Asset Tracking - More Important in the Economic Crisis

As we descend into an increasingly crippling financial crisis, private and public sector organizations alike are having to be more intelligent with their budgets to avoid getting into trouble. Something that's not often considered is holes in the way your business does its accounts which can lead to asset leakage. If you ensure that you have a grasp on what's happening with your fixed assets, chances are you'll be able to make significant savings and boost your profits for relatively little effort.

What is a fixed asset?

For starters, let us define the meaning of fixed assets. Businesses have two kinds of assets. Fixed assets, also known as tangible assets, include things like land, buildings, machinery, equipment and computers. In essence, they are objects of value that you can touch. The assets you can't touch are called, unsurprisingly, intangible assets such as trademarks or patents. It is tangible assets that I'm writing about in this piece.

Why do you need to know about fixed assets?

Well, for starters, recording your fixed assets is a legal requirement on your accounting records. You can get into a sticky situation if you don't know about them. More to the point, the more you know about them, the more money you could save. By this I mean knowing how much they're worth, calculating depreciation, and knowing where they are. In a sense asset tracking is a way for a business faced with financial hardship to pull cost savings 'out of thin air'.

So exactly how are you supposed to manage your fixed assets?

Step One is simply auditing your fixed assets and recording them in an asset register. You have probably already done this bit, since the taxman forces you to. Most commonly this is recorded on a humble spreadsheet, but increasingly savvy organisations are using more sophisticated asset management software. It's about going beyond just recording your assets in your register, and having a system that's able to react to changes in your organization. That means where it moves to, how much it's worth, how often it breaks down, and so on.

If you're a one man or woman show that doesn't mean much more than looking around the room and noting down the model of your computer and desk lamp.With bigger businesses and organizations, this job becomes a lot more tricky. And this is where dedicated asset management software really comes into its own. It takes the brain-ache out of the process by bringing everything together from accounting through tracking and maintance. And most importantly, if you go with a decent system it will tell you exactly where your business can save big bucks. The real question is, how can you afford not to invest in it.