Many organizations don’t realize the value of effectively and efficiently tracking their fixed assets. When businesses track property correctly, they develop an accurate perception of how profitable their investments in land, infrastructure equipment and other fixed assets are. While fixed asset management can lead to important tax savings and limit unnecessary spending, businesses that rely on spreadsheets to track property conditions risk making errors on financial reports and wasting time and resources. Fixed asset management software can prevent these risks, however.
Spreadsheet software is an essential tool for businesses that use them for employee hour registration, expense reports and industry-specific projects. However, they often prove lacking and cannot appropriately meet organizations’ financial tracking needs. Here are three reasons how spreadsheets fail to save businesses money in asset management.
Spreadsheets are not dynamic
As asset values depreciate differently, they can be difficult to track manually. Factors that play into an asset’s condition and value, such as initial purchasing price, age, use and wear, aren’t always taken into account correctly on spreadsheets. “Parent/child” relationships also play into asset value, and spreadsheets don’t accurately calculate or reflect these dependencies. When values listed are inconsistent or exaggerated, businesses lose important amounts of money through insurance and taxes. Asset management software takes into account the variables that spreadsheets cannot.
Calculation and spreadsheet errors
Human error is inevitable, which is why financial reporting shouldn’t be a manual task. Every year, businesses large and small lose thousands of dollars because of spreadsheet errors, according to CFO magazine, which explains that tracking financial data on spreadsheets has caused large companies to misstate financial standings.
When formulas are created manually, growing spreadsheets become daunting as these formulas become more complex. One typo can derail an entire column or row, which can throw off the accuracy on an entire sheet.
Complex data confuses the human eye
Spreadsheet cells that contain a formula rarely explain what the cell is calculating. It’s very easy to misinterpret data because ranges aren’t be clear.
Meanwhile, financial reporting and forecasting is difficult and time-consuming when accounting staff has to rely on asset management spreads.
In light of these operational and financial issues, it’s vital that companies adopt appropriate tools for keeping track of their fixed assets.