Why do Manufacturing Companies Need Depreciation Software?


Why does the manufacturing industry need depreciation software? No matter the product, manufacturing companies rely upon equipment, tools, and other fixed assets to keep operations running smoothly. Their ability to meet that objective and deliver goods to their customers depends upon the condition of their equipment as well as their recordkeeping practices regarding those fixed assets. There are many moving parts to manage within any manufacturing company, and manual asset tracking and management can make things harder than necessary.  Investopedia.com defines depreciation as “an accounting method of allocating the cost of a tangible asset over its useful life and is used to account for declines in value.” Specifically, it’s the “methodical decrease in the documented cost of a fixed asset over its useful life.” So it is not difficult to understand why the tracking of depreciation is a crucial component for manufacturing companies.

How Assets Depreciate

The value of an asset decreases over time for two primary reasons. First, assets and equipment experience wear and tear, which can occur over time as the asset ages or on a more expedited schedule if the equipment is regularly used. Manufacturers must calculate the cost of their production, and that includes the wear and tear of their equipment. Second, as technology evolves and business needs and scope change, some of a company’s fixed assets may not be useful anymore and/or may not be performing at the pace the company requires. Their respective values then decrease, and they may need to be phased out or replaced. At the end of the year when manufacturing companies calculate their actual profitability, depreciation is one factor that influences the balance sheet. The declaration of a profit without the inclusion of depreciation is, quite simply, “fuzzy math.”

Understanding the Rules

Most companies view calculating depreciation as important because they can write off or deduct the cost of their fixed assets as business expenses. However, the Internal Revenue Service stipulates the manner and conditions under which business owners may take those deductions. Those rules can be complicated for the layperson, and resorting to guesswork is never a good strategy. Manufacturing companies who deploy depreciation software can outsource this function to a reliable and accurate platform that not only calculates the value of their fixed assets but also their exact location, condition, and other pertinent details. When every dollar counts, depreciation software can eliminate waste, theft, and loss – not to mention IRS penalties resulting from miscalculation. 

A Simplified Way to Calculate Asset Value 

Asset Panda’s depreciation software brings manufacturing companies an easy, streamlined way to manage the value of their vital equipment and fixed assets, and all from the smartphones and tablets they already carry. This configured solution syncs with the cloud and enables businesses to track assets, run audits, create reports, and enjoy the peace of mind that comes from knowing their data is both accurate and up-to-date.

Depreciation calculation is just the beginning with Asset Panda. You can determine the exact location of any item, examine its complete maintenance history, access its warranty and insurance policy, and much more, all from the smartphone you already own. Add as many users as you’d like, and connect all of your stakeholders within this intuitive system for maximum accuracy and accountability.


Courtney Roush

Courtney Roush is a freelance writer, editor, and communications strategist with 25 years of experience. Her favorite discipline is crisis communications – and it’s a highly relevant one in our present times.

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