20th century management lays an account structure over the business
20th century management follows generally-accepted accounting principles and lays an accounting structure over the business to account for a portion of business finances in actual and accrued income, expenditures, known assets, and liabilities. This may be supplemented by some statistical record keeping. Cost accounting may record some known costs against a final product, or contrived entities like activities or centers. Capital is not recorded by the solutions utilized by the business and much high-worth capital is not recorded at all, or is labeled as “intangible assets”. Economic output results that produce value and income are not accounted for as a set. Some results such as product produced, sales order booked, and revenue received may be recorded as a separate account entity. The costs and actual expenditures incurred when capital is utilized or consumed to produce an output result cannot be recorded. Non-financial data in the quantity and effectiveness of capital utilized to produce a volume and quality of results cannot be recorded. In most enterprises, facility records produced beyond accounting records in documentation, correspondence, agreements, etc related to business transactions are not managed as capital and many important records on the business are not kept.
Accounting today follows generally accepted accounting principles rather than recording the actual business
20th century accounting is driven by adherence to principles rather than completely and accurately recording all actual business transactions involving capital developed and utilized, all economic output results produced by the business, and all results entering and leaving the business. A chart of accounts is produced by accountants and laid over the business to provide the accounts that can be debited and credited. The accounting general ledger system and other financial system information is only as good as the chart of accounts that dictates and limits what can be recorded. These accounts only incidentally record pieces of the business and are maintained separate from actual changes to the business. The chart of accounts is by definition incomplete and inaccurate compared to the information that should be recorded and the records that should be maintained on the actual business.
There is a growing need to manage all financial and non-financial information related to the business
For some time, there has been a need for professional records management to manage both the financial and non-financial facility records capital of the enterprise. The explosion in information technology and Internet utilization has magnified the problem. This has provided the opportunity for the accounting profession to expand their outlook to professional records management. Now, many enterprises are setting up separate records management functions and information systems as additional structures laid over the business to meet the growing need. However, more structures and IT overheads just compounds the problem.
What is needed is professional facility records management to manage all financial and non-financial records for all capital invested in the business, all utilization of capital in the business, all output results produced by the business, all business media related to business transactions, all enterprises interacting with the business, and all historic and future time periods used for business planning and control.
Result-performance Management provides the solution by organizing facility records as managed facility capital
Result-performance Management (R-pM) is the solution to organize facility records as part of the business and provide professional 21st century records management. R-pM organizes the business of the 21st century enterprise through the only three components directly involved:
- Results: Economic outputs of value that are to be produced by business performance
- Capital: Investments in performance solutions of worth available to produce specific results
- Performance: Utilization of a solution to incur costs and provide effectiveness to produce value and quality in a specific result
The business organization can be viewed as a structure of results produced, capital available in the business as performance solutions to produce the results, and the deployment and utilization of each performance solution to produce each result. The business structure is defined for the current business and a strategic business structure is defined to plan the strategic business and strategic value creation. Result goals and performance expectations are set to include the financial and statistical budget and management plans to connect the current business to the strategic business.
20th century accounting does not account for results as a set of business outputs, capital as a set of business investments, and performance to incur business costs and create business value. In order to record and account for the business tangible and intangible asset investments in the business must be accurately recorded as specific performance solutions of a specific worth, all outputs from any economic activity conducted by the business must be identified and accurately recorded as a result of a specific value within the value of customer revenues received, and the utilization of each performance solution utilized to produce each result must be recorded to know the costs of performance against the result, the total performance costs to produce the result, and the value-added to the result that goes to business profits.
R-pM uses modern information technology to automate professional business record-keeping
R-pM uses modern information technology to automate business records and to generate performance transactions automatically each time a result is produced. Any part of the business can be structured for the results to be produced, the capital available, and the performance solutions utilized to produce a result. The business structure can be set up in a modern general ledger system and structures laid over the business can be eliminated. The current and strategic business structures are used for all organization, planning, direction, control, reporting, and governance.
Learn more about R-pM to understand the benefits of professional records management
This article is the introduction to “Move Beyond 20th Century Accounting Principles to Accurate 21st Century Records Management” at result-performance-management.com. Use R-pM to organize your actual business for significant competitive advantages not possible in today’s enterprise. Join the R-pm Community for details and downloads on how to use R-pM to organize, manage, record, and govern your business. Download the R-pM Tookit for documentation and procedures on the use of R-pM and conventions and standards for 21st Century Management.
