What are fixed assets?
Most fixed assets have a long-term life cycle.
“A fixed asset is a long-term tangible piece of property or equipment that a firm owns and uses in its operations to generate income. Fixed assets management are not expected to be consumed or converted into cash within a year. Fixed assets most commonly appear on the balance sheet as property, plant, and equipment (PP&E). They are also referred to as capital assets.” – source: Investopedia
In a car factory, various assets are used for a vehicle’s assembly. The raw materials are different metals and other components. They have a limited shelf life in the manufacturing facilities as they are consumed quite quickly. Therefore, raw materials are classified as current assets, not fixed assets.
On the other hand, robotic arms used for assembling cars, plus the land on which a factory is built, and the plant structure built on top of it, have a long-term expected lifetime. Therefore, we can classify them as fixed assets. These are a few challenges that need to be overcome in your journey of fixed asset management: –
- Manual human errors (like data entry mistakes) can make it tough to monitor and track asset information accurately.
- The information flow has to run through different departments. This can make decision-making slow.
- Cybers attacks pose a risk for any digital system. It is vital to follow the best data safety practices and use reliable software providers.
- Collecting data and generating actionable reports can be a challenge if the company is managing assets using multiple apps or relying on spreadsheets and paper records.
- Managing inventory for a large number of assets is cumbersome. Though it is not a core part of fixed asset management, tracking your inventory is often a part of the fixed assets journey.
- Tracking a huge number of assets in any organization generates a large volume of data. Storing, managing, and analyzing this data requires effective data management.
We, at Rebin Infotech, can prevent your company from facing all these challenges by yourself and are always ready to extend a helping hand in your fixed asset management journey, by implementing the right software and following best practices.