Assets, commonly referred to as “current assets,” are owned by a company or organization, have value and are considered short-term, as they are liquid and can be converted into cash in less than one year. Many current assets are intangible items – for example, equity, certificates of deposit and accounts receivable. However, a company’s parts and/or inventory may also qualify as current assets because they meet the criteria of conversion into cash in less than one year.
While companies also use fixed assets to run the business, they’re considered long term; they have a “useful life,” or estimated lifespan, of more than one year. Like current assets, fixed assets carry value and are reported on a company’s balance sheet. They also tend to be more tangible items, like office furniture, company vehicles, IT equipment, office equipment, office space and even land. Because fixed assets have a longer useful life than current assets, they depreciate in value. Thus, companies are charged with recording the depreciation of each of their fixed assets, or dividing the cost of each item over the course of its lifespan.
Why Asset Management is so Important
So imagine that you’ve got a large quantity of fixed assets to manage within your organization. That scenario is entirely possible, by the way, even if you’re running a small business, if you’re a nonprofit, a church, school or almost any other type of entity. Each fixed asset you own is attached to unique data: its lease or purchase information, warranty details and expiration, maintenance history and maintenance schedule, depreciation, check-in/check-out details, location and more.
Now imagine trying to keep all of those details up to date within a single document. Many organizations try to do just that – and most often with an Excel spreadsheet. Unfortunately, that’s a difficult task because data changes often. Companies are busy and juggling multiple responsibilities, so tracking this information sometimes falls to the back burner, resulting in gaps in recordkeeping. Spreadsheets are time-consuming, and managing them can cut into your productivity. Manually keying barcode numbers into a spreadsheet leaves the door wide open for typos, especially when employees are distracted and multitasking. Mistakes lead to frustration when employees have to spend hours trying to track down missing fixed assets. Employees may resort to guesswork when it comes to reporting depreciation or determining needs for the year ahead. They may place orders for more assets than you actually need, which can put a real drain on your budget.
Asset Maintenance: An Overlooked, Yet Critical Task
Another factor to consider is asset maintenance. While you can certainly create reminders on your calendar to jog your memory when equipment is due for updates and/or service, you’ve likely got a lot of fixed assets to manage. In a 2017 blog post for Fiixsoftware.com, guest blogger Nicole Pontius of Camcode.com stated: “Most equipment requires regular maintenance for optimal performance, but too often, preventive maintenance is the first task to go when you’re short-staffed and overwhelmed.” The U.S. Department of Energy estimates that preventive maintenance can lead to:
- Up to a 30 percent reduction in energy and maintenance costs;
- 35 percent to 45 percent fewer breakdowns; and
- Reductions in downtime by up to 75 percent.
The benefits of fixed asset software are clear. By centralizing your data in one convenient location, you can track and manage the complete lifecycle of each of your fixed assets. Asset Panda’s free mobile app gives you anytime access to real-time data in a simple, yet powerful platform that will save you time and money. To learn more, visit assetpanda.com
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