Is training an Income Statement or Balance Sheet item?

On most companies financial statements Training is a line item on the Income Statement.  It’s viewed as an expense because of the cost.  Isn’t training supposed to help make things better or improve skills and productivity?

If training is making things better and improving productivity, and maybe even morale, is training really an expense?  The answer is yes and no.  Training is an expense if it’s not followed through on.  Training is an expense when you don’t have team buy-in.  Training is an expense when you talk to the bean counters.

On the other hand, what if the training works?  What if productivity rises, what if morale improves and what if the training results more than pay for the expense?  Isn’t training really an asset that belongs on the balance sheet?

Two different views and two different outcomes, but they both are determined by the same factors.  Who set the training up, what’s the attitude towards improvement and how can you sustain, condition and maximize the training.  

Training is the best investment you can make in your company and team.  You must start with the right attitude and execute and follow through on what you learned. Training is an expense, and it becomes an immediate asset the moment you take steps to implement what you’ve learned.

While you’ll never get your accounting team to remove it from the Income Statement, you can show them how it’s worth a whole lot more by maximizing the return on investment.  Finance people often object to the merits of training, because all they see is the bill.  Show them the merits, and start the conversation with one simple question…

…what’s it going to cost us and our overall business if we don’t keep improving?  In sales, you’ll lose.  In employee morale, you’ll lose.  In management skills and worker attitudes, you’ll lose, and in overall productivity, you’ll lose.  Bottom line, training is an asset.  It becomes an expense the minute you view it as an expense and your competition views it as an asset.  They win, you lose.

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