Whether you’re running a small business or managing a large corporation, having an accurate and up-to-date asset register is crucial for effective asset management. An asset register is basically a comprehensive record of all the assets owned by an organization. It helps you keep track of your items, ensure asset compliance, and make informed decisions about acquisition, maintenance, and disposal. Creating an asset register, however, can be challenging because certain factors must be considered.
The purpose of this article is to guide you through the step-by-step process of creating and maintaining an asset register. We’ll also explore the importance of asset register solutions as well as best practices for keeping them up-to-date.
What is an asset register?
An asset register is a detailed list of all the assets owned or controlled by an organization. It includes information such as the asset’s name, description, location, purchase date, acquisition cost, and any other relevant details. The purpose of an asset register is to enable businesses to keep track of all the assets, manage them, and record their financial and non-financial aspects.
The global enterprise asset management market size is expected to hit USD 11.66 billion by 2032, growing at a CAGR of 10.8% from 2023 to 2032. With an asset register system, organizations can avoid overpayments of insurance premiums, and have all the information related to their assets in one place. This makes it easy to perform monthly or yearly tasks such as calculating depreciation and maintenance schedules.
Types of assets to include in a register
Among the types of assets that should be included in an asset register are:
1. Tangible assets
Tangible assets have a physical form and can be touched and seen. They can be further classified into current and long-term assets. Current assets are those that are expected to be converted into cash or used up within one year such as inventory, accounts receivable, and cash.
On the other hand, long-term tangible assets are those that are held for more than one year. Examples of long-term tangible assets include buildings, equipment, and vehicles.
2. Intangible assets
Intangible assets are non-physical assets that have a monetary value due to their potential revenue. These assets are often critical to the organization’s long-term success and competitive advantage. Examples of intangible assets include copyrights, patents, and trademarks. Intangible assets, like brand recognition, can add to a company’s future worth and be much more valuable than tangible assets.
3. Financial assets
Financial assets are investments held by the organization for the purpose of generating income or capital appreciation. These assets may not have a physical form but have value that can be measured in financial terms. When creating an asset register, consider including various types of financial assets such as stocks, bonds, cash and cash equivalents, derivatives and loans receivable.
Why are asset registers important for businesses?
Here are a few compelling reasons why businesses should pay attention to their asset registers:
1. Enhanced financial control
An accurate asset register provides a clear picture of the assets owned by the business, their acquisition costs, depreciation status, and remaining book values. This level of financial control is vital for proper accounting, tax compliance, and financial reporting. In research studies, asset management is shown to significantly improve a company’s financial sustainability and competitiveness.
2. Informed decision making
The data contained in an asset register provides valuable insights that support informed decision-making processes. Businesses can analyze asset performance, utilization rates, and total cost of ownership to optimize their asset portfolios. Research reveals that data-driven organizations are 58% more likely to beat their revenue goals than non-data-driven competitors. Additionally, historical data can guide future asset acquisition and disposal decisions.
3. Reduced business risks
According to a recent report, theft costs businesses around $50 billion annually. By maintaining a detailed record of assets, including their specifications, warranties, and insurance details, businesses can mitigate these sorts of risks associated with asset ownership. This includes risks related to regulatory compliance, legal liabilities, theft, or natural disasters.
4. Compliance with regulations
Many industries and sectors have specific regulations and standards that mandate the proper tracking, maintenance, and reporting of assets. An asset register can help businesses demonstrate compliance with these regulations, minimizing the risk of costly penalties or legal issues. For example, in the healthcare industry, The Joint Commission requires detailed records of medical equipment for patient safety and regulatory compliance purposes.
Creating an asset register
An asset register is a critical tool for managing a company’s assets, from identifying and tracking them to ensuring their value is maintained. Here are the steps to create an asset register:
1. Identify company assets
The first step in creating an asset register is to identify all the assets owned by your company. These can include tangible assets, intangible assets, and financial assets. Define clear criteria for what qualifies as an asset, such as a minimum cost threshold or expected useful life of more than one year.
During this assessment, make note of each asset’s description, location, condition, and any identifying information like serial numbers or barcodes. This information will be crucial for setting up the asset register.
2. Choose an asset register system
Selecting the right asset register system is critical to the success of your asset management journey, and there are several options available. Simple spreadsheets like Microsoft Excel can serve as a basic solution, especially for smaller organizations with fewer assets.
On the other hand, advanced asset tracking software, such as EZOfficeInventory, offers more robust features like automated data entry through barcode/RFID scanning, depreciation calculations, and reporting capabilities. Consider future growth and expansion when making your decision to ensure the longevity of your chosen asset register system.
3. Set up the asset register
With the chosen asset register system in place, it’s time to configure the register according to your organizational requirements. Create a structured framework that categorizes assets based on relevant criteria such as department, location, asset type, or acquisition date.
Establish clear procedures for updating and maintaining the asset register so that data integrity and consistency can be maintained over time. Also, set up user roles, permissions, and access controls to maintain data integrity and security.
4. Collect and input asset data
Once the asset register framework is established, commence the process of populating it with relevant asset data. Gather detailed information for each asset, including descriptions, serial numbers, purchase dates, acquisition costs, depreciation schedules, and any associated documentation.
Leverage technology solutions such as barcode scanners, asset tags, or mobile applications to streamline data collection and input processes. Ensure accuracy and completeness during this phase to lay a solid foundation for effective asset management.
5. Verify and validate asset data
The final step in creating an asset register involves verifying and validating the accuracy of the collected asset data. Implement regular verification and validation processes to ensure the accuracy and completeness of your asset register data. Make sure to set up data quality checks and validation rules within the system to catch errors or inconsistencies in data entry.
Furthermore, review and promptly update asset data as assets are acquired, disposed of, transferred, or undergo changes in condition or value. Establish clear processes for approving and auditing changes to the asset register.
Maintaining an asset register
It is essential to maintain the asset register on a regular basis. Here is how:
1. Regularly update the asset register
Regular updates are essential to ensure that the asset register is accurate and relevant. This includes updating asset information, such as their location, status, and maintenance schedules. Additionally, updates should be made to reflect any changes in the organization’s assets, such as the addition or disposal of assets.
It is recommended to review and update the asset register at least once a year, but it may be necessary to do so more frequently depending on the organization’s needs.
2. Assign asset responsibility
For effective asset management, it’s important to assign responsibility for each asset to specific individuals or departments. In the asset register, designate a custodian or responsible person for every asset. This person should be accountable for the asset’s proper use, maintenance, and upkeep.
By assigning asset responsibility, organizations can help ensure that their assets are being used to their full potential and that any issues are identified and addressed promptly.
3. Track asset location and status
Assets can move between locations or undergo changes in status during their lifecycle. It’s crucial to track these movements and updates accurately within the asset register.
Organizations should track asset location and status using a reliable system, such as a centralized database or asset management software. This information should be updated regularly to ensure that it is accurate and up-to-date. Tracking asset location and status enables efficient resource allocation and minimizes the risk of loss or misplacement.
4. Schedule asset maintenance and inspections
Regular maintenance and inspections can extend the useful life of assets and prevent costly breakdowns or failures. In the asset register, record maintenance schedules, service history, and inspection dates for each asset.
Use the system to generate reminders and work orders for upcoming maintenance tasks. Maintain detailed maintenance logs and records of repairs, parts replacements, and associated costs for future reference and analysis.
5. Plan for asset disposal
Every asset reaches the end of its useful life eventually. In the asset register, track estimated disposal or replacement dates based on the asset’s age, condition, and depreciation schedule. As these dates approach, initiate processes for properly disposing of or replacing the asset.
You can evaluate disposal options such as selling, donating, recycling, or scrapping assets based on their condition and residual value. Document disposal transactions and update the asset register accordingly to maintain accurate records.
Best practices for asset register management
Here are some tips and guidelines to maximize the benefits obtained from an asset register:
Implement an asset management policy
An asset management policy is a set of guidelines and procedures for managing an organization’s assets. This policy should outline the roles and responsibilities of staff, the procedures for asset acquisition, transfer, and disposal, and the standards for asset tracking and maintenance. By implementing an asset management policy, an organization can establish a clear and consistent approach to managing its assets, reducing the risk of errors and omissions.
Train staff on asset register use
To ensure the accurate and efficient use of an asset register, it is essential to train staff on its use. This includes training how to enter and update asset information, how to generate and interpret reports, and how to follow the organization’s asset management policy. Also, emphasize the importance of accurate and timely data entry, as well as the potential consequences of inaccurate or incomplete asset information.
Regularly review and audit the asset register
Schedule periodic reviews and audits of the asset register to verify its accuracy and completeness. Conduct physical inspections of assets to compare against the information recorded in the register, checking for discrepancies, missing assets, or outdated information. Regular reviews and audits ensure that the asset register remains up-to-date and reflective of the company’s asset portfolio.
Integrate the asset register with other business systems
A useful way to get the most out of the asset register is to integrate it with other relevant business services, such as accounting software, procurement software, or maintenance management systems. Seamless integration allows for the automatic exchange of data between systems, streamlining processes and reducing manual data entry errors. For example, integrating the asset register with the accounting system enables accurate tracking of asset depreciation and financial reporting.
Utilize asset register reports and analytics
Asset register reports and analytics can provide valuable insights into an organization’s assets, enabling better decision-making. These reports can include information on asset utilization, maintenance costs, and depreciation, among other things. By leveraging the wealth of data stored in the asset register, an organization can identify trends and patterns, enabling it to make informed decisions about asset acquisition, maintenance, and disposal.
Leverage asset register to effectively manage your business
Establishing and maintaining an accurate and up-to-date asset register is essential for any organization that wants to effectively manage its valuable assets. By following the steps outlined in this guide, you’ll be well on your way to building a comprehensive asset register. However, the work doesn’t stop there. Treating your asset register as a living document that requires regular updates and maintenance is crucial as a well-maintained asset register system optimizes asset performance, allows real-time tracking, and enhances business growth.
