As we descend into an increasingly crippling financial crisis, private and public sector organizations alike are having to be more intelligent with their budgets to avoid getting into trouble. Inefficient accounting is a common occurence which can lead to wastage in terms of fixed asset expenses. By making sure you have a good handle on the fixed assets your organization owns you can identify these leaks, put a stop to them, and save a surprising amount at the end of the tax year.
What are fixed assets?
For starters, let us define the meaning of fixed assets. Businesses have two kinds of assets. Items such as machinery and computers, as well as property and buildings, are known as tangible or fixed assets. Basically things you can reach out and touch, and are worth something. The assets you can’t touch are called, unsurprisingly, intangible assets - such as trademarks or patents. It’s the first kind we’re concerned with here.
Why should I care about tangible assets?
Well, for starters, recording your fixed assets is a legal requirement on your accounting records. Failure to keep a record of them could land you in hot water. More to the point, the more you know about them, the more money you could save. That means knowing where they are, how much they’re worth, and how much their value is depreciating. In a sense asset tracking is a way for a business faced with financial hardship to pull cost savings ‘out of thin air’.
So exactly how are you supposed to manage your fixed assets?
The first step is doing an audit of all your assets and keeping a record of them. Given that this needs to be submitted with your taxes, chances are you’ve (hopefully!) already done this in some form. Most commonly this is recorded on a humble spreadsheet, but increasingly savvy organisations are using more sophisticated asset management software. Beyond simply auditing and recording items in your asset register, you need to be able to track each and every asset. That means where it moves to, how much it’s worth, how often it breaks down, and so on.If you’re a one man or woman show that doesn’t mean much more than looking around the room and noting down the model of your computer and desk lamp. But the larger the organization, the more complex a task this becomes. And this is where dedicated asset management software really comes into its own. With it you are able to take care of the whole process with ease - auditing, creating an asset register, tracking, maintenance, and accounting. A professional package, most importantly, will have the ability to identify precisely where your organization could be making big savings. The real question is, how can you afford not to invest in it.