Asset Management

Asset Management

Description: Asset management is the controlling and managing the acquisition, operation, maintenance, renewal, and disposal of organizational assets. Every company needs to keep track of its assets.

Types of asset management

• Financial Asset Management (FAM): It refers to the strategic allocation of funds into various financial market instruments like investment funds, stocks, bonds, futures, and derivatives
• Fixed Asset Management: Companies require property, plant, machinery, equipment, and other fixed assets for their functioning, the regulation of these assets falls under this category.
• Infrastructure Asset Management: The facilities that ensure connectivity and accessibility act as assets for a nation. These include roads, bridges, transportation, internet, electricity, and telephones. For infrastructural assets, managers focus on the development, improvement, and replacement of amenities.
• Real Estate Asset Management: These Asset Management Companies direct financial resources into buying or construction of commercial properties.
• IT Asset Management (ITAM): Information technology is an inseparable component of the corporate world, and this discipline handles software and hardware assets. This includes computer systems, patents, licenses, applications, and networks.
• Digital Asset Management (DAM): Digital assets like content, social media presence, websites, media, and other intellectual properties are regulated through DAM.
• Enterprise Asset Management (EAM): The EAM handles both tangible assetsand intangible assets of a firm. It looks after infrastructure, software, documentation, premises, and process.

Importance of Asset Management

There are several reasons why businesses should be concerned about asset management, including:

1. Enables a firm to account for all of its assets

The process makes it easy for organizations to keep track of their assets, whether liquid or fixed. Firm owners will know where assets are located, how they are being put to use, and whether there have been changes made to them. Consequently, the recovery of assets can be done more efficiently, hence, leading to higher returns.

2. Helps guarantee the accuracy of amortization rates

Since assets are checked on a regular basis, the process of asset management ensures that the financial statements record them properly.

3. Helps identify and manage risks

Asset management encompasses the identification and management of risks that arise from the utilization and ownership of certain assets. It means that a firm will always be prepared to manage any risk that comes its way.

4. Removes ghost assets in the company’s inventory

Instances exist where lost, damaged, or stolen assets are erroneously recorded on the books. With a strategic asset management plan, the firm’s owners will be aware of the assets that have been lost and will eliminate them in the books.

Improve asset management

• Understand the reason behind asset’s existence: For what purpose the asset is made for and for what this asset serves. And why was it procured.
• Gain knowledge about the asset’s condition: we need to know the correct status of asset , what is the problem in asset, will the asset will be repaired or reliable. And how does it fulfil its purpose.
• See how effectively the asset is being utilized: We need to know how the asset is working, what value is the asset delivering currently, is it fulfilling the existing expectations.
• Identify future demands: Will there be a change of service expectations. Is the asset robust enough to deliver future demands and process.
• Assess the existing maintenance program: By knowing the current status of asset we can know that how to maintain and repair the asset to increase the lifecycle of the asset, we need to check how effective the current maintenance program works.
• Predict depreciation rate and associated risks: Is the depreciation charge for future periods adjusted accordingly, The impact of this depreciation, Is the depreciation charge for future periods adjusted accordingly, The useful thing of asset is reviewed periodically.
• Forecast asset disposal: When the asset is completely withdrawn from the use and the withdrawal is completely profit or loss .