Periodization

Periodization in accounting ensures that revenues and expenses are recorded in the period to which they actually relate, regardless of when payment takes place. This provides a more accurate picture of the company's financial situation, with the right effect on liquidity and balance sheet.

Example: If a company pays for a year's insurance in January, the expense is spread over 12 months instead of being booked as a large one-time expense in January. Payment is typically made in a lump sum, often at the beginning of the year.

In budget123, you will find Periodization in the menu on the left under Modules. You can also create periodizations directly from an account by clicking on the operating account name.

The following information is required to create a periodization:

• Name: Identifies the effect of the periodization on operations, liquidity, and balance sheet. For example, 'Rent'
• Amount per month: The monthly revenue/expense. For example, 15 thousand DKK if the quarterly rent is 45 thousand DKK.
• Credit period: The period between invoice date and payment date. For example, 30 days.
• Invoice date: Month and year of the invoice/bill date. This is relevant for VAT accounting. For example, February 2025.
• Operating account: The account to which the periodized revenue/expense belongs. For example, "Rent incl. VAT".
• Balance sheet account: The balance sheet account where the amount is "parked" until it is activated. For example, "Prepaid items".
• Dimension value: If the periodization is to be linked to dimensions. For example, Department "Copenhagen" and Business Area "Plumbing".
• Start date: Month and year of the periodization period's start. For example, January 2025.
• Number of months: The duration of the periodization in months. For example, 3 months for quarterly rent.
• Repetitions: Number of times the periodization should be repeated. For example, a quarterly rent is often repeated 4 times.
• Repeat provisionally: Check this box if the periodization should be repeated for the entire duration of the model.

In the overview of periodizations, each individual one can be edited or activated/deactivated. You choose which accounts to use for the periodization, but it is recommended to use the same accounts as in the bookkeeping.

Limitations

If an operating account is used for Value Adjustments (see Global Settings > Account Plan > Liquidity Property), a periodization cannot be created on the account. Bank accounts (Global Settings > System Accounts) cannot be selected as a balance sheet account for a periodization either.

Models

When you create new models with the "Copy setup from..." function, your periodizations will generally also be copied to the new model. If this is not desired, simply deselect Periodizations in the box below. The start and invoice date of the periodization do not change when copying.