Fixed asset management encompasses the method of creating, managing, sustaining and trading assets in a cost-effective manner. In finance, fixed asset management is generally used as a reference to persons or organizations that handle asset holdings on behalf of another entity.
Keeping track of the assets of a company is a critical undertaking that enables companies to save both money and time. Asset management is the process of increasing the assets of a company to deliver significant returns to its investors and shareholders. Usually, it also includes the recovery of an asset. Companies have a broad range of assets that consist of fixed and liquid assets. A company needs to have control over its assets to use them to attain the best possible returns. Here are the top ten reasons why managing company assets is necessary.
Fixed asset management enables tracking of all assets that a company possesses. It can state the location of the assets, how they are used, and when changes have been made to them. The data derived from asset management ensures better returns and helps integrate asset recovery.
Implementing fixed asset management helps accurately and efficiently manage company assets from different locations. The company can create an inventory report based on the data from asset management and use it to showcase to insurers or lease financers if needed.
Fixed asset management can also be employed to ensure the accuracy of the amortization rates. It enables the understanding of daily investment reviews to ensure consistency of the firm's financial statements.
The recovery of assets is automatically reflected within a fixed asset management report. Once the assets are discarded or sold, the said assets are excluded from the company's records and accounts. Different assets like spare parts and consumables are written off or traded for free storage space.
Implementing fixed asset management techniques help your company save a substantial amount of money on maintenance. A business faces multiple repair or maintenance issues during the operating process of the asset's life cycle. Maintenance is a regularly occurring business expense that can hamper the company's profits. Overspending on maintenance carries considerable costs that can affect the overall financial stability of a company. Whereas the under maintenance of assets can lead to reduced productivity and efficacy.
Fixed asset management makes daily operations of business more productive. Not only does fixed asset management allows a company to consider and realize its resource capabilities, but also facilitates efficient functioning of the same capabilities.
Implementation of fixed asset management allows the formulation of risk management plans for a company. It also involves the handling of associated risks by proper use and maintenance of the company's assets. Accurate fixed asset management reports help identify the risks involved and discovers solutions to mitigate them.
Fixed asset management, if properly implemented, can help optimize business activities like planning, resource utilization and implementation of managerial systems.
Usually, assets that have been lost or stolen can be found in the records of the company inventory. These are known as ghost assets. More often than not, ghost assets are items that get misreported. Implementation of structured fixed asset management helps in the removal of ghost assets from your company inventory and records of warehouse.
The use of fixed asset management helps minimize theft incidents. Also, the proper accounting involved in the process of asset recovery ensures that the business maximizes its profits without losing any assets during the process.
Implementing a fixed asset management program is essential to a company. It is useful for tracking assets and for laying down a plan for asset recovery.
TRC Corporate Consulting offers fixed asset management and delivers innovative solutions to oversee all kinds of management needs. Our team of experts helps you formulate, develop and implement fixed asset management techniques to optimize your business growth. Partner with us and let us help you achieve optimal results for your business. If you have any queries about asset management, contact us, and we would be happy to help you.