For any organisation, having an accurate and robust asset register that shows the location, value and condition of assets can help ensure that resources are available and usable when needed as well as achieving compliance with key industry legislation. How an organisation manages its assets also has multiple effects on finances, from tangible costs of heightened insurance premiums through to neglected depreciation.
But how can a robust asset register be effectively created and managed? Whilst spreadsheets are adequate for collecting basic data, Real Asset Management believes there are ten good reasons to switch to a specialist fixed asset management system.
1. Corporate governance requirements
Today, companies of all sizes are subject to increased scrutiny by government agencies and regulatory boards for higher standards of accountability, transparency and overall corporate behaviour. Compliance with the latest legislation including IFRS, Sarbanes-Oxley (SOX) and SORP consists of improved financial management and increasingly detailed reporting. With such a high degree of attention focused on your organisation, why would you risk the integrity of your financial data by relying solely on spreadsheets, which are inherently instable and invariably achieve poor audit results?
2. Inaccurate depreciation calculations
Too many spreadsheets contain errors, which is to be expected with information entered by hand. Whether it be the background asset data or the formula itself, there’s little doubt that depreciation calculations, when based on a spreadsheet, are likely to be inaccurate. Several people within one accounting department will often access, manage and edit the same data, making errors even more likely. In addition, a spreadsheet that is designed and managed by an individual brings its own risks, with over reliance on their knowledge of the formulas etc. which, if they were to leave the company, would be lost.
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3. Lack of an audit trail and overall security
A specialist fixed asset management system will track and record every detail of every action ever made by any user, which is simply unachievable with spreadsheets. Dates, times and explanations are recorded as well, making it very simple to ensure the security and integrity of your fixed asset data. A specialist system will require a valid username and password combination to enter it and will enable department heads to define security at an individual level to ensure that confidential information can be viewed only by those that need to see it and safely hidden from those who don’t.
4. Inability to link ‘parent/child’ assets or conduct asset splits, batch disposals, etc.
The ability to link ‘parent/child’ assets is key in order to establish hierarchical relationships and dependencies. A specialist fixed asset management system will display such links pictorially in collapsible branches. A typical example of this might be the association between a PC and software licence, where the PC is the ‘parent’ and the licence assumes the role of the ‘child’. The option to transfer or dispose of the ‘child’ asset will subsequently follow the transfer or disposal of the ‘parent’ asset, keeping the relationship intact. Spreadsheets are unable to accommodate ‘parent/child’ asset relationships in such a way, making it difficult to accurately track and manage these important hierarchical dependencies.
5. Access to multi-currency, multi-lingual or multi-book capabilities
If your organisation operates in many different countries then multi-currency, multi-lingual and multi-book capabilities are most likely imperative in your fixed asset management procedures. A specialist system will have multi-book capabilities to allow core asset information to be shared across any number of books with different sets of figures, enabling compliance with both local and group depreciation policies.
6. Historical reporting and forecasting requirements
Composing reports and forecasts can be a complicated and daunting process, especially if attempted in a spreadsheet. With the raw data within a spreadsheet dictating that each report be constructed individually using often complex macros, this provides room for error as well as wasting valuable time at month-end. A specialist fixed asset management system will incorporate standard and customised reporting and forecasting templates to ensure an intuitive method of extracting and analysing asset data quickly and accurately.
7. Lack of confidence in data integrity
Total control over your fixed asset management data simply cannot be achieved through the use of a spreadsheet. Whether a user input error or unintentional miscalculation, inaccuracies are inevitable. With that said, how can you be 100% confident in the integrity of this vital data? A specialist system will have strict security features in place to address the issue and automate the entire fixed asset management process. From data import capabilities to automated reports and forecasts, a significant amount of valuable time can be shaved off the entire process.
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8. Communication and transparency
With increased pressure on organisations of all types to ‘do more with less’, communication and transparency between departments is an important part of streamlining business processes. A central asset register can be accessed and viewed across multiple departments including asset management, finance, IT, estates and maintenance, providing all the information required in a consistent and easily accessible format.
Sharing asset information in this way can deliver increased efficiencies and direct financial savings. For instance, the lifecycle of equipment and its maintenance can be effectively tracked and managed using a central system so that optimum value is obtained from investment in the asset. This can include deployment, service and disposal of the asset at the appropriate time in compliance with legislation such as the WEEE Directive.
9. Insurance Premiums
One of the most tangible ROI realisations for businesses that implement such a system can be a dramatic lowering of insurance premiums and more successful insurance claims. Many UK companies complain about escalating insurance premiums. However, in reality, the majority are actually over insured. Endemic failure to maintain accurate asset registers results in the majority of companies insuring assets they no longer own.
10. Software Licensing
Using a dedicated asset management system can save significant sums through reducing the over-purchase of software licenses and help organisations avoid the legal risks associated with under-purchasing.
It is only by instigating rigorous asset acquisition and disposal policies and recording detailed information about the software loaded onto every machine, that any organisation can attain real control over the software asset and prevent over-purchase of software licenses.
With this information to hand, organisations can immediately check for unlicensed software and manage user numbers against agreed licenses. If a machine is scrapped, regularly updating the asset register will ensure that software can be reloaded on another machine, if the license allows. Furthermore, using alerts, an IT manager can be warned if user levels are reaching the license limit.
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