By Lisa Maxwell on August 16, 2018
Tracking and managing fixed assets through the asset lifecycle is a major benefit for any business. The keywords here are “tracking” and “managing”. If you are not doing it right, you could be losing money. The things most often overlooked in considering asset management are keeping track of amortization rates, saving money on maintenance costs, and optimizing your operation’s asset management.
Let’s not get ahead of ourselves though, what are we talking about when we say fixed assets? Fixed assets are assets that are purchased for long-term use and are not likely to be converted quickly into cash, unlike merchandise or general inventory. Some examples of fixed assets are land, buildings, and equipment. Since we specialize in business consulting services and business software, we are often dealing with assets such as computer equipment, computer software, and office equipment like printers or scanners. These are all assets that should be assessed as part of your organizations overall worth.
So now we know what our fixed assets are but are you managing them yourself, or do you have an outside party like an accountant doing it? Bringing asset management in-house can be a saving and gives you total control of all these assets. If you are already managing them are they being managed as effectively as they could be? You have multiple assets in multiple locations. How do you keep track of all of them? Often assets are tracked manually with spreadsheets and that leaves room for error and isn’t very secure. It is also time-consuming, and do you really know the over 300,000 IRS tax and GAAP rules as well as more than 50 depreciation methods? That’s a lot of pressure to put on a single individual who probably has plenty of other job responsibilities. An asset management solution aids in the reduction of risks surrounding tax and finance compliance, while also making your ledger being more efficient, freeing up time and manpower to focus on more essential tasks while keeping a close eye on your assets.
This is a task better handled by a Fixed Assets Management application, and that’s what we recommend to any client with a lot of assets to keep track of. You can research and see if your current business software system (ERP) has this application built in, or if it’s a possible add-on for an additional cost. There are also stand-alone fixed asset applications to consider if your requirements are very robust. Considering the scale of your operation and the scope required from your software should be an important first step in considering what application will suit your needs best.
What should you look for in a fixed assets management application? You’ll need a solution that has comprehensive depreciation calculations for financial and tax reporting, and asset inventory tracking. It should include construction-in-progress management, and customized reporting, so you can effectively manage every step of the fixed asset lifecycle—from acquisition to disposal. You also want to look for a solution that can work for small to large companies, so it can grow with your organization. Flexibility is also important, so that it can fit any industry-specific needs you might have.
This is just a brief overview of what you should keep in mind when considering your fixed assets management. If you go to www.cmsct.com/resources, you can find some other tools to help you on your journey. We recommend that our client's review at least three products and narrow down the features they require to get a clear picture of your return on investment. You also want to make sure the solution manages both complex and straight-line depreciation of your asset inventory. I can assure you that once you get a system in place, you will wonder how you ever ran your organization without it!