In Module 6 we saw that money is always in flow, that is liquid. At least this is its natural form of being. Too much money, which does not move, which is not being used for a purpose, creates tensions in the economic system. Of course we need enough savings for potential risks to cover, like illness or accidents, and for our pension. But also this money normally is in constant movement in the economic system.
Nowadays there is a strong tendency to see money as something real. But money is only a reflection of real processes. That is how it should be, in my opinion. Reality, real physical economic and service processes should prevail in our perception, not the money itself. Money is the result of good economic acting. Money should follow initiative. Money can provide for opportunities, ideas, initiatives, it can make them possible. But in itself money is nothing.
Based on this idea, that real processes are more important than the money itself, we can consider money as a mirror, as a representative, of reality. Of course, without money we can do nothing. Many books about money have been written. I will not repeat them here. I would like to suggest money as a mirror of real processes.
If we now look at financial reporting for management functions such report should be a good reflection of reality. Many reports are not very helpful for this. They include too many calculated figures which can only be understood by a few experts.
For instance, in reports we should avoid too many calculations and saldos, because they are a step away from reality. We should try as far as possible to show real numbers, which most truly reflect reality.
I want to give an example: A report for a certain activity or department could show the result of income and cost. Sometimes this is also called Saldo of income and cost, or just result, or profit. It would be better to show the income in real numbers and the cost in real numbers, and then finally the result.
When we then look at those numbers regularly, then we get used to such numbers. They become part of our feeling life. And they start to speak to us. We remember the numbers of the last periods. And we know what we have planned for. When we then look at those numbers today we know where we stand. So financial reporting not only should mainly show real numbers, but it should always also show past periods and planned periods. And we should make it a good habit to look at those numbers regularly so that we get used to them, that they become a part of us, that they are familiar to us. Otherwise we cannot really know where we stand with our initiative.