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Why Spreadsheets aren’t the Best Fixed Assets Management Tool?
Fixed asset management form one of the most secure and primary assets of any business. It holds immense importance in the eyes of business owners. However, not everyone adopts the best approach towards it. Most business owners still rely heavily on the use of spreadsheet software for managing fixed assets, which is not only time-consuming but complicated as well. The simple reason is that there exists no data validation for important fields, which leads to an error.
Apart from this, maintaining bonus codes, first-year conventions, and various methods of depreciation rely on complex formulas that are a huge challenge for business owners. There is no denying that asset listings can be generated easily with spreadsheets, but the problem occurs when one has to calculate the depreciation value for the present or any other period. Also, with the growing number of acquisitions, tracking adjustments, disposals, and transfers to fixed assets become overwhelming for owners.
The Digital Approach
In order to streamline internal processes and enhance efficiency, retailers around the world have adopted the digital approach and outsourcing retail accounting services. Depreciation of fixed asset management is a complicated process that involves the tracking of fixed assets’ life cycles for the prime aim of reporting their value for tax purposes and insurance.
As per a Sage source, depending on the size of the organization, the fixed assets tracking system requirements vary a lot, with the following adding to its complexity:-
- 35 percent of businesses in the U.S. consider accounting related to tax to be the most time-consuming.
- 15-30 percent of fixed assets are considered to be invisible assets i.e., businesses are unaware of their existence and are still paying for them.
- 87 percent of corporate fraud cases comprise of schemes that are related to asset misappropriation.
- This clearly means that the digital approach in the form of fixed asset software has a lot more benefits as compared to the spreadsheet software. So, let’s discuss the same in detail below:
1. Automated Updates of Tax Compliance
With the growing complexity of tax laws, it is getting difficult for businesses to keep compliance with the same in terms of recording and depreciating assets correctly. A manual spreadsheet approach towards this can lead to inaccuracies and insecurities, which are highly costly for any business.
This is where automated software comes into the picture. With the help of automated updates, you not only get to keep compliance with the latest laws but also calculate depreciation accurately, which is never the case with the ever-changing formulas of a spreadsheet. This is the reason that almost 35 percent of software users of fixed assets management record-keeping compliance with the latest and changing regulatory needs as one of the essential risk-cutting factors.
2. Effortless Tracking and Depreciating
If you have ever used a spreadsheet for managing the important details and data related to fixed asset management, you must be familiar with the complexity involved with the same. You obviously want a single platform that enables you to easily access and track key information like capital investments, occasions, materials, transfers, labor, disposals, and generally accepted accounting principles (GAAP).
With the help of software, you can track important data points with automation, leading to time-saving and creating customized depreciation methods to track multiple different assets together and also in real-time most of the time.
3. Efficient Workflow Integration
Every employee has his/her own way of assessing things, and when different spreadsheet formulas pass from one to another, it results in values that are highly inaccurate. These inaccuracies become manifold in the case of fixed assets.
However, with the use of software, automatic loading of purchasing data is done from one business unit to another, minimizing human error and ensuring 100% accuracy at every level. So, in a way, the workflow is not only integrated but streamlined too.
4. Physical Inventory Processes’ Management
As per above discussion, almost 15-35 percent of fixed assets goes to dump zone lot earlier because of non-tracking. With multiple spreadsheets, it becomes extremely difficult to shuffle across data, leading to a limited possibility of spotting such discrepancies.
On the other hand, the software option has multiple tools that help in reconciling disposals and transfers to make sure that the inventory is shown in an accurate manner, and that no insurance under/overpayment exists.
5. Project Planning
In case you have multiple locations, with the passage of time, you may feel the need to replace assets or depreciate new assets. For this, it is imperative to work on various resources and budgets. The entire lifecycle of tracking assets are as follows:-
- Planning asset purchase budget and service placement.
- Automate depreciation with the asset movement from the initial phase of planning to the final phase in useful service.
- Managing financial aspects is incredibly easy at any point in time in the year.
- Managing assets’ physical location.
- Gaining valuable insights with the help of customized capabilities of reporting.
This brings us to the conclusion that managing fixed assets with the help of spreadsheets is not a viable option. You not only get to streamline the overall fixed assets management process but also save ample time and effort.
During the initial business phase, a spreadsheet might meet your fixed assets management requirements. But as your business expands, you definitely will need the latest and advanced fixed assets management software.
Fixed assets are one of the primary aspects of an accounting process. It is imperative to take care of the financial information related to your fixed assets on a consistent basis. Do you lack the time and expertise when it comes to managing your fixed assets accounting? If yes, join hands with Cogneesol as we have been providing cost-effective services to accounting for retailers since 2008. Contact us at +1 833-313-3143 or email us at [email protected] to start with your free trial!
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