Importance of Fixed Assets Management for Your Business

Tally Solutions | Updated on: October 19, 2022

What is fixed asset management?
Why fixed asset management is important?
Key elements of fixed asset management

Fixed assets play a vital role in the way a business can generate revenue, which makes tracking assets an important concern of every company, regardless of its size. Companies face a substantial challenge to track the location, quantity, condition, maintenance, and depreciation status of their fixed assets.

Fixed asset management enables businesses to monitor equipment and vehicles, evaluate their state, maintain them in acceptable working order, minimize lost inventory, equipment failures, and downtime, and improve the asset’s lifetime value.

What is fixed asset management?

Fixed asset management is the accounting process of tracking and maintaining company physical assets and equipment such as vehicles, computers, furniture, and machinery for the purposes of financial accounting, preventive maintenance, and theft deterrence.

Using an asset management system, your business can achieve many tasks such as:

Manage equipment and machinery in multiple locations
Track and monitor fixed assets
Enhance operational efficiency
Reduce maintenance costs
Maintain a record of retired, sold, stolen, or lost assets

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Why fixed asset management is important

According to some statics and studies, unplanned downtime had cost businesses $260,000 per hour in 2016.

In some businesses, about 40% of investment goes to buying equipment and vehicles. So, being able to monitor the performance and condition of machinery and equipment can help businesses to slow the rate of depreciation and maintain fixed assets.

According to the ISO 55000 international standard, asset management should maximize value for money via enhancing the quality and useful life of the equipment and securing the best return on investment.

Fixed assets management can support your business to avoid:

Equipment failures
Unplanned downtime
Safety or environmental breaches
Misplaced or lost inventory
Failure to meet compliance or regulatory standards

For businesses with large inventories, the results may convert into millions of dollars in lost productivity, repairs, replacement, or fines.

Key elements of fixed asset management

Identify your requirements

Most businesses look at current workflows and try to find suitable solutions. Understanding your business needs, user level, and technical requirements is key to making sure you choose the right fixed asset management system.

Better visibility of fixed assets

Having better visibility of assets helps to enhance inventory management. Also, tracking solutions such as tagging and IoT devices to collect asset data and store it in a centralized system leads to reducing costs of loss or theft of equipment.

Secure your assets records

Using a high secured system as a fixed assets management solution is a priority. So, you can establish the origin of equipment and services across the asset supply chain, record safety-related transactions such as permits and incidents, provide an audit trail across the network, and provide oversight into damage and warranty-related claims.

Maximize fixed asset’s useful life

Although marked down as long-term assets, an asset’s useful life is usually within the first year of purchase. From then on, as wear and tear begin to take hold, an asset will depreciate in value. But that’s where the tools of an asset management system can be effective, which makes fixed assets management an essential element in generating a good return on investment by extending a fixed asset’s useful life.

How can TallyPrime help?

TallyPrime is a business management software that provides a comprehensive solution to manage the growing needs of small and medium businesses. Using TallyPrime, you can manage invoicing, accounting, inventories, banking, taxation, payroll and much more.

Here is the list of TallyPrime’s features: