Features
Asset Management
Why use ERP for asset management?
Using tech to manage and organize your companyโs assets can aid you in improving efficiency and maximizing your investments. This is facilitated by managing your assets across all departments, facilities, and locations. Through proper asset management, not only do you maximise your return on assets, but you also reduce costs and risks, and increase asset uptime.
Breaking down the workflow
Letโs take a look at some key asset management concepts before understanding how Spindl implements them in its ERP.
Asset
An asset is a resource owned or controlled by your business. The general expectation from an asset is that itโll be useful in generating future cash flow. There are various types of assets, however, they all share some key characteristics.
- Ownership:ย Assets are owned and can eventually be turned into cash and cash equivalents.
- Economic Value:ย Assets have economic value, and can be sold or exchanged.
- Resource:ย Assets can be used as resources to generate economic benefits.
In an ERP, the asset record is at the heart of asset management. All transactions related to an asset (e.g., purchase, depreciation, sales, movement, maintenance, etc.) are maintained and managed against an asset record.
Many factors come into play when managing assets, but to understand them well, we must first take a look at the different types of assets. Theyโre classified based on three broad factors: convertibility, physical existence, and usage.
Convertibility
If your assets are classified based on their convertibility into cash and cash equivalents, then theyโre either classified asย current assetsย (short-term assets) orย fixed assetsย (long-term assets).
Current Assets
If an asset can be easily converted into cash and cash equivalents in a short amount of time (generally a year), then itโs considered aย current asset. Stocks, office supplies, short-term deposits, etc. fall under this category.
Fixed Assets
Assets that cannot easily and quickly be converted into cash and cash equivalents are considered non-current assets, orย fixed assets. Theyโre otherwise called long-term or hard assets. Land, machinery, buildings, equipment, patents, trademarks, etc. are all fixed assets.
Physical Existence
If assets are classified on the physicality of their existence, then theyโre divided into two categories:ย tangibleย andย intangible assets.
Tangible Assets
Assets that physically exist (and can be touched, felt, and seen) are consideredย tangible assets. Machinery, equipment, supplies, computers, buildings, land, etc. are all tangible assets.
Intangible Assets
On the flip side, assets that are not physical in nature are consideredย intangible assets. They still hold value (based on the characteristics we discussed earlier!) but cannot be touched, felt, or seen. For example, copyrights, patents, trademarks, permits, etc. are intangible assets.
Usage
Lastly, assets that are classified based on their resourcefulness or purpose fall under the category ofย usage. There areย operating assetsย andย non-operatingย assets.
Operating Assets
Assets that are required for the daily operation of your business to generate revenue are consideredย operating assets. Examples include machinery, patents, cash, copyrights, building, etc.
Non-Operating Assets
Assets that are used to generate revenue but do not require daily use are calledย non-operating assets. These include investments, vacant land, interest income, etc.
Asset Transactions
Purchasing an asset
Theย purchase cycleย is generally followed for the purchase of any new assets. Once a new asset is purchased, accounting entries are reflected in the accounting module of your ERP. Details of the asset are entered into the system upon purchase.
Selling an asset
Selling an asset using your ERP follows theย sales cycleย (starting by creating a sales invoice). This can also be used to enter the gain/loss account so that it can reflect in the companyโs records. As is the case with purchasing, accounting entries are made here as well.
Asset Value Adjustment
If the value of an asset changes suddenly due to unforeseen reasons (e.g., damage), the change can be recorded usingย asset value adjustment.
Asset Management
Categorizing assets
Anย asset categoryย classifies different assets of your company. You can usually set what kind of categories you want based on yourย classification methodย for assets (some of which weโve discussed above!).
Locating assets
The assets of your organization can be stored at various locations (e.g., admin offices, manufacturing plants, warehouses, etc.). Theย asset locationย entry shows theย current facilityย in which an asset is.
Moving assets
When an asset isย movedย from one location to another, it is recorded using anย asset movementย entry.
Maintaining assets
Any activity performed on an asset toย maintain peak performance conditionsย is considered to beย asset maintenance. Most ERP systems will allow you to categorize maintenance activities while setting up the module (e.g., preventive maintenance, calibration, etc.). Based on the start date and periodicity of the maintenance activities, the system can create to-do tasks for the assigned employee.
Asset Maintenance Team
The employees who areย responsible for carrying out maintenanceย activities on a given asset are a part of theย asset maintenance team. These activities can include cleaning, polishing, servicing, or any other activity required to maintain the asset in top condition.
Asset Maintenance Log
For each task in Asset Maintenance, aย recordย is created to keep track of scheduled maintenance activities. This is called theย asset maintenance log. It generally has a status (planned, completed, canceled, or overdue), actions performed, and completion date.
Repairing assets
Any activity that is carried out to restore a broken asset to full functionality is calledย asset repair. Details of the assetโs failure date, error description, repair cost, additional actions, etc. are recorded in this log.
Discarding assets
Asset Depreciation
The timeline of theย eventual breakdownย of your asset is calledย asset depreciation. Some ERP systems automatically create a schedule for depreciation based on the depreciation method selected by you.
Scrapping an asset
When an asset isย no longer of any useย to your business, it is consideredย scrap.
Asset Reports
Data that is used to generate insight into your assets fall underย asset reports. These reports all serve various use cases and are useful in maintaining a keen eye on your companyโs assets.
Asset Depreciation Ledger
This report displays the purchase amount, depreciated amount, and accumulated total depreciation for all the assets under the selected date range. It also shows theย current valueย andย depreciation statusย of the asset.
Asset Depreciations and Balances
This report shows the cost ofย purchase,ย sale, andย scrapย of all assets based on your chosen category. It also includes theย depreciation detailsย based on theย selected periodย and theย net valueย of the category.
Fixed Asset Register
The fixed asset register provides aย unified viewย of all the details regarding the current status of any given asset thatโs present in the system. Consider this to be a consolidated birds-eye report of your fixed assets.
Setting up a workflow
While they donโt need an active workflow for all their assets, Saf and Melโs employees still create a comprehensive database of Spindl's assets in their ERP system.
- All assets are entered into the system. The current location, category, classification, value, etc. are all stored in the asset master document.
- A maintenance team is created and employees are assigned to various assets.
- Maintenance parameters are set and followed for fixed assets. This also applies to the occasional repairs.
- If an asset is being moved from one location to another, a movement entry is made into the system.
- If an asset breaks down, a repair entry is made into the system.
- At the end of its lifecycle, asset depreciation is calculated and the asset is scrapped.
How Spindl made the most of the ERP Asset module
With all the asset locations and value accessible from one central system and the asset's purchase, maintenance, and lifecycle being tracked accurately, Spindl was able to make more informed decisions regarding these assets.
With the asset maintenance being allocated to responsible people and being tracked regularly, the assets were maintained properly. They became more reliable and the overall breakdown cost was reduced. The uptime of assets increased with their efficiency.
Since all the tangible and non-tangible assets were recorded and tracked properly, Spindl's bookkeeping was flawless and regulatory compliance was met easily.