How Fixed Asset Management Is Essential To Good Business Practices

Fixed Asset Managementis an accounting tracking process for managing a company or individual's fixed asset

. Fixed assets are called Property, Plant and Equipment, or PP&E when referring to business assets. They are permanent things such as land, buildings, machinery, office equipment, furniture, fixtures, computers and vehicles. In other words, they are not disposable or liquid. Liquid Assets are assets that are, or are easily converted to, cash, such as bank accounts and stocks.

The purpose of this kind of accounting process is to make a cohesive system, incorporating all of the pertinent asset information. Information related to asset budgeting and forecasting, depreciation and federal and state tax issues would be included in the relevant information.

Unmanaged assets can even have a negative effect on an individual's estate. They can go into probate and cause difficulties for surviving family members. It becomes an issue even though throughout the person's life it never came up at tax time. Most people own fixed assets of some kind. However, they don't require the complexity of a business management system unless they possess multiple properties, antiques, valuable collections or other such items of value.

If the individual has a management system in place, they have a current assessment of the value of their estate which would include all assets. They can then decide how best to distribute their wealth and whether a living will is right for them. Seeing an asset management professional is advisable for someone who is unsure of their net worth.

Businesses have need of fixed asset management systems in order to keep track of their asset value. To implement the system, they must first catalogue and value all fixed assets. This frequently means assigning asset tags.

A barcode system is commonly chosen for asset tags because they are cost effective, efficient and familiar to people. Each item in the inventory is given a barcode tag which is scanned into the system with a barcode scanner such as the ones seen in use in large discount department stores. This inventory is the ground work for preventive maintenance.

Once the inventory is tagged and given values, the management system tracks everything from each inventory item's location to how many there are. The condition of the item and its next scheduled maintenance and even its depreciation status can be followed. This high visibility assists in lowering losses and provides quicker results.

Knowing where assets are, what condition they are in, how often and consistently they are used produces an efficiently run organization. Fixed asset management will facilitate accurate, detailed and current records. It provides consistent, easy asset tracking which allows for less equipment downtime, lower insurance costs, and can save money on property tax mistakes and many other issues that eat away at a company's bottom line.

by: Jerod Willis

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