financialtreat – will explain about Asset Lifecycle Management that Turns Out to be Very Important for Companies which you will get in the following article. let’s look at this article carefully!
Asset lifecycle management that should not be missed, Asset management is the process of decision making and its implementation in accordance with the acquisition, use, and division of these assets.
Every private and government company organization certainly has assets both tangible and intagible. Every asset owned must be managed effectively and efficiently so that these assets can provide the highest benefits for the company and one of them is asset lifecycle management.
Asset Lifecycle Management that Turns Out to be Very Important for Companies
The term asset management may be rarely heard by many people. Others more often hear or say the terms management and assets separately. The management in question includes 4 (four) basic functions, namely Planning, Organizing, Leading, and Controlling, while what is meant by assets in general is wealth.
Wealth can be in the form of tangible (physical) or intangible wealth. The tangible wealth owned by the company is for example land, buildings, equipment and machinery. Tangible assets that are oriented towards public services such as infrastructure include roads, bridges, ports, and irrigation.
While intangible property, examples are intellectual property rights, copyrights, patents and others. Basically, the purpose of asset management is to assist companies in making the right decisions so that assets can be managed effectively and efficiently.
Asset Management Objectives
There are several objectives of managing the company’s assets, including:
- Ensuring the ownership status of an asset;
- Conducting an inventory of the wealth and service life of the assets owned;
- Keeping the value of assets high and having a long life span;
- Ensuring an asset can generate maximum profit;
- Achieving optimal use and utilization of assets;
- Minimize costs over the life of an asset;
- As a necessity for asset security; and
- As a reference in preparing the balance sheet in the accounting report.
Asset Management Cycle
In managing the assets of a company, there are cycles that must be carried out sequentially so that the final management process can function optimally. The following are the stages of the cycle in order.
1. Asset Needs Planning
This is the first and most strategic step in the asset management process. Asset needs planning must be able to provide information about the level of company needs for fixed assets to be managed, both long-term and short-term management. With this planning, it is expected to increase profits and reduce the risk of company losses in the future.
2. Asset Procurement
The next stage in the cycle is the procurement of assets, which is a series of activities to obtain assets carried out both by internal parties of the company and by external parties appointed as providers of the assets concerned.
3. Asset Inventory
At this stage, the company collects data and records tangible and intangible assets by providing an asset code and writing information about an asset, such as the location of the asset, asset area, asset acquisition price, asset designation, proof of asset ownership, identity of the person in charge, and asset specifications.
Furthermore, the results of the data are reported and documented at a certain time to obtain data on all assets owned.
4. Legal Asset Audit
Also known as legal due diligence, this is an audit or examination stage regarding the ownership status of assets, procurement systems and procedures, transfer systems and flows, as well as looking for legal problems related to assets and finding appropriate solutions.
5. Operation and Maintenance of Assets
The company uses all assets in business processes in accordance with their respective functions. Then, the company also carries out asset maintenance so that it can function optimally.
6. Asset Valuation
The company determines the value of its assets to clearly know the value of the wealth owned, which is transferred or written off.
7. Write-off and Transfer of Assets
If an asset cannot be utilized anymore, the company will decide to write off the asset by transferring it or destroying it. Transfer of assets is the transfer of rights and/or responsibilities and authorities of assets in other divisions. Meanwhile, asset destruction is the destruction of assets to reduce the assets owned.
8. Asset Updates
In some assets that are assessed that cannot work optimally, they can still be renewed so that they can still be utilized by the company. Therefore, the company carries out the process of updating or rejuvenating assets so that they can return to work optimally.
The Importance of Asset Management
By conducting asset management and its cycle, the company can maintain the value of its assets to remain stable and can increase profits, both in terms of income and achievement of goals.
The company can also minimize the risk of loss stemming from damage or decreased asset value. In addition, this asset management helps the company in monitoring if its assets are depreciating.
When there is a depreciation of the function or value of an asset, the relevant team must make a depreciation report on the assets listed in the financial statements to then consider the decisions to be taken.
Asset management can facilitate the preparation of a company’s budget, such as construction, purchase and maintenance of goods. From this budget, companies can also be more careful in making decisions on purchasing new assets in order to save on expenses.
Asset management is always accompanied by risk management. Because the company must consider the risks that will be faced in the future that can threaten its assets. By running asset management, companies can also manage risks that may arise in the future.
And each company has assets both tangible and intangible. So with so many of these assets, it will not be easy to manage all these assets. Especially if the asset will be sold to your clients or customers.
Managing company assets certainly requires someone who is responsible and understands how they work. Then in fact the company can easily manage it, if it follows some of the tips below, namely:
1. Determine a reliable and trustworthy team in managing assets
Reliable team, asset management tips, asset management management, asset management
Focusing on asset management on one team will be lighter than if done together with other things. Look for a team that is reliable, responsible and trustworthy to manage company assets. If it is a small business, it can use two people to work on it, but if it is a large business then a special team of asset management and maintenance must be formed.
2. Get to know the life cycle of company assets
The turnover of company assets, company assets, asset management tips, asset management, asset management Knowing the turnover of assets from purchase to unusable is very important.
The company must be able to estimate how long it can be used and when to carry out maintenance. This will affect when the company will choose or buy new assets again.
3. Track assets regularly
Company Asset Tracking, Company Asset Turnover, Company Assets, Asset Management Tips, Asset Management Management, Asset Management
If the company is not observant enough in seeing what assets are still there, then over time this will affect the company’s finances. Related to tax payments, assets that are no longer owned by the company may still be paid if they do not track assets regularly.
4. Knowing the depreciation of assets
Asset depreciation, asset management of enterprises, assets of enterprises, asset management information systems. Knowing assets that are no longer suitable for use and looking for the cause will affect employee work productivity.
If so far employees use tools that have been around for a long time and have not performed well, then the products produced will also not have good quality. So that depreciation calculations can be carried out regularly to know the right time to buy new assets.
Read more financial management:
- Tips for Achieving Success with Good Financial Management
- Become a Great Accountant with a Financial Management Application
5. Manage assets with automated management
Company Asset Management, Enterprise Asset Management, Enterprise Asset Management System. Everything that is manual will take a lot of time, effort and cost. So that asset management can be managed automatically.
The abundance of software that helps in asset management such as ERP Software will help in displaying asset value, depreciation tracking, asset maintenance, contract management, cost analysis and others.
The five tips above will certainly increase the efficiency, effectiveness and productivity of the company. Technology has been able to help companies in managing their assets so that it will also help employees in working, improving customer service and also developing the products created. And that’s the reason why the asset life cycle is important for the company.