3 Reasons Businesses Need to Ditch Manual Fixed Asset Management

Spreadsheets expose your company to risk from weak internal controls, not to mention wasting time and money

From a portable x-ray machine to a pizza oven to an office copier, fixed assets are a fact of life for most businesses. And where there are fixed assets, there must be a system to manage them over their useful lives. And lately, new regulations like ASC 842 have made leases more complicated to track and manage.

When you’re just starting out, spreadsheets are a quick and easy way to keep tabs. But the busier your organisation gets, the easier it is to lose track. Purchases, asset retirement, and depreciation transactions can easily slip through the cracks.

And manually tracking fixed assets and posting lease journal entries only gets more complicated and prone to error as your business grows. Despite this, improvements are often pushed to the back burner  to avoid disrupting workflows.

Here are three reasons that’s a bad idea.

1. Weak internal controls increase the possibility of audit findings.

Centralised spreadsheets tend to have weak access controls, a red flag for auditors. That makes additional manual reviews necessary to compensate and ensure complete and correct reporting of fixed assets and lease entries — the bare minimum monitoring activities required.

Someone must also be responsible for ensuring each asset is properly maintained and carries insurance coverage appropriate to its current replacement cost. That level of detail is hard to track manually, and spreadsheets have no ability to ensure consistent application of rules and regulations. A controlled process using defined asset classes, depreciation methods, and procedures can establish a clear picture of how you monitor fixed assets. That’s important to auditors, not to mention for a true understanding of a business’s current position.

2. Manual tracking is not an efficient use of time.

Have you ever waited around for a busy department head to verify information before updating a spreadsheet or making journal entries? If so, then you know that compensating for inefficient, manual systems that don’t connect to your core accounting software wastes time. Decentralised spreadsheets require finance staff to hunt down information from across the organisation. Manually combing through siloed, decentralised data to make sure transactions have been captured and assets retired and disposed of takes even more time.

Then there’s the need to compensate for a lack of built-in controls by manually discovering and fixing mistakes. That leaves even less time available for other work, much less real process improvements. And as the business continues to grow, ill-fitting processes get more complex, exponentially increasing time wasted, prolonging period end, and delaying report delivery.

And finally …

3. Wasted time equals wasted money.

If time equals money, then inefficient fixed asset management processes drive up payroll. But in addition to that, forgotten assets that you fail to depreciate can cost you a tax deduction. Assets that were disposed of yet incorrectly remain on the books, or assets with incorrect higher carrying values, can cost the company extra in tangible property taxes and unnecessary insurance coverage.

Undervaluing assets or failing to secure enough insurance for pricey items can prove even more costly.

Managing equipment maintenance dates and lease renewal terms in a system purpose-built for that function can pay for itself.

How NetSuite Helps Manage Fixed Assets Better

When businesses use spreadsheets to document operating leases and record the value of assets, they end up tied to a process with rampant inefficiencies and compounding errors. The solution is to leverage software and strengthen internal controls. NetSuite Fixed Assets Management not only tracks fixed assets, it streamlines the entire process and serves as a central data repository for your organisation.

NetSuite Fixed Assets Management links items to purchase orders from accounts payable systems. Accounting transactions are entered automatically, on schedule, eliminating duplicative effort and reducing errors. Captured lease agreement details help companies maintain up-to-date records that comply with lease accounting standards and regulations. With built-in controls and rule logic, the risk of error is reduced and less time is wasted.  

Organisations that cling to spreadsheets end up working double-time to compensate for the lack of internal controls, face additional risk, and waste time and money. With NetSuite Fixed Asset Management, you can automate tracking, easily adhere to new lease accounting regulations, and minimise time-consuming manual data entry. 

Learn more about how NetSuite Fixed Asset Management can help simplify your fixed asset management process by joining our webinar, How To Manage Fixed Assets with Less Risk, Expense, and Effort(opens in new tab).