The process of developing, running, maintaining, and selling assets in a cost-effective manner is referred to as asset management. Individuals or businesses that manage assets on behalf of individuals or other entities are referred to as asset managers in finance.
Every company should keep track of its assets. As a result, its stakeholders will be aware of which assets are available for usage in order to maximize revenues. Fixed and current assets are the two types of assets that any organization has. Fixed or non-current assets are assets purchased for long-term usage, whereas current assets can be converted for cash in a short period of time.
Here are the topmost reasons why your business needs asset management.
- Allows a company to keep track of all of its assets
Businesses may easily keep track of their assets, whether they are liquid or fixed, using this strategy. Owners of businesses will be able to know where assets are located, how they are used, and if they have been modified. As a result, asset recovery can be accomplished more quickly, resulting in increased revenues.
- Assists in ensuring the accuracy of amortization rates
Because assets are examined on a regular basis, the asset management process guarantees that the financial statements accurately reflect them.
- Aids in the identification and management of risks
The process of identifying and managing risks associated with the usage and ownership of certain assets is known as asset management. It suggests that a business will always be ready to deal with any potential danger.
- Removes phantom assets from the inventory of the company
There have been instances where assets that have been lost, destroyed, or stolen have been incorrectly documented in the books. The firm’s owners will be informed of any assets that have been lost as a result of a strategic gestion de patrimoine plan, and they will be removed from the books.
Creating a Plan for Strategic Asset Management
- Make a list of your assets
An owner must inventory all of his assets before doing anything else. If he doesn’t know how many assets he has, he won’t be able to effectively manage his inventory.
- Calculate the total cost of ownership
If a business owner wants to be accurate with his asset management strategy, he should analyze each asset’s total life-cycle expenses. Many business owners make the mistake of merely considering the initial purchase price.
- Service levels should be defined
The next stage is to identify service levels after calculating life-cycle expenses. Simply put, it involves characterizing the total quality, capacity, and function of the assets’ numerous services. The owner of a business can then assess what operating, maintenance, and renewal procedures are required to keep the assets in good working order.
- Make long-term financial planning a priority
A firm’s asset management approach should, in theory, simply transfer into long-term financial planning. With a solid financial plan in place, the business owner can determine which goals are attainable and which should be prioritized.
Asset management is a system that allows businesses to keep track of all of their assets, including vehicles, equipment, and investments. Keeping track of assets can assist expedite operations, especially when it comes to selling or disposing of them. Because all available assets are fully accounted for, the procedure reduces the risk of registering ghost assets.