Topic: General Posts

Subject: 13 Periods
Karl Migliaro
Member: 2014
Posts:3
Submitted on 02-16-15 9:28 am
Message:
I just joined a professional services company that runs the financials on 13 periods in the year that do not end on December 31. They run on four week periods that close every fourth week on a Friday. Can anyone with experience tell me what to look out for when working with this scheme? What are the benefits of running the books this way?
 
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Replies
John Veloski
Member: 2014
Posts: 12

Subject: Re:13 Periods

Submitted on 02-16-15 11:25 am.
Message:
Hi Karl,

It's actually pretty simple. A lot of companies, primarily retail, do this so that they can compare one 4-week period to another. A bit of apples-to-apples. For instance, if you're Macy's, you can't get a true comparison by matching January with February (31 days to 28 days). Think of how many line items are going to be slightly off.

The things you do need to be aware of are items like rent, depreciation, amortization of revenue, health and business insurances, etc. Basically everything that's based on a month. So you have to take the annual amount and divide it by 13 (52 weeks/4) to get the amount to recognize for each reporting period.

As I said, it's fairly simple, just a pain in the butt.
 
Karl Migliaro
Member: 2014
Posts: 3

Subject: Re:13 Periods

Submitted on 02-16-15 1:59 pm.
Message:
Thanks, John. I will follow up on those items like depreciation, rent, and revenue to ensure they are being tracked properly.
 
Scott Ackerman
Member: 2014
Posts: 1

Subject: Re:13 Periods

Submitted on 02-16-15 3:10 pm.
Message:
Hello, this is based on my experience working for a company with 13 periods. I don't find 13 periods value added. You are still going to have differences in the number of selling days per month. For example, with public holidays. So you aren't going to get a real month to month comparison anyway. Furthermore, every 5 years or so you will need a "leap week" (since 28*7=364) and have to add a 5th week to the 13th period in order to stay aligned to the calendar year. Lastly, it it an inefficient use of time and resources. Management has to discuss results 13 times instead of 12. Finance/accounting have to report results 13 times instead of 12.
 
Karl Migliaro
Member: 2014
Posts: 3

Subject: Re:13 Periods

Submitted on 02-16-15 4:32 pm.
Message:
Thanks, Scott. I agree. The only one benefit to 13 periods I can think of is that the company can bill 13 times a year instead of 12. But the argument is moot if 13 periods is what the leadership has decided on. The president is adamant about not straying from 13 periods.
 
Carla Phillips
Member: 2002
Posts: 6

Subject: Re:13 Periods

Submitted on 03-07-15 12:19 pm.
Message:
I haven't ever used this system but it is common in publishing and some media/broadcasting companies with publishing roots (e.g., Fox Broadcasting, Gannett, etc.). I suppose where significant revenues and/or expenses are specifically measured in weeks, it could be helpful but it would seem like there are so many expenses that would be measured in monthly terms, there would be a lot of exceptions leading to accruals. But to re-state prior periods for comparison purposes would be an even bigger chore. You might consider contacting folks in your industry and other industries that responders have identified and get their feedback.
 
Sharon Zhao
Member: 2015
Posts: 4

Subject: Re:13 Periods

Submitted on 03-16-15 1:50 am.
Message:
Using 13 periods for a fiscal year with every 4 weeks as a fiscal month might relates to how the company operations. The logic is similar to why many consumer product companies use 4/4/5 or 4/5/4 calendar. In this case, I would recommend to review how customers are billed/invoiced, and how service hours are booked, which could be the key factors the company chooses to use 13 periods. This shall provide some insights.

For 13 periods in a fiscal year, and 4 weeks in each fiscal period, there are 52 weeks in any fiscal year; and each period has 4 weeks, this makes a consistence trend if all are stable. Compare to using calendar periods, which business days can be different with 20, 21 or 22 days, the monthly numbers fluctuate.

 
Paul Malen
Member: 2006
Posts: 16

Subject: Re:13 Periods

Submitted on 03-25-15 6:13 pm.
Message:
I worked in retail grocery for 5 years and we did the 13 periods. One important item for us was getting special bank statements cuts that reflected the month end periods. Helps out with auditing when the bank statements match the period ends.
 
Joan Del Tin
Member: 2015
Posts: 1

Subject: Re:13 Periods

Submitted on 03-27-15 11:27 am.
Message:
Because there are 52 weeks in the year, it works out to exactly 13 four week periods. This eliminates any issues with comparing Feb. having only 28 days to March which has 31 days. The thirteen periods should still complete a one-year cycle. As far as ending on December31st, many companies do not use December 31st as their year end.
 
Paul Williams
Member: 2011
Posts: 2

Subject: Re:13 Periods

Submitted on 04-07-15 2:23 pm.
Message:
I lived with this for 18 months, and in my opinion there is no benefit at all, in fact the opposite. Every accrual at every month-end is different, and the accounting team is always doing monthly closes. Same for the FP&A team who have extra work doing 3 year plans.

it's origin in this case was its roots in manufacturing, where most workers were weekly paid, and production and payroll costs were in synchronisation.

Of you must follwo it, beware of the limited number of periods allowed in the accounting system, many only have 13 so you cannot use period 13 for year-end entries.
 
Bria Espino
Member: 2015
Posts: 1

Subject: Re:13 Periods

Submitted on 04-09-15 7:41 pm.
Message:
I worked in retail and we used the 13 period calendar for years.

I agree with many others that there really was no benefit to the business. We finally were able to change to a 12-month calendar year and things were much smoother and actually the comparatives got better.

 
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