What are fixed assets?
A fixed asset is your property, movable or immovable, tangible or intangible, fixed or circulating. With a useful life longer than one year such as your land, buildings, machinery, equipment, vehicles, furniture, fixtures and office equipment. A fixed asset is sometimes referred to as a capital asset.
Information about a company’s assets is a key component of accurate financial reporting, business valuation and thorough financial analysis.Asset depreciation
What is fixed asset management software?
Put simply, asset management software manages the day-to-day life-cycle of your fixed assets. Monitoring and tracking all aspects of your fixed assets from location to condition and more.
The basic premise of asset management is to intervene at strategic points in an asset’s life cycle to ensure an asset fully reaches its expected life. Thereby maintaining asset performance. A system to plan your maintenance (as the cost of maintaining an asset decreases with planned maintenance), strategically alerting you to renewals (before unplanned maintenance costs become excessive) and meet the required levels of service in the most cost-effective manner for both the present and the future.
Evaluating the software
When assessing the numerous fixed asset management software solutions on the market today, firstly define and prioritise your specific asset management requirements. Start by analysing your current processing to establish requirements and if unsure get help as this is the most crucial part of the process. Then evaluate how each software product measures against your requirements. And even though performing a test drive (with your own data) or pilot test (onsite) will be time-consuming, it will allow you to try out various features and functionality before you buy.
Your new investment should record an asset throughout its life-cycle (deploying, operating, maintaining, upgrading, and disposing of phases). Why? simply to get maximum value from your expensive assets, infrastructure and equipment.Business case analysis
Deciding which assets to track in your new system starts with the assets that are important to the running of your business. An asset’s importance can be based on a number of factors, including its sensitivity, criticality, value, or the compliance requirements placed upon it. Your important assets should have an assigned owner responsible for establishing and maintaining appropriate safeguards to protect those assets.
Better outcomes through integration
Comprehensive fixed asset management focuses on all types of assets, from critical or strategic assets and inventory to personnel. A functional system can leverage a range of integrated software solutions based on business requirements. The resulting data generated by such solutions can help management make more informed long-term decisions on business requirements and infrastructure investment. An entire solution is often comprised of lots of different systems and part of your evaluation process should be dedicated to ensuring that your user experience is seamless, regardless of the systems involved.
Manage regulatory compliance, report efficiently and trust the data
If assets are not identified and tracked through their entire life-cycle with regular audits and updated information concerning asset value, condition, utilisation and location, data can rapidly degrade or be lost entirely.
A fixed asset management software prerequisite is the recording of asset audit trails, that can protect your business from liability during legal battles, assist in monitoring data for security breaches, ensure proper protocols are followed and demonstrate compliance. When companies are undergoing internal audits to validate the accuracy of their financial statements, managing consolidation, securing a bank loan, or under a taxation or state audit, keeping a comprehensive audit trail is critical to a successful outcome.
Anytime a fixed asset transaction such as transferring, buying, selling, or repairing takes place; an audit trail should be created. The goal of the audit trail is to record relevant data and answer the following questions:
- Who handled the transaction?
- When did it happen?
- What kind of transaction took place (transfer, repair, purchase, or sale)?
- What was the impact of the transaction on depreciation?
Built-in asset finance and depreciation
Fixed asset depreciation built-in to your solution provides a full and accurate picture of your asset’s financials. Flexibility to suit your exact governance or statutory compliance requirements will save time through automated calculations and reporting of asset depreciation. With flexibility in structure and reporting, you can then virtually handle any depreciation scenario.
Fixed assets, stock and inventory
Business terminology can depend on where you are located in the world, but generally speaking, “inventory” is more an American term, while “stock” is more for the British. Either way, both terms are describing quantities of items a business owns and has existing in one or more locations. Your fixed asset management solution should be able to differentiate between assets, stock and inventory, assigning the financial valuation both data types require and being able to see how those values affect the overall corporate structure.
A storeroom that supports maintenance repair and operations (MRO) activities with the right spare parts in the right place at the right time, monitoring inventory levels, age, and reorder levels, drives the organisation’s operational efficiency. This is important in relation to spare parts and actioning on repairs in a timely manner.
Integrate your fixed asset management solution with finance and procurement to match your available expenditure to your procurement schedules and trigger alerts as thresholds are met, so you never over order or go over budget again. With the automation of administrative tasks across the entire procurement solution, as well as pre-defined processes and permissions and simplified re-ordering, you can significantly improve your operational efficiency and budget control. Reduce procurement risks such as fraud, cost, quality and delivery. In many cases, procurement risks are also compliance risks and the potential for failures in a procurement process results in business losses and disruption.
Plan for the future
Tracking multiple locations (and even countries), conditions, compliance and maintenance requirements for a company’s assets is difficult and time-consuming using anything other than a dedicated fixed asset management solution. A tried and trusted solution that helps businesses quickly implement an efficient, barcode and/or RFID based asset management system that makes the entire process easier to handle.
Understand your organisation’s unique requirements to begin your software selection journey and remember to match your needs to the features on offer to ensure you get the right software for you.