In my post last week about ICountants versus Accountants, I talked about the critical role that accountants play in conforming to accounting and reporting standards. These standards are critical to the functioning of our economy—they ensure that readers can understand and trust the information in the financials.
Beyond statutory reporting, financial accounting is still the best way to understand historical financial flows and profitability. Accounting is set up to track cash and it does a great job at it. The problem is that a lot of the value creation in today’s world is hiding in cash items that serve a different purpose today.
In traditional accounting, human capital is an expense. The money you spend to build connections with your partners and clients is an expense. The money you spend to develop data or processes is an expense. The money you spend on research and innovation is an expense. The money you spend to create a productive, trusting culture that attracts employees and customers and partners to your company is an expense. In the tangible industrial era, these items really were current-year expenses. But today, there’s something more going on.
Today, these “intangible” expenses are investments in the future of your company with value lasting well beyond the current year. Competencies and knowledge and connections. There are many good reasons why accounting has to expense the money you spend to build this intangible capital infrastructure. And I don’t advocate changing accounting (at least not yet). But I do advocate thinking differently—and more strategically. That’s where ICountants come in.
ICountants help you see the lasting infrastructure you build with all the money that gets expensed in traditional accounting. Rather than talking to you about last year’s cash, ICountants talk to you about your value creation capability for tomorrow. That’s a lot more strategic and much more proactive if you want to generate cash in the coming months and years.
ICountants and ICounting help you build records of your intangible capital infrastructure. Having good information and measures of the people, knowledge, connections and innovation capacity you rely on will help you think more strategically about the future. We offer our introductory tools in an open source form (please help yourself!). And we train and are building a global network of ICountants who can help you on the journey.
If you are serious about growth and innovation for tomorrow, you’ll want to get started with ICounting today.