Asset Management
Why Is It Important to Discard Your Old and Weak Assets?

Why Is It Important to Discard Your Old and Weak Assets?

Why Is It Important to Discard Your Old and Weak Assets?

It is very important for every organization to take a call on the useful life of all the assets in the organization. The only two important questions that companies derive out of this statement are - When & How!

For any organization to address this question can be really tough and time-taking. There are multiple factors which can influence the disposal of assets and then there are various assets which are to be disposed of in a specific way to keep a check on customer privacy and data security.

Important Disposing Asset Factors are Listed Below:

a) Required to be disposed under a certain policy. For e.g.: Motor vehicles

b) Assets are no longer required due to a certain change in procedures, functions or usage patterns.

c) Assets occupying storage space and will not be needed in the foreseeable future.

d) Assets reaching their optimum useful life and will get reasonable returns upon sale.

e) Assets are no longer complying with workplace health and safety standards.

f) Assets found to contain hazardous material and should be disposed of immediately.

g) Assets are beyond the repairs and cannot be salvaged, but can be sold for scrap following the rules and regulations.

Also Read: Reducing Breakdowns with Effective Preventive Maintenance

Apart from the predictable reasons mentioned above, there are few other situations that can influence the immediate disposal of assets.

For e.g.: A machine may be running a weary manner and might be breaking down for equipment maintenance on a continual basis and forcing the organization to pay for the repairs. In this situation, the immediate cost or buying a new machine might sound expensive.

However, if the maintenance cost, time taken for repairs, and loss in production are taken into account; then the replacement of the machine seems to be the only rational solution.

Various studies suggest that downtime costs can bring production capacity in the range of 5-20%. Due to this unforeseen error, nearly 80% of the industrial facilities are incompetent in calculating their TOTAL DOWNTIME COST (TDC).

Now, the important question is to differentiate between proper and improper asset disposal procedures.

Comparing Proper and Improper Asset Disposal Procedure Below

Many organizations which function in the banking and financial sector take a lot of effort while disposing of the IT Assets like hard drives, copiers, tablets, phones, etc. which contains valuable information about customers.

Deleting documents and files on a computer cannot erase the data completely. So, in order to ensure the complete destruction of data, one should opt for professional services.

There are other options also available in the market like selling the used IT Assets to refurbishing companies as long as it is functioning. This can also help in avoiding any misuse of the data and aid in the investment of newer more reliable assets.

Furthermore, recycling assets can help in the cause of environment protection along with the removal of old company assets. There are professional companies which have acquired expertise in this field and can help in the safe removal of data before destruction.

In addition to the above, industrial waste comprising of old machines and equipment should be responsibly disposed of; in accordance with the guidelines laid down by various environmental protection agencies.

This objective can only be achieved within a curated process, wherein all the data related to the equipment is readily stored and is accessible to avoid any unforeseen expense on maintenance.

Once the depreciated value of the equipment becomes lesser than yearly maintenance cost, the organization can easily write off the asset and acquire the replacement.


In the entire process mentioned above, tracking and discarding of assets - old or new; plays an important role. Detailed information about the purchase of assets, their maintenance schedules, and the physical movement of assets for estimating financial liabilities and their net worth at any point of time.

With an accurate asset management software, organizations can easily store the requisite data and enable the development of protocols for estimating the asset's life cycle to enhance the accuracy for cataloging physical inventory and strengthening the balance sheet.

Also Read: Keeping a Track of Breakdowns Can Help in Efficient Asset Management

Frequently Asked Questions (FAQs)

1. What Is the Importance of Discard Assets on Time? Give Example!

Discarding assets on time is important for business. For example, if you use assets that are not in good condition & their working life is over then their chances of failure are greater than those assets which have more asset life left. Moreover, they can lead to catastrophic asset failure which can hamper daily operations and employees’ health will be compromised. Furthermore, if that is found during an audit organization will be charged a lot of money penalty.

2. What Are the Main Reasons for Discarding Assets?

A few of the main reasons are mentioned above. Here are some of the other reasons for discarding assets.

When asset life is about to be over it starts showing signs such as decreased asset performance, more maintenance requirements, and so on. When the asset is fully depreciated then an asset discard can be made. When an asset is no longer required in the organization, in that also asset discard can be done.

3. How to Properly Discard Assets?

Discarding assets properly is essential for business if that is not done in the right way the organization will pay insurance and taxes for assets that they are not even using. That is why assets must be properly discarded! How, may you ask? You must discard it physically at the same time you should remove it from all your record maintains software as well. If the asset is not discarded in the right way you will pay for assets that you are not using until you find it in the next asset audit process.

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