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7 Benefits of Asset Tracking in Education
Data provided by a 2021 EdWeek Research Center survey from March 2021 shows that there has been an approximate 30%...
Written by: RedBeam Team 7/29/21 9:47 AM
What are a company’s most valuable long-term assets? They’re not the ones you think! In this article, we explore what fixed assets are (and why they’re so important), how organizations can effectively manage them– and the common mistakes that are too often made.
In general, the assets of an organization can be classified into two categories: current or non-current. Current assets include cash, accounts receivable, and inventory, while non-current include long-term investments, property, and equipment– known as fixed assets.
Although the term “fixed” may seem misleading, as assets are not always stationary and can be moved from time to time, they are considered fixed because they cannot be easily converted into cash without great expense.
Fixed assets are items that a company owns and expects to use in its operations for more than one year. This includes include buildings, machinery, computers, vehicles, furniture, and equipment.
A manufacturing company may have machinery, computers, and equipment that it uses to produce goods. A restaurant would have tables and chairs for dining guests as well as a stove, ovens, sinks, dishwashers—all types of fixtures needed in the kitchen area. These are all examples of fixed assets because they will be used over one year or more.
Assets like property, plant equipment, furniture, and fixtures are critical to stay open and profitable; they provide the basic infrastructure or foundation on which organizations build their businesses.
The value of an organization’s fixed assets can be considered part of its total assets, which is a measure of the company’s overall size and financial strength. For example, if you have $100 million in current assets and $50 million in non-current (fixed) assets, your total asset base would be $150 million.
Organizations need accurate records to effectively manage them so they’re cost-effective and used for the right purposes. Tracking enables us to make good decisions about whether an asset needs replacement or modernization, or if we are using it for the right purposes.
As your organization grows in size and complexity, the need for accurate tracking will grow as well. Managing a growing inventory of fixed assets can be difficult and expensive, but an accurate tracking system will help managers plan better by knowing what their fixed assets are worth and how much depreciation they should expect to incur over time.
This enables effective management which will lead to cost-savings and better decision-making about how best to use our long-term assets. In addition, accurate record-keeping allows us to benefit from tax advantages that are available only when we track those costs.
Organizations should keep good records of the acquisition, use and eventual disposal of any asset it owns so that financial statements are accurate and useful for decision-making purposes. This includes recording cost information such as purchase price or accumulated depreciation; where the asset is located; the asset’s current value, and how it will be disposed of.
In order to be most effective, management of fixed assets must start with an up-to-date inventory of what you own at your business location(s). To keep this list current, it needs to be updated regularly to properly account for any items being used in the company’s operations.
It is important to track fixed assets so they can be managed and used wisely. If this blog post has given you ideas for taking care of your company’s fixed assets, you may be interested in reading more on the subject. Here’s a link to our comprehensive asset tracking guide for busy professionals.
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