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Every tool, piece of equipment, or item your business purchases is an investment. You buy equipment because of the returns it provides. Equipment asset management is also an investment — one that helps you get more out of all your equipment.
Equipment asset management is the system or set of procedures an organization uses to keep track of its equipment and other fixed assets. Most businesses use asset tags and asset management software to maintain detailed records of their equipment and assets.
In this article, we’ll cover some of the most important business benefits of equipment asset management, as well as how your asset tracking software allows you to better understand, maintain, and budget for your equipment.
>Top 9 benefits of equipment asset management
These are the top nine benefits businesses can reap from implementing an effective equipment asset management system.
>1. Reduce loss and theft/increase accountability
The first, and perhaps most important, benefit of implementing an equipment asset management system is that it decreases misplaced, lost, and stolen work equipment. By creating records of when and where equipment is used (and even who has used it), you can identify who is responsible for the equipment at any time. This accountability encourages employees to take greater care not to lose or misuse equipment.
These records also make theft more difficult because you know who has used it and will often notice something is missing more quickly. With just a quick look at your records, you’ll be able to find out where the tool was last used or checked out. If it’s not there, you can take action instead of waiting for the item to “turn up.”
>2. Understand asset lifecycle and value
Each tool or piece of equipment is an investment, and understanding the use and value you get from it is an important factor in budgeting and other decisions. Your records should include asset details like when equipment is purchased and how it is used and when.
You can also use your asset management system to keep track of equipment use. This potentially allows you to track the revenue critical assets produce. If you need to convince leadership to invest in a new asset, this kind of concrete information can be very persuasive.
Over time, you will be able to see how long different equipment lasts and notice if certain brands or models last longer. Then, when it’s time for replacement, you can choose the equipment that provides the most value. By reducing loss and theft, you can often increase the lifetime and lifetime value of your equipment.
>3. Maintain and get more value from assets
Equipment asset management is also an extremely effective way to document and even promote preventive maintenance. From vehicles to industrial refrigerators, many fixed assets need periodic care to continue functioning.
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When you document repairs and maintenance history in your asset records, anyone with access to your system will be able to check when an asset was last serviced. In fact, you can even set up notifications to remind you when it’s time for maintenance. This can help prevent equipment failure and lost revenue.
>4. Extend the life of assets
Taking better care of your equipment will help it last longer and can help avoid costly breakdowns and repairs. For example, company vehicles require regular oil changes, tire rotations, tune-ups, and more.
Between taking better care of your equipment and reducing loss and theft, asset tracking and maintenance management can extend the life of your investments. When you don’t have to spend your budget on constantly replacing equipment, you can use that capital for other revenue-generating purposes.
>5. Enable location lending and multi-site work
Many businesses operate out of several locations or may work on different sites every day. Plumbers and electricians, for example, may travel to several places throughout the workday, bringing their tools with them. A tool tracking system helps make sure equipment doesn’t get lost along the way.
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When you track equipment, you also make it easier to share important resources without losing them. For example, let’s say you have three business locations. Because scissor lifts are only needed occasionally, you might only have one for all three locations to use. Equipment asset management makes it easy to lend or move the lift from one location to another. You’ll have a record of where the lift is at any time, preventing confusion, loss, and delays.
>6. Improve budgeting and resource planning
As we mentioned above, equipment asset management helps you understand the life cycles of different equipment. When you know how long an asset will last, you’re better able to project and plan for replacement costs.
For example, when creating next year’s budget, you can review your equipment records to identify items that may need replacement. This is a much better option than having an unplanned major expense halfway through the year.
With metrics around how much each tool is used and how much revenue it generates, you can also make data-driven decisions about whether to invest in costly equipment. Equipment use and revenue records make it easier to judge whether a potential purpose will ultimately pay off.
>7. Reduce human error
In the past, employees might have had a handwritten or digital log in which they would write down an asset’s serial number. While this is better than having no tracking system at all, misread numbers, illegible handwriting, and other issues would often arise. One of the benefits of a modern asset management system is that it prevents the inevitable errors that occur when you’re tracking assets by memory or spreadsheet.
Using asset tags and readers (be they barcodes, QR codes, or RFID tags) means an employee can’t write down the wrong number. All they have to do is point their scanner at the asset label, and the technology does the rest.
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Keep in mind that training your employees on how and when to use their asset management tools is essential for success. Your team should know when assets must be scanned and who is responsible.
>8. Save on taxes
For many businesses, equipment and fixed assets are an enormous investment. Along with helping you get more return from that investment, asset tracking can get you a tax break.
Physical assets and machinery often decrease in value over time, which is called depreciation. Vehicles are a great example. We all know that, generally, older cars are worth less than newer cars. The same principle applies to your company’s fixed assets. The Internal Revenue Service allows you to write off that loss of value — or depreciation — when your business files taxes.
It’s important to note, however, that you have to keep diligent asset records to take advantage of this tax break. Within your asset details, you should keep track of each piece of equipment’s value at purchase and its salvage value each year. The difference is how much that asset depreciated. When you track depreciation across all your high-value assets, the tax savings can add up.
>9. Maintain detailed asset histories
Modern asset management software allows you to keep a chronological history of your equipment. These records are at the core of so many other benefits, including the ability to track lifetime value and depreciation.
This can also be extremely important for compliance measures. For example, if you find that there was an issue with a job, you can find out what other jobs used the same equipment, potentially allowing you to make corrections before new problems arise.
These records can be helpful documentation for insurance claims. They can also serve as proof of work because they have records of when and where equipment was scanned. In case of a disaster, up-to-date asset records can help you collect your benefits faster.
>Equipment asset management software
An equipment asset management solution usually has three main parts: the unique >asset tags that are applied to each item, the scanners (or mobile devices) that allow you to read those tags, and the asset tracking software that stores, analyzes, and displays your asset records. Because it holds all your data and item histories, your asset management software is at the center of tracking and maintaining your equipment.
Any modern asset management software should allow you to easily access an item’s record, but you should look for a platform that allows you to track what matters to you. Along with common data like date of purchase, RedBeam users can create custom fields in asset records.
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Ease of use is also an important consideration when choosing asset tracking software. You need a system that your employees will be comfortable navigating. Whether using a mobile device or a desktop computer, RedBeam’s interface is intuitive and designed to allow anyone on your team to find what they need.
Some other factors that may be important in your decision are integrability with other technology, multi-location tracking, and reports and analytics. Ultimately, equipment management software should make it easier to document, look up, and learn from all the data you have.
>Frequently asked questions
Here we answer some of the most common questions about equipment asset management.
>What is an equipment asset?
While many businesses refer to machinery, tools, and other items as “equipment,” they're also considered assets. Assets are property a business or individual owns. Because equipment is typically used over a long period of time, it is a fixed asset. Equipment assets are the property your business uses to create value and revenue.
>How do you track equipment assets?
Almost any equipment tracking system involves tagging or labeling each piece of equipment with a unique identifier, such as a barcode or QR code. Each piece of equipment’s unique identifier is tied to the item’s record in a database or asset tracking software. Employees then scan the asset tag when they either use or move a piece of equipment. This ensures there is always a record of the item’s location or user.
What are the three types of equipment maintenance?
The three types of equipment maintenance are preventive, corrective, and predictive. Preventive maintenance involves inspecting and caring for equipment to prevent larger problems or equipment failure. Corrective maintenance is when there is an identifiable malfunction or equipment failure. It corrects a problem. Predictive maintenance means monitoring equipment for issues before there is a complete equipment failure.
What is asset lifecycle management?
Asset lifecycle management refers to how businesses understand and optimize each stage of an asset’s usable lifetime. The asset lifecycle includes planning, acquisition, maintenance, and disposal or replacement. Businesses use data to estimate how long a tool or piece of equipment will last, how they can make it last longer, and how they should plan for repairs and replacements.
How do you calculate depreciation on equipment?
There are several methods for calculating an asset’s depreciation. The most popular method is called straight-line depreciation, which divides the lifetime value of an asset over the number of years it is expected to be used. You begin by subtracting the item’s salvage value (what it will be worth when you are done using it) from its original value. You then divide that number by the number of years you expect to use it. For example, let’s say you buy an asset for $10,000 and the expected salvage price is $2,000. If you expect to use the equipment for four years, you can assume $2,000 in depreciation per year. ($10,000 - $2,000) / 4 years = $2,000 per year
Make your equipment work for you
Your equipment and fixed assets are essential to creating value for your customers. Equipment asset management is all about ensuring that equipment is available and in good repair at all times.
From tax savings to longer-lasting assets to reduced loss and theft, tracking your equipment helps you get more out of each piece of equipment you invest in.
Find out how RedBeam can help your business keep track of and get more use out of valuable equipment. Schedule a demo today.
