Fixed Asset Management Is Now Crucial For Survival In the Crunch
As we descend into an increasingly crippling financial crisis, private and public sector organizations alike are having to be more intelligent with their budgets to avoid getting into trouble. Something that’s not often considered is holes in the way your business does its accounts which can lead to asset leakage. By making sure you have a good handle on the fixed assets your organization owns you can identify these leaks, put a stop to them, and save a surprising amount at the end of the tax year.
What are fixed assets?
To begin, it’s important to understand what I mean by a fixed asset. Any business owns two different types of assets. Fixed assets, also known as tangible assets, include things like land, buildings, machinery, equipment and computers. In essence, they are objects of value that you can touch. The assets you can’t touch are called, unsurprisingly, intangible assets – such as trademarks or patents. What we’re talking about here is the former type of asset.
Why should I care about tangible assets?
Well, for starters, recording your fixed assets is a legal requirement on your accounting records. Failure to keep a record of them could land you in hot water. But more than this, the more clued up you are on the status of your fixed assets, the more prepared you are to save money within your organization. That means knowing where they are, how much they’re worth, and how much their value is depreciating. In a sense asset tracking is a way for a business faced with financial hardship to pull cost savings ‘out of thin air’.
How do you track these pesky assets?
Well first of all you need to make a record of each of your fixed assets. Now this part is probably something you’ve taken care of already, seeing as it’s a legal requirement and all. Most commonly this is recorded on a humble spreadsheet, but increasingly savvy organisations are using more sophisticated asset management software. The reason is that you really need to go much further than just recording assets – you need to be able to keep track of them as your organization grows and develops. By tracking I mean keeping a constant record of its location, movements, state of repair, value, etc. Now when you’re a mom and pop business working out of your living room that’s a case of glancing round the room and scribbling on a Post-It note.With bigger businesses and organizations, this job becomes a lot more tricky. And this is where dedicated asset management software really comes into its own. It makes the auditing, tracking, maintenance, communication and accounting bits of asset management come together beautifully. Crucially, a well made package will be able to pinpoint where the largest cost savings in your organization can be made. I’d say that’s definitely something worth investing in.
Tags: Accounting, accounting software, asset accounting, asset management, asset tracking, business accounting, fixed assets, recession