Most people think of asset management as the act of managing a person's cash and investments, usually by a financial services company. For businesses, asset management means something quite different. Broadly, it's the act of tracking all things of value to an organization, so that assets are developed, operated, maintained and disposed of as cost-effectively as possible.
TL;DR (Too Long; Didn't Read)
Asset management is the act of managing the organization's physical assets so nothing gets wasted, nothing sits idle and everything that needs to be upgraded is upgraded.
Asset Management Explained
For businesses, asset management is the act of managing the organization's assets so they're used as cost-effectively as possible. Asset management is concerned with tracking, maintaining and upgrading key assets to ensure that everything the company owns is put to its best use. Companies with good asset management practices track everything from conception through the asset's operating life up until its disposal phase. The company understands the location, use and state of repair of assets so nothing sits idle.
Breaking Down Asset Management
Asset management is a method for adding value to an organization by managing assets to be more efficient, reliable or cheaper. It lets a business see at a glance what assets it has, where they are located, which are in pristine condition and which are older and need some work. This data allows the business to plan purchases, schedule maintenance and figure out the value of the assets on its balance sheet. With better data on how it uses physical assets, a company could assess the output of its assets against maintenance costs so it understands the right moment to replace assets versus fixing them.
Why Businesses Need Asset Management
Good asset management practices offer numerous benefits, including:
- More predictable and sustained cash flows since assets are being put to consistent and optimum use throughout their useful life.
- An up-to-date understanding of the value of the assets on the balance sheet.
- An accurate record of quantity so you don't duplicate the purchase of equipment you already have.
- Maintenance discipline through planned preventative maintenance.
- Benchmarking the performance of assets against other companies.
- Tracking each asset's depreciation status so you know what to report on your tax return.
As a strategy, it's especially effective in lean times when a company needs to make the most of any resources it has.
Asset Management Software For Your Company
Managing assets can be tricky if you're not organized. That's why many companies use specialist technology platforms to tag assets and better analyze the risks associated with their asset inventory. Software solutions are as broad as they are long, so be sure to shop around for the right solution. As a minimum, you'll need software that supports your baseline inventory in multiple locations, tracks purchases and disposals and prepares reports for asset identification during tax preparation. Popular cloud-hosted solutions like Asset Panda let you track inventory from anywhere on mobile devices your staff is already using, and you can access support via phone and email. EZ Office inventory is another comprehensive solution that supports all purchase levels, giving small and medium-sized businesses the asset tracking solution they need.
Jayne Thompson earned an LL.B. in Law and Business Administration from the University of Birmingham and an LL.M. in International Law from the University of East London. She practiced in various “Big Law” firms before launching a career as a business writer. Her articles have appeared on numerous business sites including Typefinder, Women in Business, Startwire and Indeed.com.