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Every company needs to manage its assets by turning to fixed asset register (FAR) maintenance services to ensure good asset management. What is asset management and what are the steps or techniques for doing it? Here’s the explanation!
Assets in accounting are resources or wealth owned by an entity. Where, every company must have an asset, whether tangible such as land, buildings, equipment, or intangible such as shares, copyrights, and brands. Assets are the most important part of a company that must be managed properly through fixed asset register (FAR) maintenance to get benefits for the company while encouraging the achievement of company goals.
Getting Acquainted with Asset Management
The concept of managing assets and liabilities simultaneously was first developed by the banking and insurance industry. However, you can use the concept to improve the operational activities of any business including SME businesses.
Asset management is needed for making the right decisions so that assets can be more useful. It is determined by various dimensions and points of view. Assets that are managed effectively and efficiently can achieve the company’s expected goals. Asset management is not just managing and recording a list of inventory and assets owned.
Asset optimization must be carried out to prevent losses borne by the company. The company’s assets must be reviewed annually to see if there are assets that can still be used or must be replaced.
Every company must know which assets can still be managed or have time to be replaced. With fixed asset register (FAR) maintenance, companies can reduce expenses and increase cash income. Asset management can be done by involving all parties at the management level so that decisions can be implemented properly in all parts of the company.
For example, you should consider assets and liabilities as a combination that creates both profit and risk for your business. You must utilize business assets effectively and efficiently to bring profit to your business.
And it is hoped that you will not increase your business obligations more than the company’s ability to pay those obligations in the future. Your decisions regarding when are the right time to buy or sell assets and take on liabilities should be considered.
Importance of Maintaining Asset Management for Companies
Maintaining Asset Value
With asset management, companies can keep the value of their assets high, have a longer life, and avoid damage to assets that can cause a decrease in selling value.
To maintain the value of assets, companies must provide adequate operational costs to produce high output and follow company goals.
Monitoring Asset Depreciation
Depreciation is considered a charge against using fixed assets. However, with asset management, it will be easier for companies to monitor depreciation.
Make Budgeting Easier
With asset management, it will be easier for companies to make plans regarding asset funding such as funds for purchase or construction, maintenance, funds to extend the life, and writing off company assets.
Creating Risk Management
Risk management is a method of managing the uncertainty related to threats, such as risk assessment. This is very important because it can create company awareness about the dangers and risks of their assets.
With asset management, companies can reduce risk by adding the necessary control measures and making steps for prevention.