivery date or shipping fees at that point), or the month the goods are delivered to the customer, or the month I am paid for the goods.

Sorry if this is a stupid question, I was getting comfortable with cash basis and now I need to change so the learning curve daunts me and I don't want to get it wrong.

 

[Scalloway]

All expenses should be recorded as they are made. If you pay for goods ahead of them being made your payment goes to Payments in Advance which is a Balance Sheet account. You do a Journal Entry to move it to purchases when the goods are available.
Invoices for expenses are entered in the Creditors Ledger in the Balance Sheet and posted to the relevant expense account when you receive the invoice. The payment will be set against the invoice when it is paid.
Similarly you will raise an invoice for a sale it will go to the Debtors Ledger in the Balance Sheet and posted to Sales. The invoice will be cancelled out when the customer pays.
A computerised accounting system will do most of the work for you.