3 Reasons to Leave Manual Asset Management

3 Reasons to Leave Manual Asset Management

From portable x-ray machines to pizza ovens and office copiers, fixed assets are integral to most businesses. Managing these assets throughout their useful lives requires a robust system, especially with the increasing complexity brought by new regulations like ASC 842, which complicate lease tracking and management.

Initially, spreadsheets offer a quick and straightforward method to monitor assets. However, as your organization grows, the risk of losing track of purchases, asset retirements, and depreciation transactions increases. What once was manageable can quickly become a source of oversight and inefficiency.

Manually tracking fixed assets and posting lease journal entries becomes more complex and error-prone with business expansion. Despite this, many businesses delay improvements to avoid workflow disruptions.

Here are three compelling reasons why delaying these improvements is detrimental.

1. Inadequate Internal Controls Heighten Audit Risks

Centralized spreadsheets often lack robust access controls, raising red flags for auditors. This deficiency necessitates additional manual reviews to ensure the complete and accurate reporting of fixed assets and lease entries, merely meeting the minimum monitoring standards.

Moreover, someone must be accountable for maintaining each asset and ensuring it carries appropriate insurance coverage based on its current replacement cost. Tracking such detailed information manually is challenging, and spreadsheets cannot guarantee the consistent application of rules and regulations. Implementing a controlled process with defined asset classes, depreciation methods, and procedures establishes a transparent framework for monitoring fixed assets. This is crucial for auditors and provides an accurate understanding of a business’s financial position.

2. Manual Tracking Wastes Valuable Time

Have you ever waited for a busy department head to verify information before updating a spreadsheet or making journal entries? If so, you understand how inefficient manual systems that aren’t integrated with your core accounting software can be a significant time drain. Decentralized spreadsheets force finance staff to chase down information from various departments, consuming even more time as they sift through siloed data to ensure transactions are recorded and assets are properly retired or disposed of.

Moreover, the absence of built-in controls necessitates manually detecting and correcting errors, further reducing the time available for other tasks, let alone process improvements. As your business grows, these misaligned processes become increasingly complex, exponentially wasting time, extending period-end closing, and delaying report delivery.

3. Wasted Time Equals Wasted Money

If time is money, then inefficient fixed asset management processes inflate payroll costs. Beyond this, overlooked assets that aren’t depreciated properly can result in missed tax deductions. Assets that are disposed of but still recorded on the books, or assets with inflated carrying values, can lead to increased tangible property taxes and unnecessary insurance costs.

Additionally, undervaluing assets or failing to secure adequate insurance for valuable items can be financially damaging.

Utilizing a system designed specifically for managing equipment maintenance schedules and lease renewal terms can offset these costs, ultimately paying for itself.

How NetSuite Enhances Fixed Asset Management

Relying on spreadsheets to document operating leases and record asset values often leads to inefficiencies and compounded errors. The optimal solution is leveraging specialized software to enhance internal controls. NetSuite Fixed Assets Management not only tracks fixed assets but also streamlines the entire process, serving as a central data repository for your organization.

NetSuite Fixed Assets Management integrates seamlessly with accounts payable systems, linking items to purchase orders. Accounting transactions are automatically entered on schedule, eliminating duplicate efforts and reducing errors. Detailed lease agreement information ensures that records are current and compliant with lease accounting standards and regulations. Built-in controls and rule logic further reduce the risk of errors, saving valuable time.

Organizations that continue to use spreadsheets end up working harder to compensate for the lack of internal controls, facing increased risks, and wasting time and money. With NetSuite Fixed Assets Management, you can automate tracking, comply easily with new lease accounting regulations, and minimize time-consuming manual data entry.

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3 Reasons to Leave Manual Asset Management
Article Name
3 Reasons to Leave Manual Asset Management
Description
Manual asset management inefficiencies? Learn how NetSuite can streamline and automate your asset tracking.
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ABJ Cloud Solutions
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