Some companies may do work for clients that can extend over a number of months.  A manufacturing firm may produce custom parts for customers that have numerous steps involved and take 90-120 days or more from start to finish. 

This can affect service firms too.  A design company very often could win projects from clients that can take 6 months or more to finish.  There could be a design piece as well as a production piece to the whole project.

The challenge for companies like these is to know how they are really doing month to month.

Suppose the design firm just recognizes the revenue when the project is complete.  That sounds conservative.  But does it really reflect how the business is doing?

I say not.  The company can have dramatic swings month to month, depending on what jobs finish that month.  Some months can have big profits, while other months show losses.

If I asked the owner whether he felt they lost money in the "losing" months, he would probably say no.  The people may have been just as creative and just as productive, as in the other months.

That's where percentage of completion accounting comes in.  If the sale is pretty assured based on delivery of the services according to the contract terms and things such as advance or progress payments, there could be a good case to use percentage of completion accounting.  A $1 million contract with equal work over 5 months could recognize $200k of income each month.  Rather than show no revenue and losses during the first 4 months, and then huge revenue and income in month 5, it would be spread out.

What about taxes?  If your accountant says that cash accounting is proper, there is a way to have reserve accounts set up to adjust to cash accounting.

What is good for taxes can be terrible for running your business.  You need to have a handle on how your business is doing month to month.  When things slip, you want to know it. 

With percentage of completion accounting, you can know quickly. 
With cash accounting, you will find out too late.