The True Cost Of Fixed Asset Management Accounting
Most companies are prepared to face the fact that, although taking a physical inventory of assets is a major effort, it’s an essential task to ensure that the books reflect the real assets.When the pain is over, you have the satisfaction of knowing that there is a sound and accurate system in place.Getting such a comprehensive and accurate asset inventory in place is of course expensive and many companies look no further than the initial costs associated with a fixed asset inventory.
Managers can always find a reason to avoid expenditure on something that they perceive as being of little immediate relevance or value to the company’s bottom line. What they fail to appreciate is precisely those bottom line benefits and cost savings that accrue from using the latest fixed asset management software. Rather than focusing on the cost of the solution, they should consider the cash flow benefits that result from not paying unnecessary taxes and insurance premiums as well as many other financial benefits.This very real return on investment goes unnoticed when looking only at the top line costs of barcode software packages.
An adequate solution that facilitates an accurate idea of numbers for fixed asset accounting can pay for itself remarkably quickly. Uncovering unrecorded retirements can result in an immediate write off, reducing income taxes, property taxes, and insurance premiums.Armed with the information from a fixed asset audit you can address the concern that the firm may be over or underinsured by accurately matching required insurance coverage and premiums with actual assets.Accurate fixed asset accounting can reduce the need to spend money on additional equipment by utilising idle equipment instead of having to purchase brand new plant or machinery. Lease termination penalties can also be avoided by simplifying the process and ensuring the equipment is returned promptly when the lease term expires.
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Filed under Accounting, Bookkeeping by on Dec 12th, 2010. 
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