Fixed asset management is critical to organizations seeking to maximize or extend the lifecycle of fixed assets.
Your organization’s fixed assets, whether capital or non-capital, are all valuable resources that contribute to overall production and profits. And though they may differ in characteristics like size, category, useful life and more, they all share in common one key process: the asset lifecycle.
In How to Avoid a Mid-Asset Lifecycle Crisis, Part 1, we introduced two common dilemmas that can arise in the operation and maintenance stage of a fixed asset’s lifecycle.
In this post, we’ll explore two other possible headaches you might encounter, as well as suggestions for prevention.
Asset Lifecycle Crisis 1: Unnecessary Spending to Replace Lost Assets
Let’s say that three years ago, your organization purchased new laptop computers. The majority are immediately put into use, while five remain untouched.
After two years in storage, you decide to dust off the five surplus computers for resale. You search the storage closet and inquire with multiple departments; however, after a week of digging, you’re unable to recover the computers.
It may sound unrealistic, but it happens to organizations often, with fixed assets of various sizes. From a fiscal standpoint, the consequences of misplaced assets can be severe. Your organization may be paying for insurance on a nonexistent asset, and will likely have to pay to replace the lost equipment.
Solution: Keep a Closer Eye on Your Assets’ Whereabouts
Tracking your organization’s fixed assets improves visibility. One possible way to manage this is through the use of an automated asset management solution.
Automated asset management systems can significantly increase the security of your fixed assets with features like asset transfer management, change request management, and chain-of-custody tracking.
It doesn’t take very long for your fixed asset inventory to change status or location. In order to keep up with these changes, it’s critical that your organization’s fixed asset management processes are on-going.
In addition to an automated software solution, fixed asset management best practices also include an annual audit of your organization’s inventory. To do this, many organizations today utilize asset tagging and scanning technology like barcode or RFID scanners.
Asset Lifecycle Crisis 2: Audit Findings due to Inaccurate Accounting Reports
Anyone charged with the task of fixed asset accounting understands the importance of accuracy. However, mistakes happen. If you’re creating accounting reports manually, typos and accidental omissions aren’t uncommon.
In addition to human error, there are some more complex concerns you should also have on your radar to ensure accurate fixed asset accounting reports, including:
If your fixed asset data is outdated or incorrect, you could be overspending, and will also likely receive the dreaded audit finding.
Solution: Stay Compliant with Accurate, Current Asset Records
Many organizations try to use spreadsheets for asset accounting, but this can lead to numerous errors with costly consequences.
To avoid asset accounting and reporting errors, your organization might consider an automated asset management solution that includes robust accounting and reporting capabilities.
When considering an automated asset management solution, look for software that includes:
- Flexible allocation rules
- Automated depreciation with multiple methods
- User-defined asset classes
- Asset disposal tracking
The best automated asset management solution will provide:
- Standard reports
- Compliant reports
- Ad-hoc reports
- Auditable history
Implementing a formal technique like an automated asset management solution can help you stay on top of the constant changes to company assets, maintain accurate fixed asset data, and save time producing reports. As a result of these various features, your organization can lessen the risk of an audit finding.
An automated asset management solution helps to facilitate proper stewardship of valuable company assets through features like automated transfer management, change request management and more.
For more information on AssetWorks Fixed Asset Management Solutions, or to share other questions or concerns related to fixed asset management, contact us at firstname.lastname@example.org.
You Might Also Like…