How effective is your spreadsheet strategy for fixed asset management?
It may appear to get the job done, but the world has shifted to digitizing all business work streams for improved efficiency and cost savings. Managing fixed assets is no different.
Fixed asset depreciation, the process of tracking the life cycles of fixed assets and reporting their value for insurance and tax purposes, is one of the most important financial processes in any business or organization. Fact is, a good fixed assets tracking system is multi-dimensional and more than a spreadsheet can accommodate. And, the bigger the organization, the bigger the system requirements:
- Asset misappropriation schemes are the most common type of corporate fraud comprising 87% of the cases reported
- 15-30% of fixed assets are ghost assets, meaning they don’t exist. Many organizations are unaware of over payments and opportunities to cut costs
- 35% of US businesses say tax-related accounting is their biggest time hurdle
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Here are four barrier-breaking benefits of implementing fixed asset software that you won’t get from a spreadsheet.
Automated tax compliance updates
Tax laws are growing more complex each year. For many organizations with sophisticated schemes, it can be difficult – even overwhelming – to ensure assets are recorded and depreciated correctly. Doing so manually using spreadsheets puts accuracy and security at risk, which can be costly for any size organization.
Research shows that 35% of fixed asset management software users specifically site compliance with new and/or changing regulatory requirements as a key driver in minimizing risks. Today’s software solution includes updates (typically twice each year) of the most recent legislative changes so they are always accounted for in every calculation. Trying to keep up with all of the new formulas within a spreadsheet will leave your organization vulnerable to auditing, inaccurate depreciation calculation and hefty penalty fines. Automating this takes helps you ensure you’re on top of all changes at all times. A step further, some software providers include details about each tax law change as part of the update so you can become familiar.
Tracking and depreciating for fixed asset management
Just as legislation can be intricate to follow, important data and details about assets can be difficult to manage using a spreadsheet. Tracking disposals, transfers, labor, locations, materials, and capital investments, and generally accepted accounting principles (GAAP) are examples of key information you’ll want to be able to easily access and filter on one platform for a pulse on self-constructed assets. You can customize the specific data points you’d like to track with an automated solution, saving you time searching and facilitating confident analysis. Savvy solutions allow you to create custom depreciation methods so you can track hundreds of different types of assets comprehensively and in real-time in most cases.
Managing physical inventory processes
Again, 15-30% of fixed assets are assets that were disposed of but inadequately tracked. Juggling data across multiple spreadsheets can make it difficult to spot these kinds of discrepancies. Software solutions for fixed assets offer tools to reconcile disposals and transfers to ensure your inventory is reflected accurately and no over/underpayment of insurance.
Planning and tracking projects for fixed asset management
As time progresses and it’s time to replace assets (or depreciate new ones), you’ll want to start planning for budget and other resources to do so – especially if you have multiple locations. This essentially allows you to track assets through the entire lifecycle.
- The asset is planned from the budget for purchase to placement into service
- Depreciation is automated as the asset moves from the planning phase to in service throughout its useful life. You can manage the financial aspects at any point in the financial year.
- You can manage the physical location of assets through the lifecycle should you relocate or add a new location.
- Robust, often heavily customizable reporting capabilities to generate insights not available via spreadsheets (but imagine how many spreadsheets it would take!).
Workflow integration for efficient fixed asset management
Spreadsheet formulas can break when passed from one employee to another, or improper cell reference can lead to inaccurate values. With fixed assets, it’s easy for these inaccuracies to lead to bigger problems. Integration with your organization’s purchasing or accounting software adds another layer of control and simplicity that you won’t get from using spreadsheets. Purchasing data is automatically loaded from one business stream to the other, reducing human error and ensuring accuracy at each touch point. You can even attach an invoice to one or 10 newly purchased computers, for example. An integrated accounting and fixed asset reporting system eliminates the need to duplicate entries or export data between systems.
This can be particularly useful in the case of a natural disaster, burglary, or vandalization. Having this information readily available and easily trackable can streamline the insurance claim process.
Fixed assets may appear complicated at first glance. After all, they can be subject to a multitude of rules, regulations, and depreciation methods and can be physically located in a wide range of geographical locations making it difficult to keep an eye on. And that’s before you factor in cumbersome spreadsheets and information silos. New product intelligence affords those responsible a better way to manage them, though, that can ensure cost savings for the company and enhanced productivity for everyone involved. With a streamlined process for tracking and depreciating fixed assets, they can simply be part and parcel of a well-run organization, enabling its growth rather than hindering its progress.
Spreadsheets, while useful in many ways, can only take your company so far when it comes to managing fixed assets. After a certain point, it’s worth investing in fixed asset tracking software, which can intelligently streamline the above processes and much more. Doing so can give your company more insight into its fixed assets, minimizing their TCO while simplifying operational and financial workflows.
Has your organization migrated to a digital fixed management system? If yes, how would you compare the difference? Do you plan to within the next 12 months? Tell us why or why not in the comments.