The Importance of Fixed Asset Inventories

Implementing a fixed asset inventory solution is vital for organizations for many reasons. A proper accounting of assets can save time and money, reduce theft, improve planning and budgeting, eliminate “ghost and zombie assets,” and help an organization recover after a natural disaster. Often times, however, the importance of fixed asset inventories is overlooked in an organization. Yet assets such as land, buildings, computers, furniture, fixtures, vehicles, machinery and equipment represent the largest investments most companies make.

Many companies are unsure of how or where to start in this process, and the challenge can be daunting. Establishing the highest standards of inventory accuracy and best practices in fixed asset management will pay off in savings and efficiency for:

Corporate accountants managing fixed assets.

CFOs striving to optimize organization efficiencies and plan capital budgets.

Government asset managers complying with Governmental Accounting Standards Board (GASB) 34/35 standards.

Nonprofit executives seeking to gain maximum leverage from limited resources.

Why Fixed Asset Inventories Matter

Unfortunately, when it comes to the fixed asset inventory of your organization, what you don’t know could cost significant money, reduce efficiencies, and could even cause your organization to cease operation. All too often, organizations don’t pay attention to their fixed asset inventory. They don’t stop to think how much they are paying in insurance or property taxes on the assets the organization does or does not have, and are ill prepared in the event of a disaster.

To run a profitable organization, management must have information regarding the current location, use, state of repair, and usefulness of its productive assets. The CFO has a fiduciary duty to ensure accurate systems are in place to provide this information. The only way an organization can accomplish this is to implement a best practices inventory process, document it, and continuously monitor and update as changes occur. Challenges to controlling fixed assets include the lack of accurate physical fixed asset inventories—and inadequate tools and resources for maintaining accurate inventories going forward. Implementing a detailed inventory process will enable organizations to:

Save time and money.

Reduce theft.

Improve planning and budgeting.

Eliminate “ghost assets.”

Identify “zombie assets.”

Recover in the event of a disaster.

Save Time and money by implementing a fixed asset inventory process that includes documenting, labeling, a fixed asset tracking software solution, and continual tracking, organizations can reduce the time it takes to evaluate the assets on hand—reducing costs and helping to achieve profitability. By properly tracking fixed assets and performing regular fixed asset inventories, organizations can ensure that it does not spend money on items it already has and reduce the costs of performing audits.