How Should You Track Fixed Assets?
How Should You Track Fixed Assets?
A business’ fixed assets are its most important components after its workforce. Given their significance, fixed assets must be tracked and managed so you have a proper analysis of all such assets that play a role in the business’ income.
Physical objects as large as the building you work in to the furniture and devices employees use, all are considered fixed assets. Apart from having an ever-ready and complete database with an analysis of all fixed assets, tracking fixed assets allows you to:
- Make fixed asset management a breeze
- Keep fixed assets in their best condition
- Organise the storage of all fixed asset data
- Make well-informed asset-related decisions
- Identify and deal with ghost assets
This is not an exhaustive list of all the benefits fixed asset tracking has to offer. But if you want to uncover its full potential, you must do it right. This post is all about how to track fixed assets the right way.
What Fixed Assets Should I Track?
To get things started on the right foot, we need to determine which assets go on the fixed asset register and which don’t. You don’t want to be logging the wrong assets on the wrong asset register only to have everything jumbled up in the end.
For an asset to qualify as a fixed asset, it must be something that cannot be readily converted into cash. It should be a physical object that you’ve purchased and intend to use for more than a year. Additionally, the asset must also play a direct role in the business proceedings of your company.
That being said, let’s go through some examples.
- Buildings: All facilities that your company uses
- Property: The cost to purchase land and for land improvements
- Hardware: Computers, laptops, servers, tablets
- IT Software: Any software that you have purchased outright, and not leased or paid as a service
- Furniture: Tables, chairs, filing cabinets.
- Machinery: Machines used for production (for factories especially)
- Equipment: Any other office or field equipment
- Vehicles: Company-owned cars, trucks, bicycles, and other vehicles
What Fixed Asset Information Should You Track?
Once you’ve determined the assets that’ll go on the fixed asset register, you need to know what things you need to track about them. Although the itemit app will let you enter all the relevant details in the right places after you register an asset, you still need to know this in order to understand fixed asset tracking better.
The most important aspect of tracking your assets is to ensure that the data is up-to-date. This is because the database should always have the correct information about where an asset is located, in whose custody it is and its last maintenance date. Apart from the most basic details, here is a checklist for what you may wish to track for an efficient fixed asset tracking system.
- Vendor: The company you purchased the assets from
- Purchase Cost
- Effective Lifetime
- Serial Number: important for warranty information
- Warranty Expiration Date
Taking depreciation into account is a crucial part of your finances. Fixed asset tracking enables you to track assets over time and monitor depreciation effectively. This helps you keep accurate financial records for better financial decisions and to achieve efficient tax filing.
Keep in Mind Not to Mix up Fixed Asset Tracking and Inventory Management
Your business’ inventory is the consumables and stock your company owns. On the other hand, assets are the things you use day-to-day. It’s very common for users to mix up the two types of assets and start tracking things that belong in the inventory with the fixed asset register.
Inventory management and fixed asset tracking are two different disciplines. If you’re making the mistake of using the same method to track both, you will inevitably face challenges.
The fixed asset register is for tracking data on the asset level. So that you know who has an asset, where it is, and if it’s well maintained. Whereas inventory management is for tracking a group of assets without so much detail. So, instead of exact asset data, the inventory shows you bulk asset data in terms of e.g quantities of each item type.
Using Asset Tags
Assets tags are the best thing that’s happened to the fixed asset management process. With asset tags, you can allocate a unique identity to each of your fixed assets. This automates asset tracking and eliminates the need for manual data entry.
The most essential asset details such as its location, status and custody are automatically updated whenever the asset tag is scanned by the itemit app. Not only that, using asset tags enables you to carry out accurate asset audits, real-time asset tracking and management and reduce administrative costs.
Fixed asset tracking is something for all businesses to do. Having a dependable way of knowing the assets you have, where they are and being able to manage maintenance and depreciation is essential for a business’s success.
Your company should track the assets that are helping your business operate, generate revenue and grow. This involves keeping the fixed asset register up-to-date with all the right information. This will save you and your company loads of time and money.
To find out more about how itemit’s fixed asset register software can help your business, you can contact the team at email@example.com. You can also fill in the form below to start your very own 14-day free trial.
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