When you’re a business owner, you can never be too careful with your investments—especially those that are integral to keeping business moving.
Fixed assets—the long-term pieces of property used in the production of income—are typically some of the biggest investments on the balance sheet. They include everything from laptops and printers to vehicles and heavy machinery.
And if you buy these assets with the intention of keeping them for more than a year, as is standard, they’re probably important enough that you’ll want to keep an eye on them.
Yet when it comes to fixed asset tracking, many small business owners are remarkably cavalier: According to the 2017 Wasp Barcode State of Small Business Report, 55 percent of small businesses don’t track assets or use a manual process to do so.
In a world where almost everyone and everything has some kind of information in the cloud, it’s hard to believe that some businesses out there are still using a pen and paper when auditing their assets, or, even more unbelievably, just guessing at what they have, where it is, and what condition it’s in.
Keeping your assets secure means knowing where they are to begin with. If you’re one of these SMB owners that admitted to not tracking your company’s assets, but still say you pride yourself on your security, or transparency, or accountability, you’re a walking contradiction.
If you’re reluctant to take the plunge, here are some important perks of investing in an asset management system that you might not have considered:
Asset management systems keep your assets safe
The fixed assets your company buys are often used by your employees on a daily basis. Maybe it’s their computer or laptop, or a mobile device like a barcode scanner or wearable tech like a smart watch. Maybe it’s a company vehicle, like a truck used to transport orders, or a drone that helps pick inventory off hard-to-reach shelves.
The point being, your employees likely interact with your assets a lot. And because of that—even though we’d like to think that we hire only the best people, people that we trust not to do our business harm—the unfortunate truth is that our assets often go missing.
Sometimes, a missing asset is the result of an honest mistake—say, by leaving a laptop or device at a job site overnight by accident. But according to a 2016 Global Fraud Study, asset misappropriation was by far the most common form of occupational fraud, with a median loss of $125,000 per scheme.
While some of these “schemes” include check tampering and cash larceny, others include asset requisitions and transfers or plain misuse.
Occupational fraud is clearly always going to be a risk when going into business, no matter how careful you are in your hiring and workplace practices. But one surefire way to cut down on the instances of misappropriation is to use a system that adds layers of transparency and accountability to the use of fixed assets.
Automated fixed asset management systems can keep digital records of when an asset was last checked out, by whom, and for what purpose. These records can be used to keep people honest, as well as to help track down assets that have gone missing due to forgetfulness.
The benefits to this are twofold: One is, of course, that you won’t lose valuable investments due to employee misappropriation. But the second is an issue that can continue haunting your business well after the initial loss.
It prevents “ghost assets” from haunting your business
A ghost asset is a fixed asset that is on the books but can’t be found in real life. If a company printer goes missing, but you still report it to the IRS (note that the IRS can demand the purchase documents for any asset on your depreciation schedule when conducting an audit), does it really exist?
Ghost assets are a symptom of poor accounting practices, which is commonly cited as one of the major reasons why small businesses fail. How do ghost assets affect your bottom line?
For one, listing extra assets on your fixed asset ledger means excessive and unnecessary property tax dollars levied against your business.
That can also mean artificially high insurance premiums as you insure assets that don’t exist—or, going the other way, not insuring “zombie assets” (which don’t appear on your FAL but for some reason are sitting in your office or warehouse) and leaving yourself exposed to big potential losses.
You may also run into budgeting problems: You might think you have too much money tied up in your assets to make investments in other parts of your business, when in reality you’re just tying up your capital in nonexistent assets (and their associated costs in taxes and insurance).
Finally, the most noticeable way that missing assets will hurt your bottom line is that you need them to run your business. Otherwise, why else do you have them?
It keeps your business running smoothly
Automated asset management makes sure that your business keeps moving and doesn’t stop due to unknowns. If a crucial tool, device, or piece of machinery goes missing and you’re unable to work, you’re in trouble.
One overlooked aspect of these systems is that they keep assets that haven’t gone missing in working condition. Some systems can set periodic reminders for routine maintenance, or can alert your accounting team when an asset is due for disposal.
Sometimes an asset can be rendered unusable when maintenance replaces a part by taking it from one machine and using it another. When the first machine comes into rotation missing that crucial part, but no digital record can be accessed to determine what’s missing and why, workflow is thrown into disarray.
Essentially, a cloud-based system allows anybody to make changes and updates to the records that other members of the team can access, keeping everyone informed as to the status and location of important assets. That always-accessible information keeps the team working efficiently and effectively, without worrying that a mistake, or something more nefarious, has kept them from doing their jobs.
Asset tracking programs don’t have to break the bank, either: Many use barcode-based technology—it’s amazing how versatile the humble barcode has become—as well as cloud-computing, which is quickly becoming the standard for business operations everywhere.
The bottom line
So if you’re wondering why your manual processes for tracking assets is still resulting in workflow inefficiencies, excessive fees and premiums, and consistently inconsistent asset records, maybe that’s because it’s well past time to upgrade to something befitting of a 21st century company. The world is increasingly moving towards automation, and it’s time your asset tracking, however simple and straightforward you might think monitoring your investments should be—followed suit.
About the Author
Brian Sutter is the Director of Marketing for Wasp Barcode Technologies, a software company that provides solutions to small businesses that increase profit and efficiency. He loves connecting with small business owners as well as like-minded individuals and can be found at @SmallBizBrian, Google+, and LinkedIn.
Other news articles:
|How pop-ups are paving the way for intrepid entrepreneurs and established online retailers|
|Personalization versus Data Security: Three Questions to Answer|
|Four Reasons why Retailers are Choosing Cloud POS|
Get The Point of Sale News once a month, once a week or once a day. Subscribe here.