Every business, big or small, needs to keep meticulous records for accounting purposes – this can include recording sales, purchases and expenses, and details of business accounts. It’s not just a good idea for a business to have a detailed and digestible overview of its profits, losses, expenditure, inventory and other dealings – often it’s a legal requirement for tax purposes and other audits.
One aspect of a company’s accounts that can be overlooked is tracking fixed assets – this is a requirement for accounting under the International Financial Reporting Standards, a standard used across the world for keeping track of company accounts. To meet this requirement, a range of fixed asset management software has sprung up from developers like Assetware Technology.
What constitutes a fixed asset exactly? Often known by the shorthand PP&E – standing for “property, plant and equipment” – they are non-liquid accounting assets that cannot be easily converted into cash. This can constitute almost anything in the business that is not sold directly to customers (i.e. inventory) – from vehicles and heavy machinery to computers and office furniture. It also includes property such as land owned by the business and buildings owned and used by the company.
Where asset accounting and tracking software comes in is helping businesses perform clear and consistent audits of what fixed assets are physically available to the company. This helps businesses answer several important questions regarding their fixed assets: what, exactly, they own, where it is, and who is currently in possession of the asset. Importantly, for financial purposes, it also helps keep track of the cost and the depreciation of value over time, which can be vital when calculating tax deductions.
When setting up an asset tracking system, a business must first perform an inventory of its current fixed assets. This can be achieved quickly and easily using portable devices that can scan barcodes or RFID tags physically affixed to the asset. It’s even possible to use GPS tags for precise location of assets down to a few metres – ideal for small or mobile assets that could be moved without authorisation.
This information can then be transferred into a software database that can be easily updated when new assets are purchased or old ones are disposed of. Using this kind of software can ensure multiple benefits for a business with a large number of fixed assets – first and foremost, is the ability to track and account for fixed assets that contribute to the company’s financial accounts, but there are other bonuses. It can help businesses identify what assets are due for maintenance or updating, ensuring the best possible system uptime and minimising the risk of costly failures. Finally, the database can help to deter theft or fraud from the business.