Rule No. 4: Keep financial and non-financial records on full business operations and development

20^th century management does not maintain accurate financial and non-financial records on the business

Records are tangible information capital to record and document the actual business. Records are the predominate information capital in 20^th century management. But, 20^th century management does not manage enterprise records as capital. Most records are maintained by an individual or organization unit. There is no defined responsibility for maintaining records on the business. 20^th century accounting maintains partial financial records against a contrived chart of accounts. Some corporations have a secretarial function to maintain corporate and shareholder records. Each enterprise has to develop its own procedures to see that important records are kept. Many important business records like proposals, designs, quotations, and documentation are maintained ad-hoc by a department or individual or simply get lost in the passage of time.

Financial accounting is often confused with business record-keeping

The Business Change Forum says that “Accounting is one of the top ten problems of 20^th century management”. Many people think that financial accounting keeps enterprise records. In some enterprises, accounting does attempt to keep records beyond the specified accounting documents. But, in general, accounting views its function in narrow terms of financial accounting and following generally-accepted accounting principles. Financial accounting does not account for the actual business, but lays a contrived chart of accounts over the business. The chart of accounts records accrued and actual cash expenditures and receipts. The actual value received for cash expended, the costs incurred and value added in the business, and the actual value provided for cash received is not accounted for.

Some capital worth may be maintained on depreciating assets, but most capital is not recorded. Much high-worth capital is simply labeled “intangible assets” by accounting and the worth is not recorded. Since capital and the utilization of capital items in the business is not recorded it is not possible to record the return on capital investments through the value created in the business.

Enterprises are now setting up records management units and solutions separate from accounting

The need for professional records management is becoming acute with the explosion of records entering and leaving the enterprise in emails, file transmissions, imaged documents, etc. Enterprises have no way to reference records to the business and no consistent business methods for records management. Enterprises are now laying additional information classification structures over the business and investing in record, document, report, image, and other management systems. This only aggravates the records management problem with additional units, data entities, and overheads. The records management problem will only get worse and can never be solved by more 20^th century management structures.

Rule No. 4 of 21^st Century Management: Keep financial and non-financial records full business operations and development

R-pM addresses the 20^th century records management problems in organizing the business for 21^st Century Management. Rule No. 4 of 21^st Century Management is “Keep financial and non-financial records on full business operations and development”. First the business is organized to reduce records maintained to those related to an actual business entity. All financial and non-financial records of the enterprise business are capital maintained to be utilized to operate and manage the future enterprise. Performance solutions are developed from record capital for operational and management needs. This is explained further, in the article “Your business is your only valid account structure”.

R-pM establishes Facility capital to manage the tangible assets of the enterprise

Facility capital manages all the tangible capital and facilities of the enterprise. There are three classes of facility capital:

• Readiness capital in Facility Equipment: Facility equipment includes all reusable tangible assets including infrastructure, networks, operating software, financial facilities, digital assets, and property. Facility equipment gets an organization ready to produce a set of results
• Production capital in Facility Supply: Facility supply includes all consumable cash, energy, collateral, and other supplies. Supply capital is consumed, when producing specific results
• Information capital in Facility Records: Facility records include the tangible information in the enterprise in documents, records, images, archives, intellectual property, etc. Record capital provides record solutions to produce results, and to document results produced

Facility capital is managed by human capital with administration capability and experience with the particular capital

Facility records capital manages the tangible information of the enterprise

Facility records are the tangible information capital in the enterprise that record and document business initiatives, decisions, and activity. Facility records maintain full financial and non-financial records of the complete business cycle for both operations and development. Financial, statistical, and qualitative records are maintained for all business activity that incurs a performance cost and creates value in results in process. All records are referenced to the business in a specific result, performance solutions, enterprise, time period, or other maintained business data entity. Originals are maintained of documents, computer files, or images to substantiate business activity, to have records available to produce future results, and to meet retention requirements. Facility records management follows the rules for information management outlined under Rule No. 3: “Organize and manage capital for high utilization and return“.

Facility records capital maintains financial records on the full business cycle in operations and development

Facility financial records are maintained against the actual business structure for performance solutions utilized and results produced. From this record, information can be aggregated by set and key result, business line, organization or responsibility center, product, service, work in process, capital category and class, and other totals. If required, additional 20^th century accounts may be maintained to meet regulatory requirements. Financial records cover the full business cycle to record accrued and actual cash expenditures and receipts, plus performance costs, result value, and result value-added. Records are maintained on the capital sets that are utilized as performance solutions to record capital costs, understand contribution to result value-added, and assess capital worth. Records are maintained on the negative capital worth of liabilities accepted by the business.

Management accounting, information analysis, etc that provides management information solutions from the analysis of accounts or business records is management intelligence capital, which utilizes a different set of human capabilities from records management.

Professional facility records management provides records solutions for good corporate governance and management

Traditional accounting is broadened to professional facility records management in 21^st Century Management. Professional records management captures correspondence, documents, and computer files on all business initiatives, decisions, transactions, and follow-ups. Documentation records are maintained on results produced and capital implemented as performance solutions. Professional records management maintains complete facility records related to specific business entities, and develops performance solutions from the aggregation and manipulation of facility records to produce operational and management results.

The performance solutions cover the reports and statements traditionally produced by accounting as recorded against the actual business. Performance solutions include a new range of operational and management information produced from the added financial records and the combination and manipulation of financial and non-financial business records.