TABLE OF CONTENTS Today there is a critical requirement to expand conventional management systems to measure intangible assets, intangible liabilities, intangible revenue, intangible expenses, and intangible capital. Because accounting systems already measure intangibles under goodwill it seemed only logical that all intangibles should be viewed as "assets".
In truth, accounting practice must be extended to capture the financial effects of intangible assets, intangible expenses, and intangible revenue. Intangible cost management offers significant assistance in facilitating this process.
It is not a well-known fact: Intangible costs are every organization's biggest cost center. Intangibles steal millions, or even billions, of dollars worth of productivity and profitability from organizations every year. Worse still most executives don't even know it is happening.
If you have ever walked into a store, received bad service, and walked out without buying, then you understand intangible costs. If you ever purchased something, but swore that you would never buy from that organization again, then you understand intangible costs. If you were going to do business with a firm, but cancelled because you realized they had no real knowledge of what they were selling, then you understand intangible costs. It is the total financial impact of intangible costs (unobservable financial transactions) that either makes or breaks managerial careers and organizations.
At a fundamental level, intangible costs can be internal or external. The examples above illustrate external intangible costs. External intangible costs are therefore activities that prevent financial transactions from occurring.
Internal...
