It may seem relatively simple at first to track your assets using an Excel spreadsheet and a couple of formulas to calculate depreciation. How could this create issues down the road? As your business grows, and more assets are acquired, the accuracy of your asset valuation could be steadily decreasing.
There are multiple vulnerabilities associated with a manual asset tracking process without the implementation of a fixed asset software program. The potential issues include inaccurate tracking of the acquisition of new assets, incorrect calculation of depreciation, and the vulnerability of data that may be easily manipulated or inadvertently changed by anyone with access to the file. Imagine keeping record of your fixed assets and then, throughout the course of an audit, discover that there are multiple errors in the tracking and valuation. All of these issues may lead to a material adjustment to your financial statement records.
While all of the potential issues are daunting, there is an easy fix with the implementation of a fixed asset software program. There are a multitude of programs available suited to all types and sizes of entities. The features available with most accounting software programs range from tracking an unlimited amount of assets, to generating customizable reports, separating out book and tax depreciation, and disposing of assets. There may be a fixed asset software program that specializes in the industry in which you operate, or a program that is compatible with software that you already have implemented for accounting.
The benefits of a fixed asset software program outweigh the costs and not every program will be extremely costly. It is important that prior to purchasing a software program you evaluate where your business is and where you project your growth within the next few years. Purchase a program that you will be able to use beyond just one calendar year so that you’re able to get the most bang for your buck!
By Sarah McFarland