Why Your Business Needs Asset Tracking
By Jordan McPelt on Dec 19, 2008 in Software | comments(0)
Asset tracking in business is about more than just knowing where your money lies. It is about being able to gauge, from a whole perspective, the real worth of your business. The assets your business hold are the root of the business borrowing power and net worth, so tracking them is essential to running the core money making aspect of the business.
What is an Asset?
An asset is anything of value that is owned by a company. In layman’s terms, there are two types of assets. There are assets that are tangible and assets that are intangible. The tangible assets most often refer to the physical assets of the business. The office building, the office supplies and computers, and the money in the bank are tangible or physical assets. The intangible assets often refer to the monies that are there but not in “real” form. These will often include stocks, bonds and shares of the business.
When tracking a business’ assets, it is important to employ a software or tracking system that is consistent. Once you start tracking, you will want to keep a steady line of information at consistent intervals. This means if the business is tracking their assets by month for the first 6 months of the year, changing to weekly tracking may interrupt the flow of information and ability to judge where the business really is financially.
It is also important when tracking assets to take into consideration the negatives that pull from those assets. The assets - the monies owned is referred to as the net worth of a company. This is the real amount the total business is worth at this moment in time. Having an accurate asset number can mean a world of difference when another, larger company wants to invest in your business or buy your business. The amount of assets you have will help to gauge a selling price for the business.
Another important reason to keep careful track of assets is the borrowing power involved. If you know your business is worth $150,000 and you are trying to borrow $175,000, the bank will probably not approve the loan without substantial proof that your net worth (which includes your assets) will increase over time. But, if you are tracking your assets carefully and can prove that the business net worth has consistently grown by 10% each year, the bank may just see your side of the story and lend the money.
How Do I Track Assets?
The asset tracking system you use for your business will more than likely be a computer based software. This is only because keeping track of assets with a filing system is dangerous and can lead to expensive errors. The asset tracking system will employ accounting techniques and, thanks to constant Internet access, real time account balances and holdings information so the business can truly see where they are at any point in the day.
Tracking your business assets is about more than just knowing how much money you have. It is about giving yourself the information needed to keep that business strong, curb problems before they get too big and keeping the power of your money in your hands where it belongs.
