In Microsoft Dynamics 365 Business Central (Financial), how do I… Understand Accounting Periods and Fiscal Years

This article is part of the In Microsoft Dynamics 365 Business Central (Financial), how do I… series and of the wider In Microsoft Dynamics 365 Business Central, how do I… series which I am posting as I familiarise myself with Microsoft Dynamics 365 Business Central.

Business Central is a very flexible system, and allows you to create fiscal years and the accounting periods to meet your business requirements.

Whether your financial year starts on 1^st January, the first Monday of April, or any other date in the year, Business Central allows you to define the fiscal year. You can also choose how long the year is (usually 365 day, but in case a year needs to be longer or shorter, Business Central support this) and you can also specify how long the periods are.

For the majority of the clients I have worked with, their accounting periods are a calendar month in length, but a significant minority have configured periods using a 5-4-4 grouping of weeks, which splits the year into four quarters of 13 weeks. Both of these are possible to configure, although a calendar month is easier and quicker to configure.

As well as being used to control posting in Business Central, accounting periods can also be used as an option in reporting.

As an aside, from a technical point of view, Business Central does not require accounting periods to be used; they are only necessary if you need to close the income statement or run data compression tasks. I don’t know a single client using Business Central who does not require accounting periods, and I’m not sure what the use case for this is.

Over the next few articles in this series, I will step through creating fiscal calendars, closing periods and years.