Taking control of assets using an asset management system improves the efficiency and financial strength of your business, by maintaining these assets as economically as possible. Taking control of maintenance schedules and reducing unnecessary repairs, maintenance, purchases and upgrades. This maximises the value of the assets, providing the best returns to stakeholders.
Assets management by definition seeks to track assets for the purposes of depreciation and tax, preventive maintenance and theft deterrence. Consider processes such as asset planning, procurement, asset and custodian tracking, depreciation and disposal.
Why is an asset management system important?
Why is an asset management system important? Because taking control of assets is more than location tracking! Asset management is critical in helping a company monitor and control assets using a systemised approach. Managed effectively, the benefits include improvements to productivity and efficiency which places a company in a better position to increase their return on investment.
Asset management systems (fixed asset registers) record all types of assets. Such as fixed (fixed assets are those that your business uses frequently in order to create revenue), physical and digital. A company can have a range of assets; fixed/capital and inventory/stock/parts, that need to be controlled. So using one single source of truth efficiently, to get the maximum possible returns and be competitive, makes sense.
Asset management is vital in providing greater transparency in the following areas:
- Tracking loaned assets and due date of return
- Location, movement and usage monitoring
- Stock/parts/inventory usage and re-order control
- Maintenance scheduling
- Governance and compliance
- Physical audit history
Asset management software is important for reporting on how assets are being used and where they are located. But more importantly, when changes are made to assets, such as replacing a part, and the finance involved.
Then, there is the upkeep of these assets, and maintenance is a business expense that can cut into the profits of any company! Overdoing it can bring significant costs. On the other hand, under-maintenance can lead to reduced productivity.
The same goes for your machinery and equipment parts. Controlling the re-ordering process maintains the correct item levels “on-hand”. Ensuring there is no downtime when looking for parts. All-inclusive asset management software solutions incorporate quantities of items, such as spare parts, with inventory/stock control.
Save time with asset depreciation calculations and reporting
Tax laws are growing more complex each year and for many global companies, it can be difficult even overwhelming, to ensure assets are recorded and depreciated correctly for each country. Your depreciation solution should be easy to configure for countrywide or even the world. To suit your industry, currency, regulatory and governance requirements and tax jurisdictions.
Integration to popular third-party systems, and scalability to react to changes in your business is a must to keep up-to-date and competitive. Asset management software that contains all-inclusive depreciation will make amortization rates easier to calculate.
Regular assessments of your assets will ensure that the financial statements of the business are accurate. Putting the power in your hands, to develop and design custom reports and dashboards.
Stay compliant and avoid the most common pitfalls
Compliance is an intimidating topic, but having the “bigger picture” reflected in your reporting allows for a better understanding of the capabilities of your assets. Management of risks connected with the use and ownership of assets, and a proper assessment, can help identify possible risks involved and come up with a solution to avoid them.
Five of the most common compliance mistakes:
- Not conducting internal compliance audits
- Not completely understanding industry guidelines
- Using legacy technology
- Not properly vetting vendors
- Neglecting physical security
Meeting compliance regulations is a must, especially if you want to avoid costly fines and potential legal issues. Compliance is something that applies to all businesses, no matter their size, industry, or niche. While all companies have some sort of compliance strategy mapped out, not many know how to integrate those processes and strategies to ensure profitability and operational efficiency.https://www.digitaldoughnut.com/articles/2018/october/5-of-the-most-common-compliance-mistakes
Asset misappropriation is the most common type of corporate fraud comprising 87% of cases
With the use of an asset management system, incidents of thefts can be lowered. Primarily due to the visual deterrent of the asset tag (especially if using tamper-evident asset tagging) and employee knowledge that items will be missed (especially at physical auditing time). Proper accounting of the asset recovery process will ensure that your company maximises the returns and minimises items lost during the process.
What is asset recovery?
Asset recovery is the process of maximising the value of unused or end of life assets through effective reuse or divestment. Both large and small organisations practice asset recovery at some level with the end goal of obtaining the greatest possible return from the asset.
The asset recovery process has three main parts: idle asset identification, redeployment, and divestment. Asset recovery can also refer to the task of recovery of assets that have been wrongfully taken either stolen, fraudulently misappropriated or otherwise disposed of to remove them from their rightful owner.https://www.acfe.com/report-to-the-nations/2018/
Track and monitor your assets
Controlling assets is a business strategy, that if deployed correctly will reap you rewards in the way of cost reductions and increased compliance. Further, comprehensive solutions permit parent/child tracking, revaluation, recording custodian and department responsible, transfers, purchase information, maintenance costs, management of leased and written off assets to name a few!
Often companies try to overlook the importance of asset management unless they have to face some loss, which sheds light on the need and importance of managing their assets properly. But managing up-to-date and accurate data can be challenging, especially when it comes to preparing reports if you are using disconnected spreadsheets or a substandard asset register.
Asset tracking and auditing
While asset management is the predominant term that describes the end to end process of managing every aspect of a company’s assets, asset tracking (a critical component of asset management) focuses primarily on the last known location of each asset. Asset tracking specifically refers to the process of locating assets and physically auditing, typically using QR codes, barcodes and RFID asset tagging and scanning technology.
Deploying comprehensive asset management software will not only help you keep track of your asset movements, but incorporates maintenance, MRO lifecycles (Maintenance, Repair and Operations) and asset procurement.
Asset management software assists any size company change from spreadsheet records to efficient, agile reporting on asset utilisation, condition and more. Therefore, a good fit for companies that need to be valued for tax or acquisition purposes.
Major reasons companies use asset management software
Management of vendors; lease management, disposal management, depreciation management and asset lifecycle management are some of the key features of asset management solutions.
Tracking assets; their location, their movement, their use, and any changes made to the asset, including parent-child asset relationships and parts.
Security, disaster recovery and audits; an effective asset management system provides valuable information for recovery and allows for quick and easy physical audits.
Recording depreciation; assures the amortization rates are accurate and financial statements can be trusted, through regular assessment of the assets.
Saving money on maintenance; preventative maintenance brings significant cost savings and increases productivity.
Operations; helps optimise your operations, including planning and resource use. Allows for a better understanding of the capabilities of assets, over its operative value, to utilise assets more efficiently.
Risk management plan; relates to the use and ownership of the assets, to avoid any risk involved. Proper assessment of the assets can help to identify the risks involved and come up with a solution to avoid them.
Selecting the ideal asset management software
The only way to properly manage and track your assets is to deploy a robust asset management system. But, with so many different types of asset management software available on the market, confusion is inevitable! Below are just some considerations that should be given, when upgrading your asset management system.
The size of a business is an important factor in deciding the most suitable software for your company. A multinational corporation will have different requirements and integration considerations compared to the needs of a small-scale business.
The software has to fit in
Integrating with your existing business ERP systems is paramount. Your asset management software needs to fit in with existing ERP or standardised accounting software. Why? because you want to record against each asset calculations such as depreciation, gain or loss on account of disposal/exchange, and instalment amounts for leased equipment. These calculations require a high level of accuracy and integration is a must, as to avoid any mistakes caused due to manual interference in the process.
Physical condition is important
Being unaware of the physical condition of your assets, or times the repair schedule has lapsed, will lead to unnecessary capital expenditure. An ideal asset management system will automatically send an alert regarding repairs and maintenance, on or before the due date, hence enabling suitable action to be taken in a timely fashion.
Track that movement and usage
While tracking of assets helps with utilisation and compliance, companywide knowledge that assets are being tracked is a great theft deterrent! A driving factor, for organisations who have portable high-value assets or whose major chunk of assets and equipment are usually moving.
Quick and easy report generation
Every company tracks the progress of their organisation on a periodical basis. In such a scenario asset management software helps you generate reports about the purchase, sale, due date of instalments, fair valuation of assets, repair, maintenance schedules and costs, depreciation, useful life, production capacity and more.
This provides senior management with complete details of assets i.e. who is using the asset, condition of the asset, where is the asset located, how it is being utilised, maintenance costs and more.
Take stock of quantities
Related assets such as consumables and spare parts, stock and inventory, need to be recorded and tracked. Primarily, so you know what quantities are “on-hand” and to provide you with an automated approach to re-ordering so stock levels are never a concern. This prevents delays in the repair and maintenance of operational assets.
Asset management is a systematic process of deploying, operating, maintaining, upgrading, and disposing of assets cost-effectively. Asset management involves the balancing of costs, opportunities and risks against the desired performance of assets, to achieve the organisational objectives.
Internal controls over assets alleviate two distinct risks. The primary being physical in nature and relates to the asset getting lost, stolen or damaged. Thereby affecting the value as reported on the financial statements. The second risk is financial in nature, related to errors in determining cost basis, useful life, and depreciation assigned; all of which can affect value.
Latest generation asset management software provides mobility using smartphones and tablets. To scan asset tags and perform quick audits, inspections and stock movements. Mobile devices provide mobility and accessibility, so you can empower your workforce, to rapidly and accurately capture data, complete inspections and work orders, view reports and undertake audits, wherever they are.
Remember the primary purpose of physical control is to be able to verify the existence of the assets. The two key financial controls are proper acquisition cost calculation and the second is the selection of the appropriate depreciation method to properly determine asset value over time.
Taking control of assets – the goal
The goal of fixed asset management is to track assets for the purposes of financial accounting, preventive maintenance, and theft deterrence. To verify existence, condition and custody of the assets on-hand.
Historically fixed assets were considered “low risk” in the areas of financial misappropriation, theft, or unrecorded damage. This is mostly due to the difficulty in stealing these types of assets. Furthermore, assets are ranked in groups on the balance sheet and the most valuable is the land and building. So, the bulk of the financial value resides in assets that is pretty much immovable.
After land and buildings, comes your production equipment. Specialised manufacturing equipment or large pieces of heavy equipment. Again, hard to steal or sell.
Then there are the items of equipment that are more likely to be stolen or misappropriated, and this includes vehicles, trailers and tools. These types of assets require more physical control (asset tracking) to ensure proper use.
Lastly, for most companies, the final group of assets is the more common value found on the balance sheet – office equipment and IT equipment. This is mostly technology-based equipment specifically computers and laptops.
Portable and expensive, office and IT equipment are the easiest to misappropriate. So these asset types also require more physical control (asset tracking) to ensure proper use. And more scrutiny over them should be exercised by management. The best tool for these types of assets is a check-in/check-out assignment. Whereby an asset can be assigned to an employee, who acknowledges responsibility (custody) or a physical location.
Scalability and performance with robustness and maintainability
The Hardcat asset management system delivers superior asset management and asset tracking, via QR codes, barcodes and RFID asset tags. Offering you the ability to control assets in terms of accountability and planning, while also tracking your assets to ensure you’re getting the most productivity from them.
Hardcat solutions take control of all your assets types and assists in growing your business, maximising operational efficiencies that will make your life simpler! Comprehensive management that maximizes asset lifetime, reduces costs and improves efficiencies through automation.