Corporate entities use various assets for value creation. They can range from cash holding to digital goods and complex machinery. But compared to other types of assets, fixed assets have the most significant long-term operational and financial impacts.
As a result, every business aiming to boost profitability, minimize operating costs, and improve efficiency should have a powerful fixed assets management and accounting strategy. Here are a few tips that can help you create one such asset management strategy-
Tips to Optimize Fixed Asset Management & Accounting Strategy
1. Create a Capitalization Policy
Capitalization policies determine a Rupee threshold to differentiate between expenditures capitalized as incurred expenses and fixed assets.
Items more expensive than the threshold should be added to the account dedicated to fixed assets and depreciated accordingly throughout their useful life. Industry guidelines should be followed for the record-keeping of such assets.
2. Know the Lifecycle of Every Asset
From purchase to disposal, the lifecycle of each asset should be denoted accurately. By forecasting the lifecycle of the assets, it’d be easier to perform routine maintenance. Moreover, in the longer run, it’d also help you with your asset purchase decisions.
For instance, you can invest in more durable machinery that could last longer than the ones you already have at your manufacturing facilities.
3. Routine Asset Tracking
Without regularly tracking your fixed assets, the company might suffer significant financial losses. Apart from asset maintenance, there could be additional expenses related to insurance, taxes, and purchases. Moreover, insufficient assets to fulfill the demands of clients or customers can also have financial and reputational implications.
Thus, ensure your fixed assets management plan emphasizes asset tracking and regularly tracks assets the company owns and the assets recorded in the books.
4. Use Modern Asset Management Solutions
If you have multiple business entities, assets at various locations, or several assets, it can help to invest in one of the modern asset management software. The software can help you budget for the assets you might acquire in the future and minimize asset management errors.
Compare some of the leading fixed asset management solutions to choose one as per your requirements. Alternatively, some accounting solutions also come integrated with a module for fixed assets management.
5. Outsource Fixed Assets Management
Outsourcing is becoming a reliable solution in the modern finance and accounting environment. Reduced administrative burden, savings, improved efficiency, and the expertise of talented professionals are some of the top reasons to consider outsourcing.
Discuss your needs and expectations with a renowned business advisory firm to learn more about how they can assist your fixed asset management initiatives.
Elevating Your Fixed Assets Management Strategy
Fixed assets require extensive capital expenditure and have longer life expectancies. Thus, it is essential to manage them effectively so that they deliver maximum returns on your investments.
If you’re struggling with managing and accounting for your fixed assets, consider contracting asset management professionals. The vast insights and experience of such professionals can help streamline the management of such assets, boost your ROI, and help you comply with statutory regulations.