Asset management: what is it? The real value of a company’s assets over time can vary depending on the marketing strategies applied. This condition induces companies to make statements that can give a detailed and reliable picture of the situation, monitoring what are the aspects related to tangible resources in relevant numbers.
In order for the desired goals to be achieved, an optimal resource management process, i.e., asset management, should be planned. But what is asset management and what benefits can be found?
Asset management: what it is
When we refer to asset management, in Italian asset or wealth management, we identify that financial/accounting process that is used to calculate, manage and report on the financial assets of a given company.
Setting up quality asset management ensures fewer losses and optimization of resources, which are useful not only for generating gain in the short term, but more importantly for generating it in the future.
Asset Management: Types of Assets
When approaching asset management, in most cases assets are divided into four macro categories: assets, investments, fixed assets and intangible assets. For each of these categories, guidelines are determined to be followed in order to set up wise management of business finances.
Activities
When using assets related to current activities, one must also consider the participation of rates, where the valuation of the value of the asset depends mainly on supply and demand relationships from competitive markets.
This type of assets includes cash, the latter in connection with interest and different industry and country exchange rates.
Investments
All assets related to the financial investment category concern companies that work and act in the financial market itself.
Assets in this case can be identified as stocks, securities, bonds, options and other derivatives. Everything that belongs to the sphere of financial investment is circumscribed in this category, with the advantages that will be analyzed in the next few lines.
Fixed assets
Investors who purchase assets of this physical asset type channel their funds to long-term assets, which are usually much more difficult to liquidate.
Belonging to this category are those expenditures that are made by companies for various working tools, such as machinery, equipment, vehicles, as well as real estate and long-term loans. Relying on assets of this type induces a long-term business plan, which in many cases is more constant and less subject to fluctuations.
Intangible assets
The category of intangible assets encompasses all those assets that are complex to value. Among the most common assets is that of copyright, which although defined by the new regulations, has no predefined value on which to begin objective analysis. In addition to copyright, IP (Intellectual Property), trademarks and patents are also added. This topic would merit further study, which will be discussed in the future.
Asset management: objectives
Asset types also identify what may be the Asset Manager’s most common goals. Asset management, whether private or corporate, induces an objective assessment of what one owns and can acquire. This reasoning leads to what are the objectives of asset management, which can be divided mainly into five elements.
Decentralization:
One of the goals of asset management is to distribute the company’s resources as best as possible across multiple locations. Vehicles, physical resources, and real estate must be organized so that they are productive, that is, capable of lowering costs and optimizing the available budget.
Ghost assets:
When one has the need to manage business assets, in most cases one is led to calculate what are the most relevant expenses. In fact, even phantom assets, that is, those assets with low value but high volume, can greatly affect corporate finances. The furniture in one’s office or some of the elements around it must be managed wisely in order to draw detailed reports.
Evaluation:
One of the issues to consider when striving for ideal management of business assets is that of underestimated or overestimated valuation. The concept of depreciation is indispensable for a company, buying or replacing an already depreciated item/service with a new but fast depreciating one is much more useful than relying on new tools with long depreciation times. Choosing appropriate tools that can be depreciated quickly is an integral part of the asset management process.
Monitoring:
A condition without which meaningful results cannot be achieved is the inherent management of accumulated expenses over time. The phase of monitoring a company’s expenses, time and assets becomes an essential part of an improvement process. In many cases there are errors inherent in the failure to track minor assets, which when added together generate large overall figures.
Consolidation:
One of the goals of Asset Management concerns actual financial reporting. Developing such an examination manually could take several time and generate accidental errors, while relying on dedicated software or specialized companies could ensure a better result with less effort.
Asset management: how it works
In addition to the objectives and types of assets, it is appropriate to focus on what is the operation of resource management.
Technically, resource management leverages the digital capabilities of API (Application Programming Interface), Orchestration, MDM (Master Data Management), and data extraction, transfer, and exchange from canonical ERP systems to monitor and establish the accounting process quickly and automatically.
Moreover, the use of all these technologies enables precise values, which are usually integrated with tools such as RPA (Robotic Process Automation) and facilitate the automation of workloads. By using such tools, it is possible to obtain accounting at predetermined dates and values that are as up-to-date as possible.
Asset management: characteristics and uses
Asset management can be useful for several areas, although the main purpose remains to optimize available resources and improve their future applications. But what are the most common uses of asset management that companies and individuals exploit most?
Budget:
A company’s assets are necessarily tied to its budget, whether that budget is daily, weekly, monthly or annual. Software that implements algorithms for resource management has the ability to store enough information to evaluate possible investments, both in the short and long term.
Report:
In order for the potential of a company to be defined over time, it is essential to determine the reports that are intended to be built and used in the management of the company. Dedicated reporting software can monitor behaviors, assess the best conditions, and compile detailed reports that can be read even by those without technical expertise in the field. By obtaining a defined report of spending trends for example, targeted marketing strategies can be planned.
Depreciation:
In this case, the software acts on the present value of an asset relative to all the tools at hand. In the event that a new computer or a more updated IT infrastructure is needed, the program defines what are the most cost-effective parameters for depreciation over time. Calculating business depreciation can ensure an advantageous status over those facing unforeseen expenses.
Disposal and transfer of assets:
When selling or buying an asset, it is important that the reference system removes that asset from the database. When several transfers are present it may not be easy to do this manually. With a dedicated program, this task is solved automatically when the verification of the sale of the reference asset is completed.
Asset management: advantages
Implementing enterprise asset management software can provide companies with several benefits. Although the benefits are potentially endless, four main ones can be identified: supervision, evaluation, accounting and accuracy.
Supervision:
Significant benefit of asset management software lies in its ability to oversee assets in real time over the course of months and not just at the budget preparation stage. This can be done by implementing cloud-based technologies that are interconnected so that data are constantly updated automatically.
Evaluation:
At the time when corporate accountants set the depreciation rate, the program can value assets based on the value found. Through this approach, a more accurate estimate of what the asset is worth and especially what it may be worth in the future can be obtained.
Accounting:
Additional benefit of leveraging asset management is real-time accounting. This type of technology allows various ERP systems to be integrated without too much difficulty. This interconnection allows the main system to be notified when an asset has been lost or sold, eliminating the steps of recounting assets during the pre-budget phase. Organizing assets, even ghost assets, is essential to planning a quality business plan.
Accuracy:
One of the strengths of asset management is its ability to develop detailed reports. In addition to being automated and allowing use on the desired date, the reports do not have errors usually caused by human distractions. Getting accurate reports makes calculating expenses much more effective, especially for companies that have to handle a huge amount of information on a daily basis.
Asset management: conclusions
Enterprise asset management is a starting point for not wasting resources; taking advantage of dedicated software can help SMEs and others reduce waste. However, not all companies are ready for the implementation of such a system. It is therefore advisable to conduct a digital test to understand the level of digitization of your company and respective needs.
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