You might have heard of asset management before in your business-related workshops or your management training sessions. But do you know what it really stands for and how it can help your business? If not, don’t worry. Here is your short, yet comprehensive guide to asset management which will help you take your business to new heights.
What Is Asset Management?
For us to be able to understand what is asset management, we must first define what is an asset per se. Simply put, any item, product or service which has a value to your organization or company can be an asset. The measure of its worth and form depends on the type of organization you are currently running and on your stakeholders.
Some examples of assets include the following.
- Civil structures
- Buildings, etc.
Building on this idea, asset management becomes the joined efforts of a company, business or organization to manage all the assets that it owns and needs. The primary purpose of the management process itself is to get as much value out of the assets as possible.
While the best part of the category we call ‘assets’ represents physical items, the list extends beyond that. Modern business types consider an asset the following three categories.
- Tangible assets
These items represent buildings, office equipment or machines. In other words, they are described as things which do not exhaust while running the business processes. They are used at all times while the business is running and will depreciate as time goes by. Tangible assets are one of the most important parts when it comes to asset management.
If this is a thing that interests you, and our best guess is that it is, then you should know that they fall into the category of Plant, Property, and Equipment if you are looking for them on the Balance Sheet. Apart from that, since they can convert to cash so quickly by just selling them, they are high liquidity assets.
- Intangible assets
Just as the name suggests, this category of assets comprises the valuable goods in your organization which you cannot physically touch. Some examples include your company’s reputation, the know-how, your knowledge of the industry, and even the recognition of your name. You cannot list them on your balance sheet, and they cannot be liquid assets.
Still, they have intrinsic value which will add to just how credible your business is. In case the intangible assets have a high value, via clever asset management you can use them to evaluate your business to a higher standard. Remember that you can always sell your tangible assets if they take a hit or if you need money. However, you should always protect your intangible ones as the core of your enterprise.
- Intellectual property
This class of assets is a variation on the intangible ones. They include the famous trademarks, brand names, patents, logos, inventions, formulas, as well as any other creative means of communicating and expressing yourself you can imagine.
The copyright law protects intellectual property as an asset. Therefore, you must always take that into consideration when performing asset management regarding intellectual property. Otherwise, you might breach the rules and end up on the brink of infringement, imitation or plagiarism. If that be the case, your company can face civil lawsuits and fines for infringing on someone else’s intellectual property.
What Are the Benefits of Asset Management?
Good asset management begins with knowing your assets as best as you can. And since we have already covered this topic in the paragraphs above, it’s time we moved on to what benefits it can bring into your company. Here they are.
- Asset management can help you demonstrate compliance in accordance with the wishes and requirements of all your stakeholders.
- You can have better results from a financial point of view since your ROI will improve, and your costs will reduce.
- As the manager, you will be able to make informed decisions based on multiple angles which asset management will provide. Some of these perspectives include profit and costs, performance, opportunities, and risks.
- Risk management if you consider it necessary.
- Asset management can and will lead to customer satisfaction.
- Making decisions about the entire lifecycle of an asset, which will lead to better planning and reduced costs overall. You can also do it when it surpasses the duration of some other plans you have made.
- Asset management can increase the stability of your production lines in the long term.
- If we are talking about intangible asset management, as described above, the process will improve your reputation when it comes to your stakeholders and investors.
- You can also use it to demonstrate compliance towards the laws and regulations that govern your business field.
- Asset management will help you trace your decisions and your decision-making process.
- It helps you improve your knowledge management process.
- Increase your attractiveness towards your investors and stakeholders.
- Asset management can also generate a higher level of interest as far as upper management in your company is concerned.
- The process is also certifiable so that you can make your business more credible on the market.
- It is recognizable internationally.
- Asset management as a process is recognizable by your stakeholders, such as investors, policymakers, and customers.
Acquiring an Asset Management Piece of Software
Specialists say that it’s not enough to perform asset management. You also need to buy a piece of software or another kind of technology that will help you automatize the process. You need to let go of the times when you used to do it with the aid of pen and paper. Minimalize your mistakes and increase your profits by using a piece of software instead of manual labor. Here are the benefits.
- It will save you a lot of time from preparing the reports.
- You will be able to file your reports on time.
- It will enable you to transfer your assets automatically.
- Maintaining the condition in which your assets are right now.
- Assigning owners to every asset.
- Keeping the documents organized.
- Managing the change requests a lot easier than before.
- Calculating depreciations automatically.
Here is one final tip as far as asset management is concerned. If we have managed to convince you that performing it will help your business skyrocket, then you would also be advised to seek the help of a professional. He or she will be able to walk you through the meanders of asset management in the best way possible.
Image source: 1