The best methods for tracking fixed assets

What is fixed asset tracking?

Fixed asset tracking (also known as fixed asset management) is an accounting process that helps business to continually calculate the cost and volume of their fixed assets for a variety of reasons.

Just some of these reasons for tracking fixed assets include:

• Calculating the financial worth of a business
• Calculating the amount of tax your business must pay
• Preventative maintenance
• Preventing and minimising asset theft or loss
• Calculation of an assets worth over a period of time

Due to the sheer amount fixed asset tracking can achieve, it’s easy to see why so many businesses place such an importance on it. Nonetheless, if you’re going to track your assets, you need to do it properly, as inconsistencies can lead to loss of profit.

What’s the best method for tracking fixed assets?

Your fixed assets should be shown on a balance sheet as a summary account. This will show you overviews of fixed asset ‘areas’ and their total costs. Examples of summary headings for asset areas could include office equipment, buildings/land ownership and mechanical equipment.

When creating an asset management system, you should always ensure you have a clearly marked account number, name and balance for all your assets. You can use asset management software to make life easier but it’s important to choose one that is high quality and reliable.

Fixed assets should be displayed in scheduled accounts that are looked after by a designated employee. They should be assigned a control number, or asset tracking number, that can be used to monitor, update and change the value of an asset when needed. These changes include replacement of assets, sales of an asset or the depreciation in value of a specific asset.

Each month, every one of your assets should display a beginning balance, any changes to the asset and the monetary impact, plus the final end balance for the month. When it comes to reliable methods for tracking fixed assets, you should start as you mean to go on and create a good, solid base for your asset management process.

What is depreciation?

Each fixed asset you own will eventually depreciate in value and this depreciation must be added to your asset tracking system each month. The basic calculation for the rate of depreciation is the original cost of a product, divide by the number of useful years it has. The end number is the fixed rate of depreciation you will use annually. This doesn’t include the scrap value of the asset.

If you don’t want to work out the depreciation of your assets or simply can’t, some accountants will do this for you, as long as your asset management is reliable and up to date.

How can asset labelling help?

You can use asset labelling to track your assets more reliably and ID labels, stickers and plates can all help you to better keep on top of asset tracking. Personalised asset labels are able to contain essential information about your fixed assets, including their unique tracking number, your business information and even unique barcodes for ultimate asset management.

Tracking your fixed assets is essential for the health of your business and asset labels provide you with a foolproof way to keep on top them with ease.