When it comes to fixed assets management, most companies don’t have a clue what they are doing. Most understand that keeping an inventory of your fixed assets is a good idea (and often required for reporting reasons), but many don’t have a clue where to even begin with the process. To determine whether or not your company needs to conduct fixed asset inventory and reconciliation, consider how easily you can answer the following questions:
- What fixed assets do you own?
- Who currently uses those fixed assets?
- Is each asset in working order? Are they active or sitting idle in a corner?
- Where is each fixed asset physically located today?
- How much are your assets worth today?
Did the answers just roll off your tongue? Probably not. Answering these questions without some sort of fixed assets solution is difficult – if not impossible.
Since fixed assets play such an important role in the success of your business, you need to be aware of their presence and value. Unfortunately, many companies do not have complete, accurate or timely information about fixed assets, making it hard to effectively track and report on the items your company owns and uses on a regular basis. Take a look at some of the common mistakes made in fixed assets management and see if you can relate:
- The status of an asset is not captured, so you have no idea if the equipment is sitting idle or active.
- Assets are lost, broken or disposed, but the event wasn’t captured in your company’s tracking system. These assets are commonly referred to as “ghost assets.”
- The same asset is described different ways within the system, making it almost impossible to properly query the quantity of that item to analyze that asset group to benefit the organization.
- A quantity of an asset is purchased but shows as a single line item in your company’s ERP or accounting system (ex: “bulk” asset).
- New assets is purchased, but the information has not been collected in the fixed asset record.
Every company has experienced one or more of these problems when it comes to fixed asset management. In fact, the average fixed assets register is off by 15-30% due to items lost, stolen or no longer useable. This is why it is so important to invest in a capable fixed assets management software solution like Sage Fixed Assets and conduct regular fixed asset inventories and reconciliations. The software can help you keep track of current and new fixed assets, as well as calculate the value and depreciation of each item. With an accurate record of fixed assets and a solution that tracks each fixed asset event that occurs, you can better manage the overall cost of ownership.