For decision-making in companies, it is insufficient to rely only on accounting information. The decisions must be complemented with other references or managerial-type knowledge from the same organization, without neglecting the environment. … I feel somewhat confused, and to tell the truth very worried; because the results presented by the Manager of the company were not what he expected; And to tell the truth, I think that measures must be taken immediately or at least ask the organization to intervene to detect what is happening in its administration.
I had hoped to receive excellent news today in addition to some dividends or profits and I find myself with the unpleasant surprise that I cannot still aspire to them like my other partners. Were the words of Mr. Juan Gómez to his colleagues once the partners' meeting ended where the results were presented through the financial statements for the immediately previous year.
But: what happened so that Mr. Gómez had this concept once he left the board?
Well, like every partner, shareholder, owner or owner, knowledgeable or not of all the scaffolding of accounting, he went to the Income Statement and observed that there was very important money to distribute within a heading called net profit.
At the moment of making his intervention and demanding his percentage share within that figure to which he was entitled as owner; He ended up receiving an explanation initiated by the Manager and supported by the Accountant where they showed him that a large part of that profit, which was based on that document with the sales, was found as portfolio participation; accounts receivable that were owed to the company and that according to the figures expressed these increased alarmingly; reason why it caught the attention of those responsible for this management; to explain what they were doing about it; more when when asking about the systems of debt coverage to suppliers he received an answer in which he indicated that they could not be dropped with these invoices,because they would suspend the orders and supplies of raw materials and supplies.
In this way, his reaction could not be made to wait and he emphasized the following: Gentlemen, what are we doing? paying cash and selling on credit? Please explain to me, what financial and marketing strategy is this? How is it possible that we are losing resources and punishing the financial availability of this company?
What is happening with the liquidity of this business? And what to say, when I look at the value of the liabilities, it indicated a level of indebtedness of 70%, that is, most of the company was in the hands of third parties (banks, debtors and other financial sector entities)
This, like many other similar cases, usually happens in the common life of companies, since the values or figures are usually insufficient to make managerial decisions, since accounting represents a large part of the information that is You can take it as a reference in a company, but it is not the whole.
The traditional accounting that we currently use (double entry) in our organizations has an existence of more than 600 years, since since its development in the Venice region by the mathematician Luca Pacioli in the year 1400, it has been presenting a series of changes and modifications, since the intangibles that have been added to all these processes have made this accounting insufficient to determine the new quality standards.
It is well understood that the large areas or departments that are concentrated in an organization, regardless of its purpose, in some cases with more dependencies than others, but ultimately are summarized in: Financial, Production, Marketing and Talent or Human Resources; which must be under the complete supervision of the person or persons in charge of the organization, who must have the knowledge and the form to be able to exercise the administration, control and coordination of your company; so that supported by the accounting information, which is made up of the financial statements, it can have managerial and administrative complements , such as budgets, projections, sales estimates, cost analysis, marketing strategies, portfolio control systems, formulation of expansion projects for current products, as well as the planning of new products or services and analysis of the environment or competencies between others; that serve to be able to assist in a better way, always focusing on hitting managers in the decision-making process in order to achieve the success of the organization, a process that cannot be the product of improvisations or uncertainties to impart determinations.
Currently, accounting is in the task of assuming and carrying out a great challenge; challenge that has been generated by the natural result of market competition in both the corporate and labor and professional spheres, indicating as its best scenario the evolution and quantification of the most precious intangible asset: “Intellectual Capital”.
Today there are many studies that aim to be able to reach and translate the levels of knowledge and productive capacities of both individuals and organizations into figures and thus be able to take it to the digits. A task that requires an infinite number of variables since what is being evaluated is a factor that could be considered without limits; which is knowledge. But what better opportunity to be able to express the intangible capital of companies in a financial presentation, based on knowledge, knowledge that must be translated and supported in accounting.
