How to Configure Custom Fiscal Year in Salesforce?

Some companies categorize their fiscal years, quarters, and weeks into custom fiscal periods based on their financial planning. Salesforce allows you to define these periods as per your needs by giving you the provision of a Custom Fiscal Year. 

Enabling Custom Fiscal Year in Salesforce affects your forecast, quotas, and reports. When you configure a Fiscal Year in Salesforce, all existing forecast history and records are deleted from the year’s first period onward.

Learn How to Configure Custom Fiscal Year in Salesforce

• Login to Salesforce and click on Setup 
• Type “fiscal year” in the quick find box, and click “Fiscal Year” under Company Settings
• You will land on the Fiscal Year page in Setup.

Let’s go through the example shown in the video:-

Now, this particular custom fiscal year follows the 4-4-5 templates, and we will first see what it means:-

About the 4-4-5 template

Each quarter in a financial year has three periods, two or four weeks each, and the third one of five weeks. So, if period one has 4 weeks, period two has 4 weeks, but period three has 5 weeks, then it is called a 4-4-5 template. 

If you want to reset your fiscal year structure, consider the following point:-

Instead of the 4-4-5 template, or if you want to change it to 4 or 54, or 544, you can do that or choose another template. Be wary of the fact that when you do this to an existing custom fiscal year, the forecast calculations will take place again and can take a significant amount of time.

Now, assume that the fiscal year start date is 1st Feb 2021 onwards. The fiscal year name is set up to default to the year of the ending month. In this case, it is Jan 2022. So, the naming convention is going to be FY2022. And the name of the fiscal year will be determined by the prefix ‘FY.’

“Week Start Date” is the preview’s first day of the week. According to the selected date, the fiscal year starts from Monday onwards. Under advanced customization, you can further insert or delete the length of your fiscal period. Moreover, you can also change the naming convention.

Now, let’s go through the Settings, 

Choose the “Quarter Name” scheme. So there are two values that you can select, numbered by year or the custom quartered names. Numbered by year will default to Q1, Q2, Q3, and so on. 

And if you choose to add more quarters, you can add them in addition to the default four quarters, you can do so by selecting Custom Quarter Names, and you can also define your naming convention. In the pre-filled example in the drop-down, spring, summer, fall, and winter are there. But you can customize these drop-down values as well.

You can change the fiscal year’s start date, name of the fiscal year, description, or week of the start date. Sometimes when you change the fiscal year start date, the fiscal year overlaps with the previous fiscal year or creates a gap between the two fiscal years. 

You can’t change a fiscal year’s start date or end date if that causes it to overlap with a fiscal year defined using a Gregorian year template. 

Go through the video for more detailed information on how to configure Custom Fiscal Year in Salesforce, which gives you an in-depth understanding of its Setup with examples and explanations.

Summing Up

The custom fiscal year in Salesforce allows you to accurately analyze the data over the years. It helps analyze the data related to revenue, earnings, and other expenses.

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Frequently Asked Questions (FAQs)

1. What are the benefits of using a custom fiscal year? 

Here are some of the benefits of using a custom fiscal year:

• Alignment with Business Cycle: A custom fiscal year allows you to align your financial reporting and budgeting with your company’s unique business cycle. If your company is in a seasonal business, this can be especially helpful. 
• Better Insights: Tailoring your fiscal year to match your business operations provides more accurate insights into your financial performance, making it easier to analyze trends, set goals, and make informed decisions. 
• Regulatory Compliance: In some industries or regions, regulatory or compliance requirements might necessitate a non-standard fiscal year. Using a custom fiscal year helps you stay compliant with these regulations.
• Budgeting Flexibility: A custom fiscal year lets you plan and allocate resources based on your company’s needs and timelines, enhancing budgeting accuracy and efficiency.
• International Operations: If your company operates in multiple countries with different fiscal year calendars, a custom fiscal year can help streamline financial consolidation across other regions.

2. What are the limitations of using a custom fiscal year? 

The limitations of using a custom fiscal year can be listed as follows:

• Complexity: Managing a custom fiscal year can be more complex than adhering to a standard fiscal year, requiring careful planning and adjustments to ensure accurate reporting.
• Comparison Challenges: Comparing financial data across different fiscal years, especially if they are non-standard, can be challenging and might require additional effort for normalization.
• Integration Issues: Some financial systems and software might not readily support custom fiscal years, potentially causing integration issues with other tools.
• External Stakeholders: Communicating financial data to external stakeholders, such as investors or lenders, might be more difficult when using a custom fiscal year, as it may deviate from industry norms.

3. How do I switch between a standard and a custom fiscal year? 

Switching between standard and custom fiscal years typically involves adjusting your financial reporting settings in your accounting or financial management software. This process might vary depending on the software you’re using. For particular steps, consult the product’s documentation, ask your economic team for help, or contact software support.

4. How can I troubleshoot problems with my custom fiscal year configuration?

Troubleshooting problems with custom fiscal year configuration can be sorted in the following ways:

• Data Discrepancies: If you encounter inconsistencies, ensure that all data is accurately mapped to the correct periods in your custom fiscal year settings.
• Integration Errors: If you face integration issues, double-check that your custom fiscal year settings are consistent across all integrated systems.
• Reporting Errors: If reports aren’t aligning properly, review your reporting tools’ date ranges and settings to ensure they match your custom fiscal year.

5. How do I ensure that my custom fiscal year is aligned with my company’s financial reporting requirements? 

Ensuring that the custom fiscal year is aligned with the company’s financial reporting requirements is easy with the following:

• Consult Experts: Work closely with your finance and accounting teams to understand your industry and region’s reporting requirements and regulations.
• Legal and Regulatory Compliance: Ensure your custom fiscal year adheres to legal or regulatory requirements for your business operations.
• Audit Readiness: Prepare documentation that explains the rationale behind your custom fiscal year choice, which can be helpful during audits.

6. What are the best practices for managing custom fiscal years in Salesforce?

Some of the best practices for managing custom fiscal years in Salesforce are listed below:

• Detailed Planning: Plan the transition to a custom fiscal year carefully, considering how it impacts data migration, reporting, and integration.
• Testing: Thoroughly test the custom fiscal year configuration across different scenarios to identify and address any issues before making it official.
• Communication: To facilitate a smooth transition and reduce confusion, inform all pertinent teams and stakeholders of the change.
• Training: Train your staff, especially those handling financial data and reporting, to ensure they understand the new fiscal year structure.
• Regular Review: Periodically review and assess the custom fiscal year’s effectiveness. Based on evolving business requirements and feedback, make improvements as necessary.