The importance of fixed asset management
How important is it, really, to carefully manage your fixed assets? In our experience over the years, we’ve seen all kinds of accounting records of course, and one area that seems to continually receive too little attention is a company’s fixed asset records. It seems it’s continually been one of those aspects of a company’s books that the business owner just assumes the accountants will look after at year-end. The accountants at year-end of course, by that time, may not get much to go on; they don’t always get the proper details for recording asset acquisitions or disposals, and over time, the company’s asset records just lose details.
When we engage with a client, the fixed asset records are always one of the components we spend time on. In the following paragraphs, I’ll discuss a handful of reasons why it is very important to properly manage your fixed asset records.
Investment: Consider this: some of the principal investments your company makes may very well be in its fixed assets. You may own real estate; office, shop or warehouse space and/or land. Perhaps you have a fleet of rolling stock worth hundreds of thousands of dollars going a hundred different directions a week. Maybe your company is very heavily invested in computer equipment or large tools. The first reason is the simplest really; this is a huge area of investment for a company. Why wouldn’t you want to manage these investments carefully?
Loss to theft: Building on the reason just mentioned, perhaps your company owns many smaller but relatively costly assets, items such as expensive tools, laptop computers or tablets. If one of these smaller items “grew legs” and walked out the door one day, never to return, would its absence be noted? If the answer is possibly no, then that’s bleeding that could be easily stopped by proper asset management.
Loss to major catastrophe: A summer in Manitoba, while one of the most enjoyable seasons you can experience in this world, also teaches us every year that catastrophes do happen. If your business suffered a catastrophic loss tomorrow, do you really have an accurate listing of what all might have been lost? Enough so to make your insurance company feel comfortable?
Investors considering buying in: If your business is at a stage where you might be wanting to attract invested capital, interested investors will want to see financial statements. If you have a large value on your Balance Sheet in fixed assets, can you back those numbers up with solid reporting if you’re asked to provide it? A lack of credibility is not what you want to exhibit to potential investors if you can’t back up what your Balance Sheet says you own in assets.
Financial institutions considering lending: We’ve had this conversation with financial lenders. If you are working with a lender to obtain financing for your business, and you can provide solid backup to accompany your company’s fixed asset values, it goes a LONG way in giving your company credibility for a lender to lend to. The better the records, the more credibility you have.
Cost of investment: If you have fixed assets on your books, do you know, really, what the daily, weekly or monthly cost of those assets are to your business or organization? If your depreciation or amortization calculations are waiting for year-end when your accountants do the necessary calculations, how can you know during the year what the cost of these assets are to your business? Many businesses rely on information such as this if they’re in the business of quoting on jobs (and perhaps need to know equipment costs) or look at cost/benefit analysis of major projects involving investment in assets.
Location, location, location: Lastly, if your company has multiple locations where assets may reside, wouldn’t you feel better knowing you have records showing where those assets are, or at least where they’re supposed to be?
So now that I’ve hopefully gotten my point across about how important it is to manage your assets, what can you do about it? I have a solution for you. At Venture we have had the opportunity to play a major part in the creation of a very exciting new cloud-based software application, and I would invite you to look at it yourself so you can see how well it will work for your business or organization. faManager is made for fixed asset management, no matter where your business or organization resides. faManager is a cloud-based application designed for business owners, freelancers, big business, not-for-profit organizations and even bookkeeping and accounting firms to track and depreciate assets. It is big on computing power and will work as well for a company with tens of thousands of assets as it will for the small business with ten assets. It is built for multiple locations, works well for serialized assets, has the best database search-ability of any fixed asset software on the market, and will even give you the journal entries you need to add to your accounting records each month; you don’t have to be an accountant or hire an accountant to figure out the entries! And best of all, everything that faManager does, it does with elegant simplicity, and is truly a pleasure to use.
I could go on and on about the benefits of faManager, but instead I invite you to visit www.famanager.ca and check it out for yourself. We’re very confident this is the fixed asset software progressive companies and organizations in North America have been waiting for. It has arrived, and it’s ready to go to work for you.