How capitalisation works

Capitalisation starts from what people actually did, not what they were planned to do. Every figure on Capitalisation is effort, turned into cost, sorted by the project's cost centre.

Effort becomes cost

Effort is the share of each working day a person spent on each project. Flowstate estimates it from your project tool and GitHub, and team leads check and submit it each week. See How the effort estimate is built.

Each day of effort is costed at that person's day rate, in your reporting currency. AI agents' cost counts too. The formulas are on How costs are calculated.

Effort from someone with no salary or rate has no cost, so make sure everyone's pay is set.

The cost centre decides the category

Every project has a cost centre, and every cost centre has a Category, set in Settings → Finance → Cost Centres.

• A project's cost is capitalised only when its cost centre is in the CapEx category.
• Cost on an R&D cost centre is shown separately. Accepting an R&D claim moves the project onto your R&D cost centre.
• Cost Flowstate can't place — a project with no cost centre, or effort that isn't on a known project — shows as Uncategorised. It's never quietly counted as OpEx.
• Time that isn't on any project, such as leave, goes to your Default Cost Centre. See Organisation basics.

Set cost centres before you close a period, not after.

After a project ends

A project's status and end date decide when its capitalisation stops and when its justification is due.

• Status comes from your project tool. A project linked to Linear, Jira or Azure DevOps takes its status from there, so close it there, not in Flowstate. For a Linear project, the dates come from Linear too. Only a project with no link keeps a status you set by hand.
• The end date is the cut-off. Each project has a second cost centre, Post-completion CC, for work after its end date — usually OpEx, for support and maintenance. From the day after the end date, the project's effort goes to that cost centre instead. If work is still going on, move the end date.
• Done starts the sign-off. When a CapEx project reaches Done, Flowstate drafts its justification straight away and asks the project owner to sign it off. If the owner doesn't have a Flowstate account, their manager is asked, or failing that the team lead. Projects past their end date are chased too. See When the project owner is asked.

Set Post-completion CC on Finance → Capitalisation → Projects. It turns amber when a project has ended without one, and projects with cost after their end date show Post-completion OpEx.

A project with no Post-completion CC of its own uses the cost centre chosen under After a project ends on Settings → Finance → Cost Centres. If that is blank too, the project keeps its running cost centre after it ends, so time logged after the end date stays on it — CapEx for a CapEx project. Set the organisation-wide one so that can't happen quietly, and set a project's own only where it should differ. See Set up capitalisation.

Projects that are never closed

Most justification backlogs come from projects that are never marked complete. A project left open with no end date keeps putting its effort on its CapEx cost centre, and nobody is asked to sign off its justification. Close projects in your project tool when the work ends.

Paid staff with no effort

People who are paid but record no effort in a period still cost money. The overview workbook lists them under No-effort staff cost. That cost isn't capitalised.

Capitalise a whole initiative

You can capitalise an initiative as one claim covering all of its projects.

1. Go to Finance → Capitalisation → Initiatives and select the initiative.
2. Select Capitalise this initiative.
3. Enter the Claim period, such as "FY2026", and its Period start and Period end.
4. Select Create claim.

A justification is started for each project in the claim.

• The initiative's cost centre must be in the CapEx category, and the initiative must have projects.
• A project can only be in one claim per Claim period, so use the same name for the same period every time.

Frameworks

Your CapEx framework decides the sections every justification covers. Choose it in Set up capitalisation.

Framework	Justification sections
IAS 38 / FRS 102 (United Kingdom), AASB 138 (Australia), NZ IAS 38 (New Zealand), IAS 38 / ASPE 3064 (Canada), IAS 38 / SNC NCRF 6 (Portugal)	Research vs Development Phase Boundary; Technical Feasibility; Intention to Complete; Ability to Use or Sell; Future Economic Benefits; Adequate Resources; Reliable Cost Measurement
ASC 350-40 (United States)	Project Stage Determination; Management Authorization; Probable Completion; Capitalizable Activities; Section 174 R&E Expenditure Treatment

The stages of a capitalised project

Stage	What's happening
Draft	The justification is being drafted, or is waiting for the project owner
In Review	The owner has submitted it and the approvers are reviewing it
Feedback	An approver has asked for changes
Approved	Approved and waiting to be completed
Completed	Capitalised, with an amount and amortisation recorded

The Rationales tab shows each project's stage in more detail. See How CapEx justifications are drafted.