Asset management is one of the management functions needed by companies to run their businesses. Assets are those resources with economic value that can generate cash flow, increase sales, and reduce operating expenses.
Find Out More about Asset Management
Assets management can be defined as a system used to oversee and maintain valuable items owned by companies or organizations. The items can be companies’ assets such as production machines, vehicles, patents, brands, or other forms.
It is not only important to oversee the items, but also to operate, preserve, and develop assets that will benefit companies. Meanwhile, assets that are considered a burden by companies need to be deactivated to maintain cost-effectiveness.
Purpose of Assets Management
In general, asset management planning is done to assist companies with making the right decisions about the assets they own. Asset management purposes are determined by companies and management teams using various overviews.
Efficiencies and effectiveness of asset management are measured by the achievements they have achieved. Here are some purposes of asset management,
- Ensure an ownership status of an asset so it can not be claimed by other parties.
- Do property inventory and the useful life of an asset.
- Maintain the value of an asset to stay high and have a long useful life.
- Reduce the cost when the asset is still in good condition. In this case, the cost is a fund used for maintenance, damage, or asset services.
- Make sure an asset owned by companies is able to generate revenue or maximize profit.
- Optimize the use of assets.
- Strengthen the security of companies’ properties.
- As a reference when creating an accounting balance sheet.
Asset Management: How Important Is It?
In accounting, assets are property owned by companies or organizations. Regardless of whether they rent those properties, companies and organizations certainly have fixed assets like buildings and land as places of production.
An asset is the most crucial part of companies and must be well-managed. Therefore, asset management has become important in business. Below are several functions and urgency of asset management in companies or organizations.
Maintenance asset values
The first function in the importance of asset management is maintaining asset values. We can imagine it with something like this, we have companies’ properties such as vehicles and production machines.
Thus, in order to ensure that those property prices do not plummet drastically when we sell them, we need to continue maintaining the assets with such good care, such as maintaining the body and the function of the car parts, or maintaining the production machines run well.
To do so, we need to maintain them periodically, therefore the price will not drop. Through asset management, the right decision can be made by companies such as providing operational funds to take care of the asset or having more of them so the others are not easily broken due to being often used.
Oversee depreciation of assets
The next function is to oversee the depreciation of assets. Mainly, assets owned by companies facing value depreciation except for soil, land, or buildings.
Therefore, companies are capable of overseeing the depreciation of assets with the help of asset management. For instance, for assets like companies’ operational cars, management must understand when the car needs to be repaired, or replaced with the new one.
If it’s time to sell the car, then the car needs to be sold, and purchase the new car to support companies operations.
Make budgeting easy
Another function of managing assets is to make budgeting easier such as preparing the fund for production machines maintenance, purchasing operational vehicles, or any other funds that need to be noted on budgets.
Reduce the overspending budget
One easy way to identify companies’ budgeting is by checking the cash balance. Without good asset management, the cash balance might be spent on things they don’t really need.
If companies have not yet used asset management, there is a possibility that companies will purchase unnecessary assets. For example, a cafe owner purchases too many ingredients for his cafe, even though he has no idea whether his cafe will be crowded with customers or not.
If apparently there is only a small number of people visiting the cafe upon its opening, surely the owner will experience a loss.
Put in place a risk management system
Risk management is needed as a method to manage uncertainty or risk that is likely to happen in the future. Companies must own this risk management for their business or investment.
The right asset management system will make sure that companies have the minimum risk and ways to control the risk they might face.
Manage Your Business Assets with LOKASI Intelligence
There are many applications available today that you can choose from if you need efficient asset management. One technology that can be used by businesses to manage their assets is LOKASI Intelligence.
What is LOKASI Intelligence?
It is a platform that integrates big data, machine learning, and business intelligence enabling companies to gain more benefits. Businesses are able to perform business monitoring by adding their assets data to the LOKASI Intelligence.
Through the LOKASI dashboard, asset management can be done more accurately, quickly, and easily like monitoring assets’ location and condition.
Find out more about how we help businesses in performing asset monitoring spatially by contacting [email protected] or chat at 087779077750.
Above is the explanation of asset management. With these explanations, we hope that we can have a clearer idea of what asset management is and why it is essential for companies to implement it for their business.