From the technical equipment to the computer system used on a daily basis and to the chair on which everybody sits; everything counts as an organization's assets.
There are many risks involved if there is no significant asset management system in your business.
Every equipment fixed or liquid is important to your business functionality.
All these materialistic things present in the office will need maintenance and the software programs will go out of date and you will need to know that information.
All these assets need to be tracked down to know the exact equation of what you have and what you need at a given time.
A proper Asset Management System is needed for the business to monitor and manage the assets using a systematized approach.
The benefits from the asset management system will include improvements to productivity and efficiency which will lead your business to a better position to increase their return on investment.
How Ghost Asset and Zombie Asset can scare your Business?
There are more than just fixed and liquid assets that exist in your organization. These are note created by you, but they still anyhow manage to exist.
These assets can be ghost assets or zombie assets.
Ghost Assets are those fixed assets that exist in general ledger but cannot be accounted because they are not physically present or has been rendered unusable.
Zombie Assets are those fixed assets that exist physically but are recorded in any accounting records.
A zombie asset can be found during the physical audit, but it is never to be found on the fixed asset register.
Ghost asset and zombie asset are scary in the business to occur; they can threaten your business finances in two ways i.e., money loss and risk.
In case you are paying your taxes on missing, unusable, or stolen assets that mean you are throwing away your money.
And on converge, if you are not paying taxes for the assets you actually own then you are opening your company for a big risk.
Also Read: Everything You Need to Know About Phantom Inventory
What are the risks, with no direct association of proper maintenance?
There are many risks that appear in the absence of proper asset management system.
A lack of control over the fixed assets will lead to an increase in costs, compliance breaches, and poor performance.
Without proper tracking and monitoring technology, the cost can go out of control and create further performance issues for your business.
1. Less return on investment:
Maintenance of any hardware or software tool is expensive and time-consuming. It is difficult to keep a regular and an accurate check over all the devices and software, leading to poor return on investment.
2. Drive-up insurance cost:
Failure of regulations compliance over and around software use might have a cumulative effect on driving the cost of insuring your assets.
3. Unable to identify potential savings:
Purchase of excess of assets and inventories, continuous repairs of specific machines, excessive spent on software licenses are the few possible reasons that can make you go over budget. This all happens due to the absence of proper asset management system.
4. Unable to enhance asset performance:
Improper functioning of assets or a lack of sight on poorly performing assets can lead to productivity loss and increased downtime period.
5. Risk data breaches old assets:
There is always a significant security risk to your business from the unsupported hardware and software. Old or outdated assets will not provide the expected performance moreover, they need to be removed, replaced, or need an updated technology.
6. Unable to manage inventory:
Without any accurate asset management system, you cannot handle and manage the inventory remotely. Whereas, it is a critical aspect of the asset management system to remotely wipe data, revoke access, or either install or update software across all the devices.
7. Unable to identify unused asset:
For the field-based staff of an organization, it is important to know about the whereabouts of unused asset. You should know when and where the asset is gone.
Also Read: Is Utility Asset Management an Expense or a Liability?
How budget-making become challenging?
A fair possibility is at the times you might don't know about the whereabouts of many of your production equipment or fixed assets which might actually cost you several thousand dollars.
And the problem occurs when it is realized that the overall goal is to make your organization earn a profit.
Without any accurate and real-time asset management system, the level of difficulties increases at the financial level.
The situation will make it difficult for you to decide a budget for maintenance as you don't know the exact quantity of your business assets along with their condition.
It is difficult and certainly impossible to remove the assets that you own and increasing a needless cost to the company.
How deplorable management leads to unhappy employees?
Whenever the problem occurs in a business frequently the atmosphere in the office start to get intense leading to frustrated employees.
From an unrepaired air conditioner to the necessary technology which always remains unavailable or is lost.
These issues are not that big as they appear, they can be easily resolved just by implementing a good policy or by a good asset management system.
When you will know what amount of assets you have, you will start worrying about its maintenance, you will start taking actions to fix the problem with the asset.
You will make the asset start working well before it gets out of control and start to make good employees frustrated.
Why is Asset Management System important?
- The complete life cycle of assets (equipment and vehicle)
- Costs control from one location
- Reduction in asset's time of action
- Integrate with a system for information
Also Read: RFID vs NFC: How They are Different in Terms of Asset Tracking?
Asset management software makes you more aware of what assets you have and helps you avoid potential risks.
The system optimizes the life cycle of your assets from the time you procure them through usage, decommissioning, to its disposal.
Whenever you recognize your need for better asset tracking, you can put our plans in place to avoid any unexpected difficulty and give your organization an opportunity to excel.
Frequently Asked Questions (FAQs)
1. What are the benefits of asset management?
The asset management system makes you more aware of what assets you have and helps you avoid potential risks.
- Good Business Practice
- Better Decisions
- Improved Regulatory Compliance
- Improved Reliability
- Long Term System Integrity
- Cost Savings
2. Why is fixed asset management important?
Fixed Asset Management gives you space to reduce expenses through loss prevention and improved equipment maintenance. It reduces new and unnecessary purchases of assets and can calculate taxes more accurately and efficiently, based on its depreciation schedules.