The Best Practices of Asset Management

  • 31st May'22
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Assets are the core part of your business, therefore managing the fixed assets is a challenge that grows exponentially as the company grows. In other words, managing the assets is a process that includes tools, systems and practices to stay on top of things. If you are being charged by tracking fixed assets then you need to focus on the potential of the fixed assets that can lead to financial loss to your company. Besides this, if you have to transform your small business into a big business then also asset management practices are required to provide you with proper guidance. 

With this, if you are not aware of the management of your asset system then you can also lead to legal trouble or tax burden. On another hand, in some organizations, the management focuses on sales increments rather than asset management, so they do not pay attention to asset tracking. As a result of this, the maintenance cost of asset management increases. Thus tracking the assets and managing them is essential for your business growth. 

 

Asset Management

 

Asset Management

Asset management is a process where we develop, operate, maintain and sell the assets in a cost-effective manner. Every company needs to track the performance of fixed assets. This provides a brief insight to all the stakeholders in availing the optimal returns. When it is about managing the assets the manager focuses on two different elements: the first one is the process of asset management and the second is how a firm develops the asset management plan. 

Here some prime assets management practices are described, have a look into that!

 

Analyze Assets Performance

Well, to have the best assets management practices, you have to ensure that how your asset is performing? Whether it is taking more maintenance than required. In other words, you have to keep asking these questions promptly to minimize the maintenance cost. However, it is also essential that you know the lifecycle of your assets. 

You can compare the expenses related to the asset with desired performance. . If you notice that any asset is no longer productive then you can get rid of it. Thus you should keep tracking the performance of the asset as it can help in optimizing the assets management. 

Ensure Accurate Depreciation Tracking

It is equally important to assess the accurate depreciation of your assets. In other words, the management of your asset software should calculate accurate depreciation. Knowing the structure of depreciation can help you to make more informed decisions about when to decommission the asset and when to invest in something new. Some companies limp along with assets that are past decommission date, while others operate blindly, switching on new assets when they are paying taxes on old ones. So you need to choose an appropriate software management tool to assess the depreciation of the asset. As it can help you in making any decision related to asset management. 

It is also a fact that not knowing the actual depreciation of fixed assets can lead to skepticism regarding the accuracy of the books. In this case, you may have to announce an audit that can be liable for high financial costs.

 

Asset Management

 

Maintain Asset Proactively

You must do asset maintenance activity regularly. Because if you wait for a machine to deteriorate then it can enhance your cost, and simultaneously it is a waste of time. This will result in lower productivity and work suffering. So it is advisable to use the assets management software that can send you messages and alerts about assets management. It is the most significant practice that should be done by every entrepreneur to have a better outlook on assets management practice. 

Determine Asset Value and Set Levels of Services

Determining the value of assets of the organization helps the decision-makers to plan for the best assets deploying strategies or methods to replace them. You should keep in mind the quality of each asset and its status in the life cycle. With this, you should also focus on reliability, the pattern of past performance and how well the assets meet the goals of the operation. In other words, the gaps between your objectives for assets and their expected performance can help you in determining the current and future value of setting the level of services. With this, you should also know about pillars of entrepreneurship to have a proper understanding of the market.

Thus taking the future programs and long-term plans into consideration is a critical and clear analysis of market trends and customer demands. Working with a solid understanding of services and expectations can help you in managing the assets wisely. 

Remove the Ghost Asset and Zombie Asset

Ghost’s assets are those assets that are mentioned in your books but are not physically available. On the other hand zombie assets are those assets which are physically present but not mentioned in books. They occurred due to non-efficient asset management practices and their effect on taxation. Now you might think why the ghost asset is a problem for you? The answer is that you are paying for a resource that you do not use. This asset is a problem because it puts a risk on your organization and jeopardizes your work. Well, you can remove your ghost and zombie assets, if you perform a physical audit on a regular basis. 

Regulatory Compliance

When the asset tracking and management are done correctly and efficiently then you can find accurate reports. This report is used by top management and plays a vital role in making strategic decisions. By using the software you can get reports of an asset within minutes. 

 

Asset Management

 

Benefits of Assets Management

Time and resources allocated to dedicated asset management extend the life cycle of the asset and improve their performance. With this, asset management helps the organization in achieving the organizational goals whether these are short-term or long-term. It also allows you to verify the performance of assets, increase them and keep compliances with internal and external benchmarks. When the information is uploaded automatically to the cloud storage system then asset management becomes an integrated part of a company’s daily life. 

This reflects that you can reduce waste, and make decisions based on solid data rather than just guessing or predicting the streamlined inventory processing. In other words, proper planning of asset management means that you can tailor the data collection and analytics that you need.

Thus asset management is important for business agility and to meet the demands of customers and stakeholders. 

 

Conclusion

Asset management practices provide tremendous assistance to you and your organization. It keeps you informed and helps in managing the strategic decisions that you can take to resolve several issues. Thus it can be said that successful asset management is essential for every business to develop an infrastructure asset with a long life span and substantial capital outlay to provide a foundation for economic activity. 

So if you are on the hunt for perfect asset management procedures or software then go for a solution that helps you in managing the assets and prolong their life by operating them effectively.

 

We at OpenGrowth, are committed to keeping you updated with the best content on the latest trendy topics from any major field. Also, both your feedback and suggestions are valuable to us. Do share them in the comment section below.

Sources/References:

*Note: The content published above was made in collaboration with our members.

About the author:

Roshni Khatri, OpenGrowth Content Team

A keen observer, who loves to spend time with nature. A fun loving person, enjoys to explore the new aspects of life. Passionate about reading and learning new things. Roshni is dedicated towards her work and has worked in different professions.


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