Managing fixed assets is a key aspect of running a successful business. These assets include items of higher value like equipment, machinery, office furniture and computers. This article describes how asset management systems can help manage these assets and thereby help your company grow.
What’s Included
What are Fixed Assets?
Fixed assets, also known as property, plant, and equipment (PP&E), are tangible, long-term assets used in the operations of a business. Their primary function is to support a business's operations, and they are not intended for immediate sale. Fixed assets are crucial for companies as they are used to generate revenue and are a significant part of a company's overall value.
Key Characteristics of Fixed Assets:
Long-term Usage: Fixed assets have a useful life of more than one year and are used in the company’s operations for a prolonged period.
Depreciation: Except for land, fixed assets undergo depreciation, reflecting their wear and tear over time. This depreciation is accounted for in financial statements.
Non-liquid Assets: They are not easily converted into cash and are considered non-current assets on a company’s balance sheet.
Impact on Financial Statements: Fixed assets affect various financial statements. They are initially capitalized on the balance sheet and then depreciated over their useful life. Their purchase or sale also impacts the cash flow statement.
Examples of Fixed Assets:
Machinery
Equipment (like cameras and expensive gear)
Vehicles (like company cars and trucks)
Land and buildings
Office furniture
Computer equipment
Tools
The classification of a fixed asset can vary depending on the nature of a company’s business. For instance, what constitutes a fixed asset for a delivery company may not be the same for a manufacturing firm.
Why are Fixed Assets Important?
Fixed assets contribute in several ways:
They generate revenue and support business operations.
They contribute to a company's net worth and can be used as collateral for loans.
Fixed assets are indicators of a company's valuation and potential growth.
Each asset class, including fixed assets, plays a distinct role in a company's financial health and operational capabilities.
What is an Asset Management System?
Asset management system software tracks and manages the lifecycle of assets - from acquisition to disposal. It encompasses various assets, including equipment, machinery, vehicles, and even software, ensuring that they are utilized effectively and maintained properly. These systems store information about each asset, such as its location, usage, maintenance schedule, and depreciation value. Up through the 2010s, asset management systems required considerable training and were expensive, cumbersome and web-centric rather than mobile. As newer technologies became available, such as mobile-accessible QRs, such features have typically been added.
More recently (2020s), asset management systems like Scanlily have been designed from the ground up incorporating these technologies and with simplicity in mind. They are more mobile-centric and leverage cloud storage and QR codes to offer a more integrated and accessible approach. They provide real-time insights into asset status, streamline maintenance schedules, and enhance decision-making processes regarding asset utilization and investment. The system's ability to store detailed histories and custom fields allows for more informed asset management, catering to both basic organizational needs and more complex operational demands.
By automating and simplifying asset tracking and management, asset management systems not only save time and reduce costs but also support better strategic planning and regulatory compliance. They help businesses maximize the value of their assets and ensure their efficient use in daily operations.
How an Asset Management System helps manage Fixed Assets
1. Reduces Maintenance Costs and Extends Asset Lifespan
Asset tracking assists in managing maintenance schedules for equipment, machinery, and vehicles, leading to reduced emergency expenses and extending asset lifespan. It also prevents costly work stoppages.
Consider a construction company with a fleet of heavy machinery. Previously, maintenance was reactive, leading to frequent, costly emergency repairs and project delays. After implementing an asset management system like Scanlily, the company started scheduling regular maintenance based on usage data tracked through QR codes on each machine.
This proactive maintenance approach, facilitated by automated alerts from the system, reduced emergency repairs and prolonged equipment lifespan. It also minimized downtime, ensuring smoother project execution and better adherence to timelines. As a result, the company saw a notable decrease in maintenance expenses and improved overall operational efficiency.
2. Reduces Unplanned Downtime
Effective asset management significantly cuts down on unexpected disruptions:
Prompt Maintenance Responses: Quick reporting of issues and efficient maintenance scheduling prevent serious breakdowns and prolong equipment life.
Preventive Maintenance Scheduling: Setting up automated service alerts and regular maintenance schedules ensures the longevity and reliability of equipment.
Decreases Labor Downtime: By easily locating and accessing tools and equipment, labor downtime is reduced, enhancing overall productivity.
3. Helps with Documentation and Training on Assets
Asset tracking systems allow for the digital storage of essential documentation like manuals and safety guidelines, ensuring easy and immediate access for the team.
In a manufacturing environment, consider the use of Scanlily QR stickers on complex equipment like CNC machines. Because Scanlily QRs are URLs, employees don’t even need the Scanlily app to access the documentation. They can simply scan the sticker on the machine to access digital manuals and training videos. This feature provides instant, on-site guidance, essential for new or updated machinery operations. It enhances safety and efficiency by ensuring immediate access to the latest information and training resources, directly at the equipment's location.
4. Enhances Operational Efficiency
Facilitates quick and efficient workflows, particularly for field teams and warehouse managers, and supports built-in barcode scanning for audits.
In a scenario where a media production company needs to manage and allocate camera
equipment for various shoots, Scanlily's booking system streamlines the process. Field teams can reserve cameras and related gear through the Scanlily web or app calendar. Upon arrival, they simply scan the Scanlily QR stickers on the equipment to check them out. This system not only speeds up the equipment allocation process but also ensures accurate tracking and availability status, greatly enhancing operational efficiency for both field teams and warehouse managers.
5. Improves Accountability
Mobile asset management encourages immediate asset checkouts and returns, leading to accurate data and reducing the likelihood of forgotten or delayed entries.The accessibility of a mobile app helps in maintaining accountability among team members, particularly in field operations:
Immediate Asset Management: Field workers can promptly check out equipment using the app, avoiding delayed or forgotten entries, which often lead to inaccuracies.
Reliable Data Capture: Ensures that asset usage is recorded accurately and in real time, reducing the chances of data discrepancies.
6. Reduces Asset Loss
Identification and prevention of asset loss, damage, or theft, enhancing overall asset security. Precise location tracking and improved accountability ensure better security and utilization of assets.
Tracking Asset Loss, Damage, or Theft: An effective asset tracking strategy ensures that businesses are always aware of the status and condition of their assets. This helps in identifying cases of asset loss, damage, or theft.
Accountability and Record-Keeping: Detailed records of asset checkouts and returns assist in tracking responsibility for lost or damaged items.
7. Facilitates Impeccable Record Keeping
Keeping thorough records of assets– including maintenance history, appraisals, and user history– is simplified with asset tracking. This information is crucial for various business processes, including depreciation claims and usage optimization.
8. Improves Visibility
Asset tracking provides a clear overview of a company's assets, beneficial for businesses with large teams or assets spread across multiple locations. This visibility can be further improved with asset tracking software offering visual representations of inventory.
Consider a large IT company with multiple offices across the country, each equipped with various IT assets like servers, routers, and laptops. Using Scanlily, every team member can check the availability and status of these assets online. For instance, if a team in one office needs additional routers for a network upgrade, they can quickly view the availability in other locations through Scanlily's platform. This visibility not only aids in efficient resource allocation but also prevents unnecessary purchases, ensuring optimal utilization of the company's assets.
9. Streamlines Auditing
With asset tracking, inventory counts and audits become more efficient. It enables quick report generation, revealing asset details like location and quantity, which simplifies the audit process.
10. Expedites Accounting Processes and Tax Returns
Asset management systems assist financial tasks like balance sheet generation, depreciation calculations, and business tax filing, aided by accurate asset tracking. They facilitate efficient tracking of depreciating assets for tax purposes, including record-keeping of purchases, maintenance, and condition changes. Inventory apps like Scanlily can streamline this process, allowing businesses to upload pictures, receipts, assign values, and monitor condition changes over time. The ability to generate reports specifically for depreciating assets simplifies the process of sharing relevant information with accountants for tax preparation.
11. Boosts Productivity
Implementing a comprehensive asset tracking system can significantly save time and increase productivity. Automation features like barcode scanning and customized alerts help speed up routine tasks.
Imagine a construction company managing a large inventory of tools and equipment across various job sites. By implementing Scanlily's asset tracking system, they can use QR code scanning to quickly check in and out tools and equipment. This process eliminates the time-consuming manual logging of equipment usage. Additionally, Scanlily’s automated alerts notify the team when equipment is due for maintenance or return, ensuring that tools are always ready and available when needed. This efficiency in managing equipment logistics significantly saves time and boosts overall productivity on the construction sites.
12. Facilitates Regulatory Compliance
An asset management system aids in navigating complex regulatory landscapes by assisting with the following tasks:
Ensures Accurate Financial Reporting: Accurately calculates and tracks asset depreciation, which helps in aligning financial statements with regulatory standards.
Streamlines Documentation Access: Maintains a comprehensive database of maintenance records, safety inspections, and certifications, which is essential during audits or inspections.
Automates Compliance Reporting: Simplifies the process of meeting regulatory reporting deadlines, such as for depreciation adjustments, in line with IRS rules.
13. Streamlines Fixed Asset Acquisition
Asset management systems enhance the process of acquiring new assets by:
Understanding and Applying Depreciation: This ensures that the cost of an asset is spread over its estimated useful life, which is crucial for accurate financial reporting and for maximizing tax benefits.
Aiding in Strategic Purchase Decisions: By analyzing depreciation, maintenance costs, and technological advancements, companies can make informed decisions about when to purchase or replace assets.
Facilitating Effective Budgeting: Asset management helps in planning future purchases based on current assets' depreciation and anticipated end of useful life.
These benefits collectively highlight the importance of asset management systems in optimizing business operations, maintaining financial accuracy, and ensuring the longevity and proper utilization of assets across various industries.
Conclusion
To sum up, asset management systems are a key tool for tracking, maintaining, and optimizing the use of fixed assets. Businesses that embrace comprehensive yet easy-to-use asset management systems– such as Scanlily– can streamline operations by managing assets wisely, ultimately reducing costs and improving growth.
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