How accurate is your asset register?
A business asset is a resource of value that you own or lease that helps you run your business. Assets can be tangible, such as computers, raw materials, stock, and petty cash, or non-physical such as goodwill, reputation, intellectual property, and your brand. An asset register is a detailed list of your business assets. But why does it need to be accurate?
Your asset register is a detailed list of all your business assets and includes information such as location, the condition of the asset, and who owns it. The purpose of an asset register is to keep business owners up to date on the asset’s status, procurement date, location, price, depreciation, and the current value.
Benefits of an asset register
While it can be time-consuming to set up an asset register, accounting software such as Xero helps you track and update your assets, and it keeps you informed of their value.
Ultimately, an accurate asset register can have a positive impact on your business’s bottom line, even increasing your revenue.
Other benefits of an accurate asset register include:
- Providing complete transparency of all your asset data
- Ensuring all assets remain compliant with regulatory standards
- Providing an accurate audit trail
- Helping to track and identify assets
- Preventing assets from being lost or stolen with accurate location data
- Allowing you to calculate depreciation
- Estimating maintenance and repair costs
More than just compliance
From a physical asset management perspective, asset registers fulfil more than a compliance role. Operationally, they’re critical for proper record keeping, managing physical assets, and validating spending on assets to track the return on investment.
However, most business owners only glance at their registers once a year to tick it off as done on the auditor’s deliverable list. If you’re only calculating depreciation, you’re doing your business a disservice.
A fixed asset register can also be used to:
- Plan for the time when major assets need to be replaced and incorporate these acquisitions into their long-term strategy.
- Verify physical assets through stronger controls to prevent or detect theft, for example.
- Accurately account for disposals and better manage profit and loss and tax requirements.
- Remain compliant by adhering to the South African company law that requires assets to be incorporated in accounting records.
A well-organised and up-to-date asset register is worth the time it takes to create and maintain. Besides the obvious accounting advantages, it provides you with a tool to keep track of and safeguard your business’s assets, budget, and resource planning.
Are you using your asset register as a key business tool? If not, talk to us today to ensure your business is compliant and that you’re getting the most benefit possible from the tools available to you