Your assets are an important part of your business’s financial picture, but if you’re like many small businesses, they’re not making it into your financial records. While asset management is important, it’s poorly understood by small business owners. However, asset management is more than a tax requirement that requires you to keep your receipts organized. It’s also a key component of a business’s financial health. Use these expert tips and resources from Forbes Digital Hub to make sure you’re giving this aspect of your company the time and attention it deserves.
Why Do Businesses Need Asset Management?
Asset management allows small businesses to track the value of their assets over time. This simplifies tax filing and protects businesses in the event of an audit. Asset management also streamlines asset purchases, maintenance, and disposal by allowing companies to easily track an asset’s age and location. An asset management system lets an employer track the age of IT equipment so it can be replaced before performance suffers or set maintenance schedules for company vehicles.
Asset management is equally helpful when it comes to equipment employees have access to. With an asset management system, employees can check out assets and employers can track when they get damaged or go missing.
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Through these uses, asset management prevents ghost assets. A ghost asset is an item that appears in your ledger but can’t be accounted for. Ghost assets happen due to recording errors, theft, and unreported damage. Since ghost assets lead companies to overpay on taxes, they’re an important thing to avoid. You can avoid ghost assets by using data analysis services. This will save you a lot of money in the long-run.
The Trouble with Manual Asset Management
Whether pen-and-paper or an Excel spreadsheet, manual processes are how many small businesses get started with asset management. (If they get started — in one survey, 34.7 percent of businesses said they don’t track assets at all!) However, manual processes are extremely prone to error, and when it comes to asset depreciation, small accounting errors can cost companies big time.
Manual asset management is also time-consuming, which makes it difficult to scale. As a company adds assets, a manual tracking system will quickly become unmanageable. You can look into a data analytics company to help you set up an automated system, which will ramp up efficiency, improve accuracy, and free up personnel for other tasks.
How to Set Up an Asset Management System
Instead of relying on manual tracking, small businesses should set up an automated asset management system from the start. As Forbes explains, by using data analytics to establish an automated system, companies can seamlessly check assets in and out, record asset location, schedule maintenance, and calculate depreciation.
The first step in any asset management system is the asset tagging flow. Asset tagging involves assigning a category and ID number to incoming assets, then affixing an asset tag to each item so it’s easily scannable. Keep in mind that if you have any assets that are kept outdoors, you’ll need heavy-duty tags that can weather the elements. After tagging each item, asset data must be entered into a tracking system and verified.
Next, determine the maintenance needs of various assets and create maintenance, purchase, and disposal schedules in your asset tracking software. By taking a proactive approach to asset maintenance, you can reduce damage and downtime due to unavailable tools.
The final and perhaps most challenging step in implementing an asset management system is training employees to use it. In addition to setting maintenance responsibilities and access levels based on employee roles, managers must get employees in the habit of checking assets in and out rather than taking them as needed. Only when asset management systems are fully utilized can companies take advantage of their real-time data and other benefits.
Finally, know that your biggest asset is yourself. Increase the value of that asset by obtaining your degree in business. Not only will that open doors for you in terms of future employment, but it will also give you an edge in the field by teaching you the skills you otherwise have to learn through years and years of trial-and-error. Additionally, the flexibility of online programs allows you to further your education while still working – and implementing those lessons in real time.
While poor asset management hurts productivity and profitability, a well-designed asset management system allows small businesses to maintain their investments without spending hours on manual tracking. If a lack of asset management is becoming a problem in your business, let this guide be the first step toward implementing an asset management system that scales.
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