What is one of the biggest items on your balance sheet? Your fixed assets. Did you know that you could identify potential savings among your fixed assets through a first-rate fixed asset accounting system?
In addition to the legally required levels of transparency and accuracy in fixed asset accounting, there are potential benefits that makes professional, accurate fixed asset accounting a critical asset in itself.
Upon hearing the term “fixed asset accounting,” most managers not trained in finance may begin to tune out, knowing it needs to be done but happy to hand over that task and forget about it.
Compliance aside, here are 5 good reasons that paying attention to this aspect of your business can affect your company’s bottom line.
- There will be times when your company’s big-ticket items break down. When that occurs, two steps need to happen virtually simultaneously: getting it (or a replacement) up and running, and locating the record of breakdowns and the sales and warranty information. Is your company prepared to pay repair or replacement costs through a review of inventory performance, sales records, and warranty reviews?
- Reviewing fixed asset accounting records may be able to help predict under what circumstances a big-ticket item will malfunction. A careful review of fixed asset accounting records may point to the need to upgrade your inventory, add additional inventory owing to increased use, and even change inventory owing to new processes or priorities at your company.
- Fixed asset accounting is a key tool for strategic capital planning. Looking at when certain assets were acquired will point you to capital planning for future purchases.
- First-rate fixed asset accounting will ensure that you see the big picture with respect to the whole company’s inventory, not just a department-by-department view. The company-wide view may highlight duplication or other opportunities for cost savings.
- The best fixed asset accounting systems save manual labor in calculating depreciation and in integrating with your company’s general accounting system.
For more information, read Oates & Company’s other blogs about fixed assets here, or contact us to learn about our discovery sessions and how we can help you with your fixed assets.
