Fixed assets are considered to be the spine of a business. But, managing and taking care of them is a not-so-easy task. So, what should be done in this regard? Is it good to seek help from fixed asset management companies? Let’s know!
As told by fixed asset management companies, active investment activity ensures the maintenance of fixed assets in good condition; this largely determines the competitiveness of manufactured products, and consequently, the profit margin and the possibility of creating value. In addition, active investment activity provides a high rate of business growth, which also contributes to value creation.
In general, fixed asset management is based on the following analytical procedures:
- Analysis of the structure and dynamics of fixed assets;
- Analysis of their movement and condition;
- Analysis of the efficiency of use;
- Substantiation of the need for investments in simple and expansion phases of business.
It is advisable to start the management of fixed assets with an analysis of their structure in the context of the active part, which directly affects the production capacity and the passive part. The active part of fixed assets, as a rule, includes machinery and equipment, and the passive part includes land, buildings, and structures.
What ratio exists between the active and passive part, depends on the efficiency of the use of fixed assets. Since the passive part is not directly involved in the production of products, an increase in the passive part negatively affects the efficiency of the use of fixed assets and the performance indicators of the organization as a whole.
However, real estate can generate income for the organization in the form of an increase in its market price, which should be taken into account when making management decisions.
An organization can increase its production capacity by leasing fixed assets. The transfer of fixed assets for rent or their transfer to conservation reduces the production capabilities of the organization. An effective strategy for the development of production potential is characterized by the use of leased fixed assets.
In addition, in the management process, it is necessary to take into account fixed assets pledged. At the same time, it is necessary to assess the materiality of the pledged fixed assets, as well as their role in the production process.
When evaluating the indicators of the dynamics of fixed assets, the growth rate of the property is compared with the growth rate of financial results, the growth of which, of course, should be higher. Fixed asset management includes the development of a depreciation policy, which is formed taking into account the specifics of the methods of depreciation used for accounting and tax purposes.
The procedure for calculating depreciation has a significant impact on the values of the most important financial indicators of the organization and its financial condition. In addition, it is important to know that the competitiveness of manufactured products largely depends on the degree of renewal of the active part of fixed assets, especially in the main production units.
From this position, the degree of wear and tear of the passive part of fixed assets has a lesser impact on the competitiveness of products. So, what do you think? Keeping your fixed assets unmaintained is a good choice? Or is it better to monitor them continuously to ensure regular income and their optimum utilization? If you still don’t know which is the right way to improve your business performance, we suggest you turn to fixed asset management companies.