Manage all Facility Capital, not just Financial Capital

20^th century management concentrates on administering financial capital

20^th century management performs administration functions, rather than managing capital for utilization to produce business results. Financial capital has always been a form of facility capital that includes tangible reusable fixed and movable assets, supplies and other capital consumed, and all business records.

20^th century management historically separated financial capital from other capital, since early control methods stressed controlling money in the business. Accounting was set up to control cash and finances in income and expenditures and assets and liabilities. Financial planning and budgeting was often separated from other planning to plan cash needs by organization units.

Over the years the finance and accounting professions have developed their own practices and principles that have widened the gap between financial capital and other facility capital and other categories of capital. These practices and principles have never solved 20^th century financial management problems such as inaccurate and incomplete business records, intangible assets, unknown business costs and value, unknown capital worth, unknown investment returns, unsupported and misled corporate governance, etc.

20^th century concentration on financial capital causes many unsolvable problems

The concentration on financial capital has meant a lack of management of other capital. This causes increasing problems with capital management:

• Modern information technology makes financial capital much easier to manage and control and has eliminated any need for separation
• Non-financial capital has increased in worth and complexity and has become more important to manage
• Much important non-financial capital has been labeled as “intangible assets” and has never been recorded as business capital or financially managed
• Emphasis on financial capital prompts neglect of other facility capital
• The emphasis on financial capital separates financial planning, control, and management from overall enterprise planning, control, and management
• Facility record keeping concentrates on financial accounting according to principles and neglects actual financial and non-financial business records
• Financial management and accounting practices and principles tend to isolate financial capital from other capital and often conflict with general business management needs

Facility capital needs to be managed as a whole by professionals who have expertise in the specific type of capital.

R-pM integrates financial capital with the proper facility capital

Result-performance Management (R-pM) manages facility capital as one category and includes financial capital in the proper class. There are three classes of facility capital:

• Facility equipment: Readiness capital for reusable assets to be ready to produce a set of results. Facility equipment includes financial assets in investments, long-term accounts, etc.
• Facility supply: Production capital for consumable assets to produce specific results. Facility supply includes working capital and short-term cash used to fund business expenditures
• Facility records: Information capital for all financial and non-financial documentation of the full business cycle. Facility records includes accounting required for compliance with professional and government rules and regulations

Including financial capital with facility capital enables the enterprise to expand the use of financial management skills to manage all facility capital and to integrate all reusable, consumable, and record assets. Proper facility capital management is required to meet two of the “Ten Rules for 21^st Century Management“; Rule no. 3 “Organize and manage capital for high utilization and return” and Rule no. 4 “Keep accurate financial and non-financial records on the full business cycle in operations and development”.

Facility equipment capital includes all reusable tangible assets

R-pM manages facility equipment to integrate and manage all reusable tangible assets including financial assets, infrastructure, networks, supporting software and technology, and traditional fixed and movable assets. Facility equipment is managed to provide solutions to produce results, be the results interest and dividends from financial investments, or other business results from the utilization of other equipment solutions.

Facility equipment is integrated with other readiness capital in business organization, human personnel, and management strategy for integrated planning of business needs and provision of solutions to be integrated with the business organization solution to be ready to produce results, normally a set of results within a defined result unit responsibility.

Facility supply capital includes all consumable assets

Facility supply capital is responsible for providing the capital to be consumed in producing results. This includes traditional cash and petty cash, supplies, credit and travel facilities, utilities and energy, internet and direct ordering facilities, accounts payable, etc.

Facility supply capital is integrated with other production capital in business process, human capability, and management tactics utilized to produce a result. Supplies are utilized as required in the business process to produce the specific result.

Facility records capital includes all financial and non-financial documentation of results

Facility records capital provides full documentation of enterprise business results, plus management and business solutions based on records to produce new results. Facility records capital includes accounting records needed, new business records on results produced and performance solutions utilized, business records that may be kept in organization units today, and record archiving needed. Business records include all records kept by the Internet, imaging, document management and other uses of modern technology for record-keeping. Accounting records are oriented toward the business and augmented by actual business data on performance costs, result value, capital worth, etc.

Facility records extracts performance solutions from records, and provides solutions as needed to produce specific results. This includes financial statements required, plus a new dimension of solutions based on business records not maintained as capital today. Facility records solutions are integrated with other information capital in business data, human knowledge, and management intelligence to produce results. Management intelligence produces additional solutions from the analysis of business records and other internal and external information.

Facility capital management is documented in the R-pM Toolkit, your 21^st Century Management Manual

Facility capital is under continuing development as a part of R-pM and 21^st Century Management. The R-pM Toolkit enables the planning and utilization of facility capital today and is continually updated with new developments.