Here’s How Fixed Asset Software Can Ease Your Asset Management Activities
Dealing with the purchase, recording, tracking, and maintenance of your organization’s fixed assets can be a time-consuming activity for the finance team. These tasks rely heavily on administrative processes and therefore, do not necessarily add tangible value to the business.
In this article, we will explore how automation using fixed asset software can help you make noticeable resource savings to your fixed asset management activities and the benefits that it can bring you.
What are fixed assets?
Fixed assets, also known as capital assets, relates to any physical item that an organization owns, such as property or equipment, that generate income and add value to the company. Typically, fixed assets have an extended useful life that covers more than one reporting period. Since organizations own fixed assets for the long term, these are not readily converted to cash.
Best practices of managing fixed assets
Fixed assets are usually high value, revenue-producing, and long-term items. Thus, there are inevitably several areas in which management of such assets must comply with business accounting, legal, regulatory, and operational procedures.
A good way of dealing with everything involved in fixed asset management is to implement a fixed asset lifecycle process. This process breaks down the various stages in the life of an asset to enable a business to analyze how it is being used, opportunities for cost or efficiency savings, and when and how to replace it when business needs arise.
There are four key stages of the asset lifecycle process. Each stage must be carried out effectively to ensure the maximum benefit of the asset to the business across its workable life.
1. Planning stage
The planning stage involves drawing up a business case to ensure that the suggested asset will add value to the business in some way, how it will be used, and the budget available to purchase it.
2. Purchasing stage
The next stage, the purchasing stage, is the point at which viable options in the market are assessed and validated. Comparisons are made based on cost, quality, and usefulness. Afterwards, the eventual purchase and addition to the fixed asset inventory follow.
3. Operation and maintenance stage
The operation and maintenance stage takes up the bulk of the time and is the period during which the asset is used to extract revenue for the organization. Maintaining the asset adequately during this time is crucial to ensure the fixed asset stays in good condition and endures for a suitable period of time.
4. Disposal stage
Finally, when the asset is either too old or not optimally functioning to be of continued effective use to the business, decisions must be made regarding how to dispose of and replace it.
What are the most common fixed assets?
The term “fixed assets” covers a broad range of items, from property and company vehicles, to plant machinery and equipment. With the ever-increasing use of Information technology (IT), web-based applications, and digital initiatives in today’s modern workplaces, IT software is also generally considered to be a fixed asset. Particularly, it is software that is operated by IT hardware or under a software license.
Features to expect from a fixed asset software system
If you are looking for a system to add some automation to your organization’s fixed asset management activities, there are a few key areas to consider.
Naturally, your needs will be related to the specific circumstances of your business, like its size and industry, plus the number and makeup of assets on its asset register. However, there are some features you should focus on when comparing options on the market to ensure that you are getting good value for money.
First, you are looking for a fixed asset software system that offers solid auditing and reporting functionalities so that you can monitor the cost, condition, and depreciation of your key assets at the touch of a button.
Further, the tool should also offer the functionality of tracking assets throughout their life cycle for strategic analysis purposes. In addition, with the aim of ultimate simplicity and ease of use, a single web-based interface with a range of different user options is often preferable.
Choosing a fixed asset solution that meets your business needs
With so many types of fixed asset management tools on the market, it can be confusing to ascertain which system will offer your organization the most practical and tailored benefits.
Involve a variety of internal teams and stakeholders in the process, from your finance team to the IT and procurement team, to ensure that you get a range of views on the workability of the fixed asset solution and how it can best be implemented in practice.