How are Ghost Assets Haunting Your Fixed Asset Register?
Here’s something that’ll haunt your finances. So, gather round, grab some marshmallows, and get ready to hear about the ghost assets that haunt your fixed asset register.
These aren’t the kind of ghosts that’ll befriend your kids, they won’t sit behind you making pottery. They can ruin your small business’ finances. A terrifying 12 to 35% of assets in a fixed asset register don’t exist, doomed to walk between the realms of an asset living its lifecycle and the complete unknown.
What is a Fixed Asset?
A fixed asset is an asset that you use to help run your business. They can be tangible and intangible, but they’re used and they therefore affect your finances and tax benefits. So, whether your fixed assets are tools, IT assets, or heavy machinery, tracking their lifecycle is crucial in order to have an up to date asset register for transparency and for financial monitoring and accounting.
What is a Ghost Asset?
A ghost asset is defined as a fixed asset that has either gone missing or is unusable, but that still remains on your fixed asset register. This means that a ghost asset still looks like it exists and is being used, when in reality all it does is haunt your fixed asset register.
At first, this might not seem like much of a problem. After all, the living and the dead aren’t supposed to mix, right?. Not knowing which of your assets are alive and which are dead could mean you find yourself awake at 2am in cold sweats, consumed by fixed asset register dread.
Why are Ghost Assets so Scary?
Having fixed assets that are unusable or missing can create a whole host of issues and headaches. Ghost assets not only create financial accounting issues but also more haunting operability issues.
Fixed assets that are in the great beyond can cause your business to overpay taxes, have higher insurance premiums, create the inability to forecast capital expenditure and create inaccurate fixed asset reporting which may in turn affect your compliance. A terrifying thought.
Ghost assets can also haunt your operability. Having pesky ghost assets mixed in with living fixed assets can slow your efficiency to a halt. Imagine, as an example, that a staff member needs to book out 3 pieces of equipment for a job they’ve got next week. Unbeknown to them, they’ve booked a ghost asset (cue face screaming in fear emoji). Due to the very nature of ghost assets, this poor unsuspecting member of staff will either not be able to find this asset or it will be in an unusable condition, meaning they cannot carry out the planned job and disaster will strike. There’s only one thing for it – Who you gonna call?
Failure to track a fixed asset throughout its lifecycle can mean a business is unable to accurately assess the cost of replacements. For example, you may need to replace a ghost asset with a living, fixed asset but if your ghost assets are not known, they will be the worst type of ghost asset – silent and deadly. The worse your ghoul problem becomes, the greater the inaccuracy of your fixed asset register will become. This will lead to a lack of transparency for the business and a whole bunch of scary accountability issues. You may think a fixed asset is a ghost asset and try to exorcise it, when in reality the ghost was the dehumidifier all along (a twist worthy of M. Night Shyamalan).
Busting Ghost Assets
Luckily, you don’t have to be afraid. You’ll only need to bust your ghost assets once. Then, it’ll be a lot easier to maintain an up to date fixed asset register and protect your business from the drains on tax, insurance, audits and efficiency.
Creating a fixed asset register by using a spreadsheet is a sure fire way to guarantee that you will be haunted by ghost assets in the not too distant future. Fixed assets are more likely to become ghost assets as a result of inactivity. They’re drawn to it. Spreadsheets are notorious for always being out of date because they are not easy to update. Human error is a guarantee when a spreadsheet is being used to track and manage fixed assets, and as any good horror movie will show, human error lets the evil spirits run rampant.
Ghosts are, famously, transparent. If a ghost is not completely transparent, is it even a ghost? By applying this logic to your fixed assets, you’ve got yourself a great ghost busting technique. By tagging your fixed assets using asset tags or labels, you’ll keep your assets alive. Use asset tracking software alongside your asset tags for a complete solution and protect your business from evil ghost assets.
Who knew that preventing your fixed assets from an untimely death and conversion to ghost assets was as simple as using an asset tracking system.
If you’re looking for a way to bust your business’ ghost assets, check out the itemit fixed asset tracking software. Using our unique asset tags you’ll have greater accountability when it comes to your fixed assets and the ability to run helpful reports to identify those that would otherwise haunt your finances. Keep your books up to date in real-time and only pay the amount of tax and insurance you need to.
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