What is asset management? This question is far more common for business owners than it should be: An incredible 55 percent of SMBs polled by Wasp Barcode’s Small Business Report admitted they did not use an asset management system that allows for auditing. That means only 17 percent of companies are realizing their full economic potential.
Fixed assets are the long-term assets that companies invest in and use in the production of inventory and income. When purchased, fixed assets are expected to remain on the books and in use for at least a year, if not longer , which is why tracking their physical location as well as maintenance status, level of depreciation and other data is so important. That is the essence of asset management, and since assets are often the biggest expenditures a small or medium-sized business makes; not taking care of them is tantamount to throwing money away.
Some businesses may not realize the ripple effect that subpar asset management can have on everyday and long-term business expenses. Here are five things you might not know about asset management that should persuade you to allow the technological revolution to extend to your “hard assets,” or “plant.”
Spreadsheets are ridiculously error-prone
People are generally reticent to change, even if there are proven advantages to altering a system, pattern or tool. There are lots of reasons individuals and organizations resist change to the status quo, from a fear of losing control to the uncertainty of the unknown. This may explain why so many companies are willing to stick with spreadsheets for asset management, they are tried and true, and businesses of all sizes have used them for years.
Related Article: 10 Reasons Why Asset Tracking Software is the Perfect SolutionJust how unreliable are spreadsheets? Studies show an incredible 88 percent of spreadsheets have errors. Many of those errors are the result of bad math, but manual input is also to blame, as humans tend to make an input error every 300 characters. This results in inaccurate audits, which lead to bigger issues like false valuations and higher tax bills. While asking another person to double-check spreadsheets is a possibility, switching to an automated system is the more efficient and effective solution.
Ghost assets are a major financial burden
Not familiar with ghost assets? A ghost asset is a fixed asset that appears on the general ledger but can’t be accounted for in real life because that asset has been lost, stolen, rendered unusable. The ghost asset may never have existed in the first place but appeared to be real because of an accounting error.
Not only do ghost assets slow down productivity (searching for a needed asset like a laptop or vehicle to no avail is a waste of time and can interfere with actual income-generating projects), but they still count towards the company’s tax and insurance liability. As a result, companies often overpay their taxes by as much as 20 percent.
The technology for it is readily available
Investing in automated asset management is as simple as downloading the software and equipping your employees with the tools they need to track assets. As it turns out, the simple barcode (or, in more recent years, the more complex but still easy to utilize 2D barcode) is the main building block for many leading management systems, companies like Amazon use barcodes on their assets and inventory, which helps them track billions of deliveries from their warehouses to customer front doors. Outfit employees with a barcode scanner, mobile computer or even a smartphone and they’ll be able to start updating your database in real-time in no time.
It helps you save money proactively rather than reactively
Too often, business owners find themselves scrambling to save money reactively rather than proactively. When they find out the company’s books are not in compliance, or that an often-used machine has broken, the company has to find a way to recoup money that is essentially already lost, fighting fines, taking pieces from other assets to fix one that is broken, etc.
One of the great things about automated asset management is that it can help you stay ahead of the curve: From the time you enter a fixed asset into the system, your software can accurately depreciate its value, sending you alerts when the asset is due for routine maintenance, or when it has been fully depreciated, reaching the end of its useful life and requiring disposal and replacement. This not only keeps your business running smoothly, but it keeps you in proper tax compliance to avoid costly and painful IRS audits.
It’s part of the mobile revolution
As smartphones become ubiquitous in the pockets of everyday Americans and in the workplace, business owners should recognize that mobile devices can be a useful tool in the asset control process. Allowing employees to B.Y.O.D. (bring your own device) and equipping them with barcode reading apps to help track assets will allow them to stay connected to the network and database from remote locations, whether that’s out in the field, in the warehouse or in another part of the office. This practice is a major productivity boost, and isn’t likely to subside, mobile and cloud computing is the future of computers in the workplace.
While cloud computing means fewer moving parts and better reliability, the trick is to ensure workers are utilizing their devices safely so as not to compromise company security and productivity.
Ensures accountability company-wide
Another major and obvious perk to automated asset management is that it holds employees accountable for assets that they’ve checked out from your system and unfortunately, employee theft of office equipment costs businesses as much as $1 billion annually. Accountability isn’t just about loss and theft prevention: It also concerns maintaining certifications (such as AIB certification) to stay in regulatory compliance, as well as ensuring that employees that were previously concerned with manual audits have moved on to other revenue-generating duties. Workers, managers and CEOs will become more accountable for their actions and time without poor asset tracking hanging around as an excuse or burden.
This list should serve as a reminder to any small or medium businesses that hang on to old methods because they are “tried-and-true” or “more cost-effective”: The hidden costs and issues that arise when using manual processes are no longer worth it. Automated asset management takes the guesswork, errors and excuses out of tracking valuable investments, and those who don’t embrace this new era will likely be left behind.
How would implementing an asset tracking system save your business time and money?
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