It is unfortunate that even with significant advancements in technology, most businesses do not employ software systems to optimize their productivity. Statistics reveal that almost 30% of businesses do not know where their assets are or who is using them. In 70% of companies, there is a discrepancy between the assets registered on the manual ledger and the assets that exist. Knowing the number, status, and current location of the assets of your business can help a great deal in reducing unwanted costs concerning tax and insurance payments.
Asset management software nullifies the errors that may arise by maintaining a manual asset register. It most often happens that all assets are registered in the ledger during purchase, but changes that occur to that asset over the years are not updated. Stolen, broken, and unusable assets are still on the asset register but are of no use to your business. You end up paying tax and insurance on these obsolete non-existent assets.
Such assets are termed as “ghost assets.” Shockingly, 12-25% of all assets on the ledger are ghost assets. It could be an outdated computer, a telephone system that no longer works, or even some broken hardware parts. They either no longer physically or digitally exist, or are in unusable conditions.
Why Asset Management Tools are Becoming Indispensable for Every Business
Utilizing smart asset management software is arguably the most effective and straightforward way to spot ghost assets easily. These tools can increase employee productivity and lower unnecessary spending through:
- Asset lifecycle management
Businesses can ensure that every resource at their disposal is being used to the fullest by actively following their lifecycle. Asset management software provides a streamlined system for tracking assets right from their purchase up to disposal. Regular changes made in between are also updated.
- Technology for real-time tracking
An asset tracking solution like Teqtivity ensures that a company’s resources are transferred to the right place and used by the right people. These tools can also provide real-time tracking of asset location through the use of barcode scanning and GPS tracking, delivering in-depth information about the location and stock metrics of assets.
- Generation of reports
These periodical reports can go a long way in effective auditing, identifying ghost assets, and reducing costs. Asset management tools remove the need for manual reporting, which effectively reduces human error and leaves more time for a company’s management team to accomplish other tasks.
- Cloud-based software
All information regarding assets can be accessed from any device under the cloud. This feature is especially useful during the present economic climate. As more and more businesses are utilizing a more substantial remote workforce, an easily-accessible and universal source of information can help with day-to-day tasks.
- Planning and scheduling the maintenance of assets
The Asset tracking system notifies when the maintenance of assets is due, avoiding the chances for them to become obsolete.
Ghost Asset Removal
By using smart asset and inventory management tools that aid your asset tracking, eliminating ghosts assets becomes a less harrowing task. Here are the basic steps:
- Identify any tax-saving opportunities by doing a thorough review of the company’s complete list of fixed assets.
- Perform physical audits for every asset by corroborating the company’s actual assets with their asset ledger to ensure the accuracy of the latter. This vital step helps detect ghosts and zombie assets. Zombie assets are unlisted in your asset ledger but still present in your inventory. They’re essentially the opposite of their ghost cousins, but can be just as detrimental for the business.
- Calculate the Fair Market Value (FMV) of the audited assets. Find the appropriate worth of each asset and depreciate them accurately in both the company’s ledger and its tax reforms.
Reaping the Benefits
Imprecise asset reporting can eventually lead to hefty fines or even steeper penalties, and those consequences are enough for every business to track their assets more diligently. With that said, being on the right side of the law comes with other perks:
- Better asset insurance coverage
- Insurance premium reduction
- Cost-effective and streamlined annual asset updates
- Optimized return on asset ratios
- Easier financial reporting
- Smarter budgeting for future expenditures
Asset management software brings light into asset data and tracking, thereby ceasing the very existence of ghost assets. Through accurate reporting, businesses can improve projections, reduce risks, and optimize overall productivity.