Fixed Assets in Your Organisation: The Risks & Rewards
Neglecting to manage fixed assets properly can pose serious risks for organisations of all sizes. A lack of control over these items can result in operational challenges and inefficiencies, financial losses and even potential legal issues.
In this guide, we take a look at the risks that arise when your capitalised equipment is not identified properly, as well as the rewards you can reap when they are.
Fixed Assets : The Risks of No Visibility
The three main areas of risk cover: operations, compliance and financial impact.
Operations
Common issues from misplaced and untagged assets include:
- Delays in manufacturing caused by problems such as lost equipment or stock
- Manual administration processes can’t keep up with equipment or inventory demands
- Replacement costs rise as misplaced items can’t be found when needed most
- Not tracking an asset’s lifecycle results in unscheduled, unexpected maintenance which in turn means increased downtime and costs
- Asset lifespan is reduced as items fall outside of critical inspection and maintenance schedules.
- Time and labour is wasted trying to find assets
- Planning and forecasting is inefficient because you don’t know what you have
- A lack of effective distribution management and asset optimisation leads to inefficiencies.
Compliance
Health and safety is just one area where efficient asset tagging and management is vital for proving your operational compliance when the unimaginable happens.
Tagging fixed assets means you can produce a full asset audit trail and schedule regular inspections and maintenance.
When accidents happen, this audit trail is vital, giving you the data required to prove that you have taken the correct steps to protect staff and the public from risks such as on-site vehicles, failure of fire protection equipment or other work equipment. With full evidence of inspections, maintenance and replacements, you will be in a position. to minimise awards for damage against your organisation and reputational loss.
Financial Impact
Financial risk is real. Without clear visibility on the status and value of your assets, your financial reporting will not be accurate, resulting in a potential challenge to your financial statements.
Audit issues
In the absence of comprehensive asset tagging and logging, auditors will find it time-consuming to accurately assess your asset register, verify ownership and value. Discrepancies can lead to your company having to adjust and re-state results.
Depreciation
Calculating depreciation sums for both balance sheet and income statements rely entirely on the correct aggregate values for fixed assets from year to year. Out-of-date registers will mean inaccuracies that can affect shareholder views and trigger tax authority investigations.
Insurance
An out-of-date asset register with old purchased costs, or missing items, is highly likely to mean the ‘contents’ section of an insurance policy is under-insured. Without an accurate picture, ownership and replacement cost will be difficult to prove and the insurer may average or deny the claim.
Security
Untagged assets are more exposed to loss or theft and the organisation may not be aware or able to take steps to deter it until it is too late. There could be significant financial impact from replacement costs, especially in multi-site operations where head office oversight is limited.
Decision-making
In the absence of accurate information, decisions and strategic planning over new equipment purchases, their utilisation, end-of-life replacements and resource allocation is prejudiced and inaccurate.
ASSET MANAGEMENT GUIDES
The Ultimate Guide to Physical Asset Management Software
The Rewards of Fixed Asset Management
We’ve learnt how the risks of not properly managing fixed assets can ultimately lead to a lower profit margin. On the flip-side, any organisation can gain significant rewards by managing their fixed assets with an online asset management system. Cloud asset management platforms help you track and manage tagged assets. It provides an up-to-date picture of asset and equipment distribution and usage as data that staff across the business can easily access for operational, financial and strategic planning.
Financial reporting
A comprehensive tagging process ensures accurate calculation of asset depreciation and valuation.
Security
Tamper-resistant labels inhibit theft and assist in proving ownership and recovering items.
Insurance coverage
Itemised and accurate replacement values ensure that adequate sums insured and swift, accurate and representative claim settlements.
Operational efficiency
A digital approach to asset management includes asset tagging, mobile app and a central online platform. This process makes asset management faster and more efficient, meaning you always know who’s got what, where, its condition, lifecycle history, as well as maintenance and disposal schedules.
Improved regulatory compliance reporting
Track asset lifecycles to demonstrate how you meet industry regulations and legislation and avoid fines.
Enhanced decision-making
Gain accurate real-time data for better strategic planning and financial management.
Gain commercial advantage
Data on assets and business processes gives you detailed reporting to improve services and manage costs to gain competitive advantage.
Gain efficiencies with streamlined administration
Reduce manual data entry, improve accurancy and speed up admin processes; all reducing costs in your organisation.
Practical Steps for Improved Fixed Asset Management
Unique identification
Establishing individual database records for each asset requires a unique reference which is provided by barcodes, QR codes, NFC tags, RFID tags, as well as bluetooth and GPS devices. Your choice will be determined by automation requirements, environmental conditions as well as threats of interference or theft.
Read more in our Guide to Asset Tags.
Asset management apps
Whether you choose to use a standard mobile device with an app, or a scanner, apps simplify and speed up the asset tagging, audit and inspection process.
The built-in scanning capability means you can identify and update an asset’s status on-site fast. This replaces manual processes which demand transcribing information to other systems such as excel, which is both slow and risks inaccuracies. By using an app, that data is automatically transferred to your central asset management platform and is accessible in real-time by the departments that need it.
Online software
One of the key benefits of asset management software is how it shares data instantly and is available for access from anywhere 24/7. The best platforms include user-definable fields in line with your own business processes and data requirements. Even better, you can simplify processes with customised alerts while ensuring you have the operational data you need to work efficiently, this includes; documentation, photos and GPS co-ordinates. For easier reporting, your system should be able to be integrated with other business systems, so data can be transferred easily.
Asset Audits & Verification
When you’re introducing an improved asset management system, you need an accurate asset register and inventory of all your items across all locations. You can do this internally, or get an expert like Assettrac to conduct it for you , saving you time and resources.
Once the asset audit is completed you have an up-to-date set of data for on-going management. Regular audits are recommended to improve overall control, best practice and to identify discrepancies between your records and the situation on the ground.
Safety Inspections
Inspections and maintenance is easily managed when items from fire doors to IT assets are tagged. Scanning and checking the item and updating the app with its current status, helps you to report failures and maintenance requirements and take action faster. One Assettrac client reported that this reduced the time taken to undertake inspections from two days to two hours!
Revenue-generating assets
Many products generate income and therefore need tagging and tracking to minimise losses in the supply chain. Data can provide the latest information on the item’s stage, process and location which can feed into reporting and invoicing.
Get a customised solution for your asset management requirements.
Assettrac leads the field in customisable solutions for asset management working with businesses all over the world (and all sizes) to create powerful asset tracking systems. What’s more, we consult and implement everything you need to get your dedicated platform working effectively including tags, hardware, implementation and full support.
Call us today to discuss your specifics, so you know where you stand.
Contact: 01273 491267 / enquiries@assettrac.co.uk