- Posted by admin
- On April 21, 2014
- 0 Comments
What will they think of next? What is this talk about changing from a monthly calendar to 4-4-5 week format? What is it? Instead of the month-end being the last day of the month, each quarter has two 4 week periods & one 5 week period. Visual ERP is capable of handling this type of calendar but what’s the impact?
- Month-end close becomes more predictable as the period-end is the same day of the week. I like Fridays. You can get your reports on Friday night or Saturday morning. Sorry, guess the downside is working on Friday night or Saturday morning.
- It is even better when people are not working in the system. No new transactions means you can make comparisons of Post Manufacturing Journal reports to other reports in Visual ERP:
- Inventory Balance versus Inventory Valuation
- WIP Balance versus WIP Valuation (Eng./Mfg.)
- PO Accrual versus PO Accrual Analysis Report (Costing Tools)
- Expenses that are weekly are easier to record. For instance, there is no need to do a payroll accrual other than for a full week. (I have one client who frequently accrues the wrong number of days and has misstated financial results.) This issue goes away. Poof!! Like magic.
- Monthly expenses such as rent, utilities, and phone bills would need to be adjusted for the prepaid portion so that the expenses are based on 4 or 5 weeks. (Or you may keep them monthly and deal with the differences? It would all depend on the materiality.)
- Amortization, prepaids and accruals should be based on weekly calculations instead of monthly.
- Inventory counts can be done at the end of the week or the weekend. Thus minimizing production downtime.
- Financial Reporting and Analysis would change since the last period per quarter has 1 more week than the other two. Here’s a few ways to overcome:
- Create reports that show weekly averages for comparisons. You could do this by setting up a statistic account in Visual ERP for the # of weeks in a period. Then take the Income Statement and create a new column for average per week. Note – Global Financials has designated statistic accounts. In Visual ERP’s Standard Financials you can set up GL accounts to use for stats. I like alpha account ID’s and inform other to do not use them. Other cool statistics are: units sold, headcount and direct labour hours. But I digress.
- Make comparisons to the same period in the prior year since the number of weeks will be the same. If you are switching calendar types, the prior year comparisons won’t be “like for like”. But no worries. Update the statistic accounts as 4.42 for 31 days or 4.29 for 30 days. Then the weekly comparison will be perfect.
- The last thing to consider is the year-end. In Canada, we keep the same year-end date so the 1st and last period of the year will be off few days. In the US, the year-end can move. Every 5 years there is a 53 week year. Check with your accounting firm or government for the correct treatment in your country.
So are you going to make the switch?