What is Fixed Assets Management and Why is it Important?

 

What is Fixed Assets Management and Why is it Important?

It can be quite difficult to keep track of all the tangible assets while running a business. The efficient management of fixed assets is one important factor that is frequently disregarded. Business owners can be losing out on chances if they don't have a firm grasp of fixed asset management and how important it is to their company's operations.

A Fixed Asset: What Is It?

In the business sector, fixed assets are long-term, tangible items that a firm owns and uses to make money. Although they are essential parts of a business's long-term operating infrastructure, they are not intended to be sold off quickly.

Fixed Asset Management: What is it?

Tracking the purchase, usage, and disposal of an organisation's tangible assets is the goal of fixed asset management.

How Does It Operate?

All fixed assets must be systematically tracked as part of fixed asset management. Purchase date, price, location, depreciation rate, and condition are just a few of the specific details that are provided by thorough records. Several techniques, including barcodes and RFID tags, are used to do this. Organisations can ensure that assets are available when needed by preventing loss, theft, or misplacement with real-time asset tracking.

Two other duties of fixed asset management are cost-effective asset maintenance and asset performance evaluation. In addition to planning and scheduling routine asset maintenance to extend the asset's life and performance, it can find less useful or outdated assets that can be disposed of.

Essential Components of Fixed Asset Managment

It's time to understand the core aspects of effective asset management.

• Inventory Tracking: Maintaining an accurate and up-to-date inventory of fixed assets is crucial not only for operational efficiency but also for ensuring financial health.
  
  
• Depreciation Calculation: Depreciation is one of the most important financial reasons businesses track their physical assets. Depreciation refers to the value that a fixed asset loses over time.
  
  
• Scheduling Maintenance: Optimising fixed asset management greatly depends on routine maintenance. Business operations can extend asset life and improve operational efficiency by planning and following periodic maintenance.
  
  
• Asset Disposal: Think about things like recycling, resale, or direct disposal when it comes to getting rid of assets at the end of their life cycle.

The Advantages of Managing Fixed Assets

Effective fixed asset management offers several advantages that can have a big impact on the company's financial performance. Let's see what businesses stand to gain:

• Improved Asset Utilisation: It avoids circumstances in which assets are underutilised or lying idle as a result of oversight. Businesses can make sure that their assets are being used to their full potential by routinely monitoring and evaluating how they are being used.
  
  
• Savings on Costs: By keeping track of assets and performing regular maintenance, one may prevent unplanned repairs or replacements and make well-informed judgements about whether to replace them before they become a problem.
  
  
• Decrease in Loss and Theft: Since the location of every item is known and tracked, asset monitoring will serve as a deterrent, greatly reducing the likelihood of asset theft and misplacement.
  
  
• Making Better Decisions: Strategic choices on when to buy, lease, sell, or dispose of assets may be guided by thorough and up-to-date asset data, such as the performance and state of their fixed assets.

Challenges While Managing Fixed Assets

Till now businesses have learnt about what fixed asset management is and other aspects of it. Now it's time to discuss challenges that might come while managing it. Below are some of them:

• Creating customisable and efficient reporting
• Getting rid of manual errors and inefficiencies
• Maintaining precise inventory records for fixed assets
• Handling growing and evolving data
• Resolving the shortcomings of the ERP system

One of the best ways to manage fixed assets and deal with all these challenges is fixed asset management software. This program was developed to help businesses track, manage, and report on their fixed assets during the course of their operations. This program automates a number of asset management procedures, such as acquisition, depreciation, and disposal.

There are many fixed asset management companies that offer software for this fixed asset management.

Mynd Integrated Solution Pvt. Ltd. is one of the companies that offer fixed asset management software. Through it, Mynd offers comprehensive services covering capitalisation, lifecycle management, physical verification, tagging, and process setup. It helps set up quantitative controls on fixed assets to ensure adherence to best practices. By using automation, it ensures effective tracking, management, and compliance of fixed assets across group companies or individual branches, along with asset verification. It makes managing fixed assets and balancing them with the books easier, which helps to prevent mistakes in reporting and audits.

Conclusion

Effective fixed asset management is vital for organisations to optimise their asset utilisation, maintain compliance, and make informed financial decisions. But managing it can be a challenging task for businesses.

Businesses require a reliable fixed asset management system to effectively manage their assets. Specialised software designed for this purpose can significantly improve asset management.

Mynd Integrated Solutions provides fixed asset management software that helps businesses track, manage, and verify their assets. It automates processes like capitalisation, lifecycle management, and physical verification, ensuring compliance and accuracy. By streamlining asset management, Mynd helps businesses avoid errors in reporting and audits.