13 Accounting Periods vs. Monthly Accounting
Macro Management Services uses 13 four-week periods to divide up a calendar year for accounting purposes. Occasionally, a client or prospective client asks why.
Consider the pattern of activity in a restaurant: generally, the weekends are the busiest sales days … and inventory is usually lowest on Sunday night (Monday morning). Inventory is counted weekly, typically on Mondays, and payroll often occurs bi-weekly.
In a 13-period system, each period is exactly four weeks long, except in random years when the last period of the year will have 5 weeks.* In a 13-period year, holidays fall into the same week of the same period every year. With a monthly accounting system, your period can end any day of the week, and holidays can fall into different weeks in the same month of different years.
What does this mean for you?
- Better comparability for your numbers – every P&L will reflect the sales and expenses of four Mondays, four Tuesdays, four Wednesdays, etc.
- Trend spotting – since every period has the same number of weekdays and weekends, you can compare apples to apples from year to year.
- Easier inventory – the four-week cycle eliminates the problem of having a month end on a Thursday, Friday or Saturday and having to take inventory after a busy night when stock may be at its highest.
- Even pay cycles – eliminate the problem of having 3 pay periods in a month when your pay period is bi-weekly! Every P&L will reflect 28 days of actual sales and 28 days of actual payroll. Payroll is easier to account for and will be more accurately reflected in your financial statement.
If you have questions about 13-period accounting, call us, (210) 226-1047.
* The most recent years to have a 5-week period were 2006 and 2017. The next one will occur in 2023.