o.k. shortish non-technical tweet thread this morning on capital Vs operational financial expenditure, because I only just learned a new way to think about it yesterday and it blew my mind. Maybe it's obvious to more, but it wasn't to me!
-
-
Basically you get a limited number of high-stakes points at which you can try to save costs. If you did it often you might get good at it, but then it would be classed as an operational expense anyway, not a capital one.
Show this thread -
Whereas with operational expenses: the organization can optimize costs on their own time, as and when the people or resources to do it are available. Wait for the quiet quarter, or whatever, do a "find some cost-savings" exercise, and make it stick as much as you can.
Show this thread -
This is *structurally* much better way of doing business. Simple example: You can train people how to look for cost savings on an ongoing basis; not just hope you have the person who was around the last time we bid for a big contract, etc ...
Show this thread -
I got all of this from a conversation with a CFO. Like I said, probably simple and obvious to many, but it wasn't to me. I never "got" that level to the whole thing, I thought it was just about budgetary math. But it makes total sense. End-of-thread!
Show this thread
End of conversation
New conversation -
Loading seems to be taking a while.
Twitter may be over capacity or experiencing a momentary hiccup. Try again or visit Twitter Status for more information.