Companies are overspending by more than 20% because of under-utilisation, inefficient maintenance and petty theft of their assets.  The accountant must also deal with the complexities of accounting for fixed assets, in particular the accounting conventions concerned with depreciation and disposal value. It is not surprising then that the fixed assets value, which often represents a very substantial proportion of total assets on the balance sheet, is for many an area of the business, do not know how to investigste.   If knowledge is power, the control of fixed assets is an area where many financial managers need empowering.

Most organizations have some form of computerised fixed asset record, which is the first stage towards the more effective management of fixed assets.  But this must be complemented by regular physical audits to ensure that theory and reality are kept in line.  For many companies, undertaking a physical audit of fixed assets means walking around with a clipboard and pen (yes, even in this electronic era,) recording serial numbers and then, trying to reconcile them to the books.

The process of a physical audit can take months during which time assets may have been moved, disposed of, or new ones acquired, it is an expensive time-consuming exercise.

There are a number of systems now on the market which utilize bar-code and RFID technology, to ease the task of physically auditing and tracking fixed assets.  Stephen Moriarty, CEO of Assetware Technology, supplier of asset management systems, has worked with many organisations as they automate their asset management procedures.  ‘A few years ago we were having to do quite a lot of missionary work,’ says Moriarty, ‘but managers are now waking up to the fact that there are very substantial savings to be made through better management of fixed assets. Estimates vary, but most of our clients judge that the time taken to do a full audit using our system; has been cut by 75%.’

As well as the obvious benefits of identifying assets which have moved or been ‘lost’, having accurate information about fixed assets helps control expenditure because there is no duplication of equipment purchase, and also means that insurance premiums and outsourcing fees, are not being paid on non-existent equipment. 

The fact that assets are seen to be bar-coded, acts as a very effective deterrent to theft, especially of PC’s and computer equipment.  Furthermore, many of our manufacturing clients are using bar-coding and asset awareness data in conjunction with their risk management analysis.  This enables the clients to ensure that should a supplier close or ceases to exist, the equipment can be quickly and correctly collected from the supplier site.
But what about the all-important first step of beginning with a reliable fixed asset register?  There are many organizations where, precisely because of the difficulty and time-consuming nature of the task, a physical audit of fixed assets may not have taken place for many years.  Such a company will have a fixed assets register, but may have little or no effective control over many tens of thousands of pounds worth of equipment.  If management is willing to grasp the nettle, the problem can be solved by using specialist asset Management Company who will send in a task force to reconcile the register, apply bar-codes to the assets, and set up procedures to ensure that the problems never recur.  The initial cost of doing a physical audit is more than recouped, often within a few months, through reductions in administration, labour and equipment maintenance costs.

According to Mr Moriarty, financial managers are now much more aware of the benefits that improved asset management can bring.  Any company looking for a way to improve management control, cut down on unnecessary costs and improve security may be well advised to consider an asset tracking solution. 

Stephen Moriarty is CEO of Assetware Technology Ltd. based in St Albans, Assetware is one of the UK’s leading asset management specialists. For further information email info@assetware.co.uk or visit www.assetware.co.uk