Why Fixed Assets are important to the company?
Fixed assets are a primary key resource for businesses and can represent a significant section of the net worth captured on the balance sheet. Many organizations nowadays face a remarkable challenge to track the location, quantity, condition, maintenance and depreciation status of their fixed assets. A popular approach to fixed assets tracking uses attaching a radio-frequency identification (RFID) tag to an asset.
Recording, maintaining, and reconciling the fixed asset account is crucial because errors can lead to inaccurate evaluation of a business consequently affecting investors, lenders, and agencies. Therefore, fixed asset tracking system seeks to track fixed assets for the purposes of financial accounting, preventive maintenance, and theft deterrence.
Asset tracking is a major element for every company, regardless of its size. Fixed assets are defined as any ‘permanent’ object or equipment that a business uses internally to accomplish tasks. Employees may use the fixed asset that belongs to the company and must return it; therefore without an accurate method of keeping track of these fixed assets it would be very easy for a company to lose control over of them.
The manual ways of asset tracking uses Excel spreadsheet are washed away now due to the recent technological rush. It proved to be a slow method to carry out processes as well as its lack of accuracy in asset tracking of the acquisition of new fixed assets, incorrect calculation of depreciation, and the ability to easily manipulate or divert data and those are major drawbacks.