Does your business use a system that makes it easy to anticipate the lifecycle of your fixed assets and identify ways to cut costs though tax breaks, or is it a constant struggle to keep track of your assets?
The problem with spreadsheets
While spreadsheets and legacy software play an important role in managing your fixed assets, they can eventually cause problems in your business.
Why? Because documents and spreadsheets are often shared around the office and can be edited by anyone. This makes it difficult to keep track of changes and you can’t be sure that the version you’re working with is the most current.
Aside from the name of the last person to edit the document, and the date and time it was edited, there is no way to automatically log changes. This means that data within spreadsheets can be easily compromised because there’s no way to easily see who changed what.
This can cause major issues when trying to manage fixed assets. Aberdeen identified manual data input, a lack of security and accountability, broken formulas, and inaccurate data as some of the biggest issues with using spreadsheets to manage fixed assets.
How fixed asset management solutions can help
Asset management software not only maintains the security and stability of your data, but also allows your organisation to handle higher volumes of more complex data.
With the ability to account for each asset in your business, you can mitigate risk throughout the asset management lifecycle and uncover ways to save money.
Take advantage of depreciating assets
Manual processes make it harder to keep track of your assets, but with the right software, you can take advantage of your depreciating fixed assets and save money as they age.
Here are 10 ways that fixed asset management software can help you to reduce risk and save money as your assets reach end-of-life.
Accurate asset registration
Asset management solutions let you accurately record how much you paid for your assets, when you bought them, and from where, allowing you to predict an asset’s end-of-life value. These figures are necessary if you need to record them as a tax-deductible depreciation expense.
Remain tax compliant
Keeping up to date with changes in tax laws will help you to avoid penalties and minimise non-compliance risks. It also helps you to identify and take advantage of tax breaks and benefits. Cloud accounting software captures these changes automatically, so you can assess how to use them to your advantage.
Automate depreciation calculations
Depreciation calculations depend on the asset. Tracking the various depreciation methods and manually calculating the depreciation value of each asset is time consuming and can be costly if done incorrectly.
Most asset management software automatically incorporates tax changes and depreciation calculations. This makes it easy to identify depreciating assets and dispose of those that you no longer use, so you can reduce tax and insurance costs.
Accurate tax reporting
Incorrectly declaring the cost and value of your assets when filing your tax forms wastes time and can result in heavy penalties. What’s more, it also has a knock-on effect on period closing and financial statements. Asset and inventory management software make it easier to fill in tax forms, reconcile accounts, and avoid the pitfalls that come with incorrectly declared information.
Identify ghost and zombie assets
There are two types of assets that either don’t exist or can’t be accounted for, but still cost you money:
- Ghost assets, which are on your books but can’t be physically accounted for (making up 15%-30% of assets), and
- Zombie assets, which you can account for physically, but aren’t on your books.
Your business could be carrying thousands in untracked assets if you don’t monitor their lifecycle accurately. With asset management software, you can easily remove old assets, add new ones, and transfer those that are moving through their lifecycle.
Reduce risk through software and workflow integration
Inaccurate data can lead to even bigger problems for your business. Spreadsheets passed from employee to employee can be unintentionally (or intentionally) compromised by broken links, incorrect formulas, and human error.
Fixed asset management software, which can be integrated with your inventory or accounting software, mitigates these risks by automating most processes. Data can be automatically shared between solutions without duplication or the need to export data between systems.
Stay ahead of the game
Fixed asset management software can help you identify ways to save money before you’ve even acquired a new asset. Here’s how:
Asset forecasting for business expansion
Planning ahead and forecasting which assets your business might need in future makes them easier to track and account for.
In addition to forecasting, asset management software gives you the opportunity to budget and plan for the acquisition of new assets, so you don’t pay too much or too little as they depreciate.
Keep track of spend margins
By reporting on realised costs and identifying spend against budget, you can better plan for future asset purchases.
Asset lifecycle tracking
Tracking the lifecycle of your assets from planning, to acquisition, to retirement is seamless with asset management software.
The last word
Legacy software might work for your business today, but as you grow and acquire new assets, you may need to upgrade to a more powerful, robust asset management solution.
Automation will make it easier to keep track of each asset as they move through their lifecycles and will help you to accurately identify, and take advantage of, cost-saving opportunities.