Entrepreneurs, business thought-leaders and economists agree that innovation and knowledge-based services drive most economic growth. This knowledge is held by firms as intangible assets. The majority of SME’s, however, do not have the reporting systems to create, recognise, manage and effectively integrate these key Intangible Assets. Here are the key drivers of growth.
Category | Asset |
Computerised information | Software and databases |
Innovative property | R&D (incl. non-scientific R&D) |
Artistic originals | |
Design | |
Financial product innovation | |
Economic competencies | Firm-specific training |
Branding (advertising and market research) | |
Organisational capital |
The problem for SMEs and CFO’s is that financial accounts only recognise a small number of Intangible Assets (approx ⅓). Statutory financial accounts focus on tangible assets with easier to define resale value in the event of going bust. This leaves a gap between what SMEs are investing and the recorded assets they are creating to drive growth. It is important that SME’s use appropriate Growth Management Accounting to recognise all these Intangible Assets alongside their financial accounts which do not.
Opagio’s Growth Platform enables managers to record their Intangible Assets in Registers, as part of their Growth Accounting Balance Sheet. The first step is to allocate the appropriate costs from the purchase and payroll ledgers, and growth projects to the Registers. This provides the executive team with the basis for making better decisions and communicating the underlying value in the business to their investors.