Small businesses that don’t utilize fixed asset inventory software often encounter the pitfalls that can doom startups and companies with outdated infrastructure — disorganization, poor security, lost or stolen assets, tax code violations and other issues. But due to inertia or even lack of resources, some companies are reticent to make the switch to technology that can help improve their business practices and bottom line.
Fixed assets, also known as hard or tangible assets, are long-term pieces of property that will be used in the production of income and won’t be converted into cash in the near future.
Fixed assets, also known as hard or tangible assets, are long-term pieces of property that will be used in the production of income and won’t be converted into cash in the near future. Examples of fixed assets include laptops, cloud computing software, machinery and real estate — all of which can be costly to replace if lost, damaged or mishandled according to the law. Thus, it’s critical to obtain software that helps you track and maintain your fixed assets to keep your company running smoothly.
Choosing software and learning how to best utilize it might seem daunting to newcomers. By following this list of best practices, you will begin to understand exactly where to start and how to choose the correct fixed asset inventory software for your business.
7 Best Practices for Fixed Asset Inventory Software
- Understand the scope of your project
- Assign responsibility for your management process
- Learn basic fixed asset procedures
- Rely on automated software going forward
- Keep an eye on emerging technological trends
- Ensure your employees, and system, value security
- Clear out ghost assets
1) Understand the scope of your project. Depending on the size and focus of your business, you may need to invest in information technology asset management, which can handle projects ranging from basic tracking of computing units and networks to more high end goals like integrating your hardware with accounting for financial and life-cycle management. On the other end of the scale, fixed asset management also refers to keeping track of office necessities like toner and ink. Whatever your scope, make sure you understand what you’ll be monitoring from the beginning.
2) Assign responsibility for your management process. A leader with the support of all executives and stakeholders should be responsible for determining what assets are necessary to track and what software is needed to track them. Oftentimes, this person is the CFO — according to a joint survey by Gartner and the Financial Executives Research Foundation, CFOs approve 26 percent of all IT investments, while CIOs approve just 5 percent. Similarly, CIOs often report directly to CFOs, particularly in small businesses. Whoever gets the final say, ensure they understand all of the moving pieces involved in selecting new asset management software for your business. This helps to ensure that the software you choose will meet all of the requirements laid out in your initial project scope.
3) Learn basic fixed asset procedures. There are a number of basic procedures you can learn to turn a complicated transaction into a step-by-step process.
- Asset Recognition Procedure: for determining the initial base unit, cost, limit and class of an asset.
- Fixed Asset Record Creation procedure involves recording all the necessary information needed to identify — for example — a manufacturing asset (serial number, location, responsibility, cost, etc.).
- Depreciation: This procedure tracks the useful life and depreciation method that are standard for the asset in question.
- Interdepartmental Transfer: This procedure ensures all records are updated for an asset that is routinely shifted between various departments in your company.
4) Rely on automated software going forward. Even the most diligent book-keeping and in-depth knowledge of basic procedures can lead to human error and thus issues with compliance, lost assets and inaccurate records. Modern technology, including RFID and barcodes, will update your asset inventory in real-time, help you find and track assets, and update workflows to reflect changes.
5) Keep an eye on emerging technological trends. Traditional IT assets such as laptops may be simple to track, but as Big Data continues to get bigger with the “Internet of Things,” companies will begin to see an increasing number of internet-connected devices — from smartphones to tablets to fitness tracking hardware — become part of their ITAM management system.
6) Ensure your employees, and system, value security. As mobile devices become more common — it’s estimated that 48 percent of all employees will work exclusively from their own tablets and smartphones by the end of this year — it will be more vital than ever to practice good security on those devices, particularly if they have access to your fixed asset inventory system. Utilization, CMDB integration and licensing standards are all expected to rise as part of the growing trend of mobile maturity in 2015 and the years beyond.
7) Clear out ghost assets. Ghost assets are fixed assets that are either missing or have become unusable over time. The problem with unknowingly keeping these assets on the ledger is that they can lead to higher personal property taxes and insurance bills, as well as an inaccurate assessment of enterprise value. These are issues that will show up in audits, or on your bottom line as your property taxes inflate. Learn how to deduct the remaining costs of such assets and dispose of them before the problem is too big to handle.
Small businesses already operate on too thin of a margin to afford the kind of costs that inaccurate fixed asset inventory management can lead to; even larger businesses can be unwittingly cutting into profits by ignoring liabilities, loopholes and emerging trends. By investing in good fixed asset management software and utilizing it correctly, your business will almost certainly reap a high return on investment that every employee, executive and stakeholder can benefit from.
Article by Brian Sutter, Director of Marketing at Wasp Barcode