Set up capitalisation

Use this checklist to start capitalising engineering cost in Flowstate and hit your CapEx target. Your finance lead owns it. It's built on effort reporting, which an engineering lead sets up alongside it.

Before you start

• Work through the foundations: organisation basics, people and teams, projects and your project tool.
• Set up weekly effort reporting. Capitalisation splits the cost of submitted effort, so teams need to be submitting their weeks.

Decide at kickoff

• Which accounting standard your rationales follow, for example IAS 38 / FRS 102 in the UK or ASC 350-40 in the US.
• How often you close a capitalisation period. There's no setting for this, so agree it with your Flowstate contact.
• Where projects are created: only in your project tool, or in Flowstate too.
• Who approves what: who approves effort after the team manager, who approves rationales, and who marks a capitalisation complete.
• Which costs you capitalise, for example employees only if contractors are invoiced separately. Exports can be filtered by resource type.

1. Check the modules are on

What: Capitalisation and Effort reporting both need to be switched on for your organisation. Who: Finance lead, with your Flowstate contact. Where: No setting. Ask your Flowstate contact if either is off. Done when: Finance → Capitalisation and Delivery → Effort reporting open, rather than a holding screen.

New organisations have both switched on.

2. Set the fiscal year and CapEx framework

What: Tell Flowstate when your financial year starts and which accounting standard your rationales follow. Who: Finance lead. Where: Settings → Finance → Frameworks & Fiscal Year. The fiscal year is covered in Organisation basics, and every capitalisation setting in Capitalisation settings. Done when: The CapEx Framework section still shows your framework after you reload the page.

1. In the CapEx Framework section, choose a Default framework, for example "IAS 38 / FRS 102 (United Kingdom)" or "ASC 350-40 (United States)".
2. Select Save Configuration.

Flowstate only starts a rationale for a CapEx project once this is set. If the list says "No active frameworks available", ask your Flowstate contact.

3. Categorise your cost centres

What: Give every cost centre a category, so Flowstate knows which cost can be capitalised. Who: Finance lead. Where: Settings → Finance → Cost Centres. See Create cost centres. Done when: Every cost centre you use has a category in the Category column.

Set each cost centre's Category to CapEx, OpEx or R&D.

4. Give every project a cost centre

What: Every project needs its own cost centre. A project is only capitalised when its cost centre is in the CapEx category. Without one, its cost sits in Uncategorised. Who: Finance lead, with engineering leads. Where: On the project (see Set up your projects), or in the Cost centre column on Finance → Capitalisation → Projects. Done when: Needs your attention on Finance → Capitalisation → Overview no longer says a project "has no cost centre".

On the same screen, set Post-completion CC: where the project's cost goes after its end date. It shows amber when a completed project doesn't have one. Step 7 can suggest cost centres for you.

Agree who keeps these project fields up to date, because they decide your CapEx numbers:

• End date: cost after the end date moves to the post-completion cost centre.
• Done status: when a project reaches Done, Flowstate drafts its rationale and asks the owner to submit it.
• Owner: the person asked to review and submit the rationale. If the owner can't sign in to Flowstate, their manager or the team's lead is asked instead.
• Status: a project left in progress with no effort gets flagged, so close or pause projects that have stopped.

A linked project's status comes from your project tool, so change it there. If your projects sync from Linear, shorten dates in Linear rather than Flowstate.

5. Get effort reported and submitted

What: Get your project tool syncing, people matched, projects linked, everyone's salary or rate in, the weekly review turned on and effort approvers chosen. Who: Engineering lead, with your finance lead, HR and your project tool admin. Where: Set up weekly effort reporting. Done when: At least one team manager has submitted a week in Delivery → Effort reporting → My teams.

Three effort choices change your CapEx figures, so your finance lead should agree them:

• Everyone needs a salary or rate. Without one, a person's effort has no cost, so your capitalised share is wrong.
• Carry leave forward to the last project worked on reports leave against the projects around it. CapEx and R&D figures go up, but total cost doesn't change.
• Commit-timestamp attribution, if you connect GitHub, changes effort, and so the cost that lands on each project.

6. Choose who approves and completes rationales

What: Name the people who approve CapEx rationales, and the people who mark a capitalisation complete. Who: Finance lead. Where: Settings → Finance → Cost Capitalisation Review. How rationales move through review: Rationales. Done when: Both stages list at least one member after you reload the page.

1. Under Approval Stage, select Add Member and add the people who review and approve justifications.
2. Under Completion Stage, add the people who are told when a rationale is fully approved, and who mark it complete.
3. Select Save Workflow.

7. Decide how cost centres get suggested

What: Let Flowstate scan your projects and suggest a cost centre for each one, or set it for you. Who: Finance lead. Where: Settings → Finance → Project Analysis, in the Project analysis agent section. Done when: Last scan: shows Completed.

1. Turn on Enable automated scanning.
2. Pick a Scan frequency: Weekly, Fortnightly or Monthly.
3. Under Automation policy → Cost centre, choose one of the options below.
4. Select Save configuration.

Choose one:

• Suggest: every suggestion waits for someone to accept it. Start here while you see how often it's right.
• Auto-apply: Flowstate sets the cost centre when it's confident enough (above the Confidence threshold), and makes a suggestion otherwise. An Inbox task lists what it set.
• Off: no cost centre suggestions.

8. Optional: use Slack for rationales

What: Tell project owners about outstanding rationales, and approvers about submissions. Who: Slack admin, with the finance lead. Where: Settings → Integrations → Slack, under Notification Features, switch on Cost capitalisation flows. Done when: The switch is on, and a test message reaches your Slack DMs.

Weekly effort drafts in Slack are set up in weekly effort reporting.

You're set up when

• Finance → Capitalisation → Overview, set to last month with the reporting source on Effort submissions, shows cost split across CapEx, R&D, OpEx and Uncategorised.
• Needs your attention on the same page is empty, or you understand every line on it.
• Delivery → Roadmap → Projects filtered by Needs attention shows nothing you haven't planned to fix.
• At least one team manager has submitted a week in Delivery → Effort reporting → My teams.

Next: day-to-day guides

• Capitalisation: this period's cost split, what's behind it, and what needs your attention.
• Rationales: how drafts are written, answering questions, submitting and approving.
• Complete a project: close a project and record the capitalised amount and amortisation.
• Targets: give each team a target share of cost to capitalise.
• Reports and exports: workbooks and rationale packs for finance and auditors.
• Recommendations: cost centre suggestions and what accepting one does.
• Review and submit a team's week and Fix unattributed effort: the weekly effort work capitalisation depends on.