Should we switch to a 13 period accounting cycle?
A 13 period accounting cycle has several advantages over a monthly accounting cycle. The two biggest advantages are eliminating month end labor accrual to straighten out your P&L, and recordkeeping.
With a 13 period year, holidays fall into the same week of the same period every year. Your weekly sales data can be accurately compared to each other from different years, making it much easier to spot trends and make comparisons that give you a true history. 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. You can also be hit with overtime labor from a prior period right at the beginning of a new one with a monthly accounting system, putting you “behind” budget from the get go. With a 13-period system, every period ends on a Sunday and starts on a Monday, so there is no mistated labor numbers, and no need to accrue labor to a different period.
With a 13 period accounting cycle, it’s also easy to syncronize inventory periods, especially if you take inventory weekly which I strongly suggest.
Another big advantage is the ability to compare one period to the next to spot trends. With a 13-period system, every period has the exact number of days and weekends. You can then compare apples to apples when you are comparing 2nd period numbers to 3rd period numbers, instead of comparing a 28 day month to a 31 day month.
Some of the advantages are more difficult to describe, as you will only see them after you switch. Once you do, the whole “accounting cycle” thing makes a lot more sense.
Posted on February 23, 2008, in Questions and tagged accounting cycle, more free time, more profit, profit and loss, restaurant consultant, restaurant consulting, work less. Bookmark the permalink. 1 Comment.