About Fixed Assets inventory
When we talk of inventory, most people think of stock inventories (especially if they’ve encountered a sign saying “Closed for Inventory”). You may think that what really matters is the products meant for sale or, in the case of production units, semi-finished products and/or raw materials, since these are the assets that the company can liquidate the fastest. And so these are the only assets that require a disciplined inventory. In reality, that is not entirely true. Keeping exact, maintained records of fixed assets can also help you save large amounts.
What exactly do we mean by fixed assets? According to the official definition: “Fixed assets are the material property that directly or indirectly serve the company’s activities for a period of more than one year or more. During the course of their use, they retain their form and their purpose generally remains constant.” To put it a little more simply, fixed assets are all the equipment, machines, vehicles, real estate property, furniture, computers, tools provided for personal use, etc. that are owned by the company and that contribute to profitable operation.
If you have fixed assets, the first step is to decide what the correct identification system is for keeping records of them. The guidelines provided by experts or an inventory company should be used to determine whether
- character strings,
- 2D codes, or
- RFID is the optimal long-term solution.
In line with the above, a plan should be drawn up for exactly recording inventory quantities, because that too can affect the identification system to be introduced. For example, if you use a marker to write an identifier over a sticker, there will be no point to planned quantitative inventory using mobile data collectors. If data are available for your fixed assets (registration number, brand, type, serial number, year of purchase, etc.), those should be reviewed, and you may also need other data. Be careful to collect only the data that will support business decisions later on, because unnecessary administration is costly. If you do not have an initial fixed asset database, you will have to plan the data required for your assets, including whether those are required or optional. You will also need to determine the method for identification, location (office, site, person, etc.), and process for moving after making the purchase. It is also important that communication within the company be clear on the procedure for moving the various assets (or asset groups). Having an exact fixed asset inventory will not be worth anything if your records database is not maintained. Timing may also be another important issue. Should inventory take place annually, biannually, before or after projects: this too should naturally be tailored to the company’s activities. One thing is for certain: by law, all companies have to take inventory of their fixed assets at least every 3 years.
Exact records help avoid unnecessary purchases, which can help you save enormous amounts of money. To name just one simple example: if the company assigns new assets to every single project instead of re-using them, it will amass an unnecessary inventory. Excess inventory may or may not slowly “disappear” over the years. But even if it doesn’t, it will tie down the company’s capital. However, the reverse is also true: there may be cases where records show that the company has enough assets for a given project, but they are nowhere to be found when they become necessary. In a case like this, the purchasing of new products may even cause you to miss deadlines. Hurried purchases may also result in incremental price increases. The storage of unnecessary fixed assets can also result in significant additional costs. These can be optimised through regular audits and inventories.
And in addition to all the above, inventories also provide a clear picture of the size and time of purchases expected before launching a project. This is essential for the purposes of finances, as you have to be able to prepare for foreseeable expenses.
If you outsource your inventory, you will receive a controlled, independent, and exact database that can help you avoid the above unpleasant situations, leading to even more efficient results. Our article contains more information on the benefits of outsourcing inventories.
We hope this has added some clarity to the essence and process of fixed asset inventories.
We recommend our services mainly for those companies with large numbers of office, IT, production, and/or other equipment that support the company’s activities (shelves, machinery, equipment, etc.). We give our customers an objective report on their fixed asset inventory while their employees can remain focused on their main tasks.
By Viktória Volák & András Takács