Detox from technical debt
It’s true – capitalizing the cost of an asset often makes a lot of sense. Assets can require significant investment over a number of years, and the benefits aren’t realized immediately. Transformation takes time. Capitalization seems like an obvious solution.
But it’s easy for management teams to get addicted to the instant high of a buy-now, pay-later mindset. Many organizations fall into the trap of saying, “If it can be capitalized, then capitalize it.”
In fact, the costs of a capitalization strategy can be significant. You may already be experiencing long-term fallout such as
Compounding depreciation
Increased opex pressures in years to come
Asset write-offs or write-downs
Increased administrative overhead
Misaligned priorities
Institutional knowledge loss
But recovery is possible. At cShell Consulting, we have tools that can help you assess your capitalization patterns and eliminate the risks that are driving harmful practices. It’s never too late to break the capex habit.