In Parts One and Two, we talked about what asset tracking is, how it works, how it can help your organization, why you need it, and the ways an asset tracking solution can save you time and make you a superhero to your company.
Superheroes like Batman and Superman share a critical character trait: they are fantastic decision makers. Their heroism lies in their ability to make confident decisions under the pressure of complicated circumstances and conflicting information. They quickly consider all of the facts and base their decisions on what’s right and what will help others. In this way, you can definitely be a superhero.
Once you have finished reading this third installment of our three-part series, you’ll know everything you need to weigh the facts, consider the needs of your company, and choose the asset tracking solution that will most benefit your organization.
How Asset Tracking Impacts Your Bottom Line
Big Picture Perspective
Asset tracking systems are designed to save time and money at many different levels throughout an organization. By increasing asset accountability and enabling more efficient asset management, asset tracking systems provide data that helps multiple shareholders do their jobs better.
Managers in Accounting and Finance are primarily concerned with maintaining regulatory compliance related to taxes and insurance. They need to know how many assets the company holds and the total value of those assets after depreciation.
Operations Managers are looking at similar information, but for different reasons. They turn to asset tracking solutions for insight to direct their decision-making processes around asset management. Good asset tracking software can be set up to indicate when it’s time to refresh or update technology, when items are due for preventative maintenance and/or repair, if critical equipment needs to be replaced, and whether or not their asset purchases are yielding optimal returns.
Asset tracking benefits everyone across an enterprise, even if they aren’t aware of it. From the time saved on searching for tools and equipment, to the money each department saves on replacing lost items, an efficient asset tracking system frees up resources throughout an organization.
The entire point of an asset tracking system is to make gathering and reporting on asset information more manageable. The data collected is sent to a database that can be accessed by anyone with appropriate credentials, and can be used to generate meaningful reports. You can set parameters that limit access by employee, department, or function, so that employees only see information that is relevant and necessary for them to do their jobs.
If you’re tracking assets with a spreadsheet, then generating reports can be a time-consuming process of organizing and filtering data. You might even be using manual calculations to determine the depreciation of your assets. Asset tracking software can do all of this for you. Choose how you want the information to be filtered, select your preferred method of calculating depreciation, and the software can generate the reports from there.
Asset tracking systems are inherently designed to maximize your return on investment. By staying in the know about your asset whereabouts, statistics, and history, you can take action to minimize unnecessary expenses. Here are just a few examples:
- When you have the ability to track down an item’s last known location or know who checked out a particular tool, you don’t have to purchase replacements just because something’s been borrowed by another department or was not immediately returned to its proper storage place after last use.
- By providing managers with data about asset use patterns and a place to log repair histories, asset tracking systems can make it easier to keep up with preventative maintenance and help maximize the life of your assets.
- They help exorcise “ghost assets” from your books: An unfortunate reality for many companies involves assets that have been lost, stolen, or are unusable, but which company records still reflect as active assets. These ghost assets can account for as much as 10 to 30 percent of a company’s assets. This means your organization could be paying taxes on as many as 30 percent more assets than it actually owns! By eliminating ghost assets, you can save your company from paying taxes on and insuring assets that you no longer have.
Most organizations are required to annually audit their fixed assets. While government agencies and public companies face regulatory requirements, even private and nonprofit organizations benefit from an annual audit.
Government Agencies and Contractors
Statement No. 34 of the Government Accounting Standards Board (GASB 34) requires all government agencies to maintain accurate records of the value of their fixed assets. These include long-term assets that are generally more valuable and can be preserved longer than capital assets. These include things like land, buildings, equipment, and machinery that is attached to a building.
The Sarbanes-Oxley Act of 2002, which was designed to prevent fraudulent corporate financial reporting, requires public corporations to maintain accurate financial records and reports of their fixed assets. Under this act, CEOs and CFOs are held personally responsible for the accuracy of their financial records, with strict penalties for noncompliance.
Private Businesses and Non-profit Organizations
While private companies and nonprofits are not subject to the legal standards set forth in Sarbanes-Oxley and GASB 34, there are many reasons why they should consider adopting similar standards as best practices. Nonprofit organizations may soon face Financial Accounting Standards Board (FASB) regulatory requirements and need to be prepared to present accurate financial records that include details on the acquisition, depreciation, and disposal of fixed assets. Likewise, private companies that may wish to one day go public or be acquired by public companies will be required to submit accurate, up-to-date financial records for assessment.
While the word “audit” can bring to mind an overwhelming process of accountability and verification, it doesn’t have to be that way. An efficient asset tracking system can make the auditing process so simple and fast that you’ll stop dreading it. But you don’t have to wait for an audit – staying prepared year-round can minimize tax and insurance liabilities. Asset tracking can be used to keep track of asset life cycles so that you are always prepared to account for your fixed assets at any time.
This guide was designed to get you started on the basics of asset tracking, including what asset tracking is, how an asset tracking system works, and why most organizations need one. Now that you’ve read all three parts, you are familiar with everything you need to get started.
Please don’t hesitate to reach out to us with any questions you still have. If you’d like to see our asset tracking solution in action, you can download a fully functional trial version of asset tracking. You can also download a PDF of our entire guide.
Now, go forth and be an asset tracking hero!