3 Tips for a Successful Inventory Program
Inventory management is a broad term, and can hold different meanings to different organizations, depending on factor’s including the nature of an organization, the value of assets being tracked, and more.
At AssetWorks, when we refer to inventory management, we’re generally talking about inventory processes meant to manage your organization’s fixed assets. But we recognize that even then, the process of managing them will likely look pretty different from one organization to the next.
Differences aside, there seems to be one commonality when it comes to the management of fixed assets: it can be an arduous process. Read on for 3 tips that, if implemented, can help keep your inventory in check so you can lighten your load come inventory time.
Keep asset data clean year-round
When you’ve got multiple hands and eyes in your fixed asset database, it doesn’t take much time for your records to get messy. So whether your fixed asset data is housed in a spreadsheet or using software, it’s critical that you make every effort to keep it squeaky clean. Staying abreast of asset changes, like location and condition, is an easy way to help ensure accurate data.
How often are you updating your fixed asset records? Your asset database should be updated, at the very least, each time an asset’s location or custodian changes. Accurate data means that, come inventory time, you’ll spend less time hunting for ghost and zombie assets, or updating incomplete and incorrect records.
Large-scale physical inventory projects don’t happen every day, every week, or even every year. So when they do, it’s important to get it right, and get it all.
Ultimately, maintaining accurate data within your asset management system throughout the year means that you’re more likely to end up with financial reports you can rely on. This information is critical for compliance, and helps to support informed decision making during the budgeting and planning processes.
Keep a close eye on your assets
Once your data is clean, the fixed asset report possibilities are endless! …okay, maybe not endless, but there are a number of helpful reports you can run to keep yourself inventory-ready.
While fixed asset reports are especially important during an audit, running them periodically throughout the year can provide a birds-eye view of asset details. Fixed asset reports help keep you in-the-know on pertinent asset-related data, which in turn can help you avoid wasted time due to unwelcome surprises during an inventory.
For example, imagine that some time ago, a few employees within your organization decided that it was time to retire three old bulldozers. They followed internal procedure for appropriate disposal, but failed to record it in your organization’s fixed asset database. As a result, the bulldozers continued to appear on your accounting ledger, until the mistake was uncovered a few years later.
Not only does this mean that your organization had been overpaying on taxes and insurance for three bulldozers that didn’t exist, but the entire ordeal also brought an otherwise smooth inventory project to a screeching halt.
By running occasional reports throughout the year to account for valuable assets, this entire scenario could have been avoided.
Here are some asset reports that you may find helpful to stay on top of your asset whereabouts throughout the year, or in preparation for an upcoming inventory:
- Asset transfer history
Asset change history
Asset disposal history
Note that report titles aren’t universal, and your organization and/or auditor may call them by names different than those we’ve listed above. For a detailed description of these reports and more, click here.
Mobile Inventory Solutions
Are you using a mobile inventory solution, like Scan & Validate or GreenBar? If so, don’t let your scanner collect dust just because your audit is over! Check out 3 ways your mobile inventory solution can help after audit season.
Implement a Fixed Asset Policy
As we saw in our Bulldozer Scenario above, it’s important that all individuals and departments involved in asset management processes have a clear understanding of their responsibilities from the get-go.
If you haven’t already, consider implementing a Fixed Asset Policy. In addition to a detailed outline of objectives, definitions, and responsibilities, your Fixed Asset Policy should also include a procedure for the recording of fixed assets on an on-going basis.
To uphold the integrity of your asset data year-round, here are a few important elements to make clear in your policy:
Clear instructions on individuals/departments responsible for specific assets
Capitalization thresholds, and procedures for the management of assets that fall above and below it
Required data elements to include for each individual fixed asset
Asset tag information (if relevant), including suggestions for placements and use
Procedures for the recording of asset disposals
You might even consider including a flowchart to illustrate the appropriate fixed asset management process. While it might mean spending more time upfront, a clear and thorough Fixed Asset Policy can result in a more simplified inventory process for years to come.
For example, if your Fixed Asset Policy requires documentation for asset activities like maintenance and transfers, your organization may have the opportunity to perform an inventory by exception. In this type of inventory process, asset records that have been updated recently are considered already inventoried. As a result, you’re left with less assets to hunt down during your next inventory project.
Different Inventory Methods for Different Needs
There are many different ways to perform a physical inventory – and it’s not just about preference. Inventory methods may also be dependent on the nature of your organization’s work, physical inventory frequency, and reporting requirements.
Implementing, enforcing, and adhering to a Fixed Asset Policy will help build structure around your asset management processes. It will also provide anyone involved in your organization’s asset tracking activities with clear guidelines and expectations for consistent, year-round engagement. As a result, you can expect a cleaner, more streamlined—and possibly even shorter—inventory project.
We can’t promise that you’ll ever love the inventory management process so much that you’re counting down the days until you can grab that clipboard or scanner. But by implementing some of these tips, we can promise you that the job will be much easier. Yes, conducting a physical inventory might feel like a laborious project, but remember: it’s a labor of love.