Difference between ISO calendar and non-ISO
ISO or not ISO ? That's the question.
Too often, the monthly reporting pace aims accountants to compute taxes. It is far from being business managers oriented to drive performances!
The Gregorian calendar is the most widely used civil calendar in the world. A year starts on January 1st and ends on December 31st.
👉 Such a calendar allows you to operate a quick comparison between months; however, those have different lengths.
Let's picture this: you are in early May. It is time to compare March sales with sales from the previous month. February. Don't you see the bias here?
You are comparing sales for a 31-days month to the sales of a month counting fewer days. It is like comparing the 9.69s Usain Bolt ran the 100m with the 6.34s Christian Coleman took to run the indoor 60m! 🤯
Ok, you got it. You should compare the same-length months together. Here is the twist: without paying attention to the composition of a month, you might be fooled as well.
Imagine driving the same model from your preferred car manufacturers. Alternatively, you will be driving the production model and a prepared version with a supercharged engine.
The same happens for months. But we rarely pay attention to it.
When you analyze the sales performances of August in comparison to the production of July, you might just conclude that July was better (or August more miserable). This conclusion would be correct accounting-wise while being completely wrong on the operational side. Two days of sales more can make the difference, even each day in August was better than July.
Here comes the ISO calendar to alleviate those two biases.
An ISO week-numbering year (also called ISO year informally) has 52 or 53 full weeks. That is 364 or 371 days instead of the usual 365 or 366 days. The extra week is sometimes referred to as a leap week.
In ISO Year,
- the whole year is divided into four periods.
- Each period groups 13 weeks.
- And each week counts seven days.
- Weeks start with Monday.
👉 Such a division of time allows you to compare periods having the same number of days. You always -and only- looking at the 100m or the 60m race.
👉 Such a division of time allows you to compare periods having the same days' composition. You always drive the same car.
This view can become a headache in the business as it decorrelates accounting and reporting. There are slight differences between both systems.
- 🚒 Weeks are across months, and even across years.
- 🕵️ Weeks and Quarters become the main unit of time, instead of months.
Anyway, it's just a matter of discipline, and habit. And, at the end of the day, is accounting a proper tool to run your operations?
So keep an eye on the period you're looking at!