August 6, 2021

A Guide To The Asset Management

Asset management is the art of deploying, maintaining, and keeping track of all the assets of the business in the most cost effective manner. Asset management is the function that is undertaken by individuals or firms that manages these assets on behalf of their clients. It is vital for the business to know well about its assets. It is with the asset management that the concerned stakeholder will have valuable information related to what assets are available and how they can optimally be put for the best possible returns for them.

Assets can be categorized into two categories, i.e., current and fixed assets. Current assets are those that can be converted into cash in a short duration, such as accounts receivables, inventory, etc., whereas fixed assets involve investment into assets for a much longer period, such as land, building, machinery, etc. It is important to employ asset management in the organization as it leads to better control and cost-effective management.

Asset management helps businesses to store all the information related to the assets in a single centralized platform, which enables the businesses to easily identify trends, monitor assets, develop asset life cycle, etc. Also, at the same time, it ensures that there is no error in performing such activities, thus also reduces the time involved in such processes. There are various benefits of asset management. These are mentioned as below:

  • Keeping Tabs: Assets are a very important part of the business. They are, in fact, the living soul of the organization. It is therefore very important to keep a tab on all the assets of the organization. It will keep the owner updated about where the asset is, how they are being utilized, what modifications are made to them, and how they are contributing towards the goal of the organization. These are all valuable information that businesses can be put to use to make strategic decisions. Efficient asset management leads to better results for the organization.
  • Accuracy: With the help of asset management, the assets are checked and monitored on a regular basis; it thus ensures that the financial records show the accurate picture of assets to its various stakeholders. It keeps track of all the happenings with the assets, such as which assets I due for repair or is stolen, etc. This all leads to the generation of an accurate, detailed audit report.
  • Increase in efficiency: With the help of asset management, one can get to know about the role of assets in profit generation. It gives information about assets’ various capabilities, their contribution, etc. On the basis of which, the organization can devise a way with which the assets can be utilized in the best possible way.
  • Removes ghost assets: Ghost assets are those where assets that do not exist anymore for any reason, such as being stolen, lost, or damaged, but still are a presence in the books of accounts. With the help of asset and facility management, one gets aware of these assets, and these must be removed to show the true picture of the firm’s financial position

Hence we can conclude that asset management must be put to in all the businesses to avail its benefits.