The Changing Face of Asset Verification

The major technological shift in assets identification, verification and tagging systems in the past decade caught most assets and facilities managers by surprise, but few key trends may be signs of things to come in the property management industry.

The intention of this blog post is to provoke your thought regarding some of what I call the worst corporate accounting scandals in history as well as some of their more immediate consequences and the need of changing attitudes regarding fixed asset management practices.

These are more than just internet stories of white collar criminals. They are fraud schemes that resulted in loss of billions taken from corporate and investor coffers. Companies were forced into bankruptcy, costing hundreds of jobs, reputations were ruined and families were torn apart.
These are just a handful of events; some of the events we have just read about were in some manner due to failure of developing solid procedures for proper asset verification.

Like always, the global reaction to such has been the culmination of a continuous series of changes in asset management practices. The changes have encompassed strong regulatory frameworks and advancements in physical asset verification technologies.
Auditors have increasingly become intolerant to poor asset verification practices. It is no longer considered acceptable for a company to go for two years without getting its fixed assets verified at least once.

Additionally, physical verification of fixed assets has been made mandatory by corporate laws of many countries. In case of some countries it is now mandatory for the Auditors to report on maintenance of proper records, physical verification and substantial disposal of fixed assets.

No doubt, it is now becoming obvious that in future those responsible for the maintenance of proper records and physical asset verification will be more likely called to account when there is such a scandal, and it can be seen by recent trends, it is likely that it will not be companies but individuals like facility managers and financial controllers.

Does the process of asset identification, tagging and reconciling fixed assets every period stands out as an area of administrative burden and glaring inefficiency? Outsourcing has become one of the catch-cries by companies offering fixed asset verification solutions aimed at lowering direct costs.

Greatest Benefit of Outsourcing Fixed Asset Services

Large businesses in Africa are waking up to the potential of outsourcing fixed asset accounting services to yield substantial savings in company tax and insurance premiums. In this article, we’ll look at the benefits of outsourcing Accounting services and how Outsourcing your physical inventory makes fixed asset tracking more manageable and accurate.

We all want to spend less time on inventory accounting tasks but we don’t want to take the plunge into the world of savings. After all a task you undertake with internal staff feels like a natural resource. But when it comes to data collection it’s all about time, and time is money.

Despite fixed asset tagging and reconciliation services becoming increasingly mainstream and acceptable in Africa, for many organizations it is still tempting to tackle asset inventory by themselves.

Of course, that’s not to say that the only companies that are embracing fixed asset accounting services are international companies. There are some fantastic success stories of local banks and utility companies in the region that have successfully carried out physical asset verification projects. Their success is down to the fact that they took steps to free themselves from the limitation of working with internal resources alone.

Most companies conduct a physical inventory once a year. It really doesn’t have to be said but I will say it anyway. Physical asset inventory is an expensive process that very few employees enjoy.

If you gave employees a choice between participating in the company’s annual physical inventory and going for a corporate cocktail party. Which one would they choose?

The thought of spending the better part of a weekend out of office in unbearable hot and dusty warehouse or traveling to remote sites, trying to count every piece of asset, finding materials that you can’t really identify, and searching for “ghost” assets is not what most employees would like to do.

If you ask any one who has ever taken part in a physical inventory count he’ll probably say, because the Finance Manager or the accountant required the figures.” They don’t see any advantage in doing a good job or being accurate. Most feel that the accountant is only going to use the numbers we give him on some reports that no one is going to look at.

Yes, management knows the fact. They know that large inaccuracies in fixed asset reporting may cause flaws in the overall accuracy of corporate financials, posing a threat to the management team as they are responsible for ensuring regulatory compliance and they also know clearly that sound fixed asset management can yield substantial savings in company tax and insurance premiums. But if the people counting don’t realize the importance of accurate inventory balances, the chances for obtaining errorless counts far fetched.

This is where physical inventory service outsourcing fits in. Asset tagging and reconciliation services offer a structured organization to a company's fixed assets, which provides an accurate record for the following accounting and administrative purposes

• Financial reporting
• Capital expenditure planning
• Insurance requirements
• Accountability and control
• Compliance with Audit requirements
• Accurate perpetuation of the system

I guess you are now thinking about physical inventory outsourcing option seriously? Why not? Here are some good reasons to consider outsourcing your next physical inventory.

If you don't have the dedicated staff available to get the job done accurately and you are required to take periodic physical inventories of your fixed assets, then consider outsourcing.

However, even if you do have the resources...outsourcing fixed asset accounting services allows you to let your employees focus on their existing responsibilities. At least one person will need to take the time to learn how you use your new fixed asset tracking system; however, everyone else is spared from the tedious physical inventory process. Most importantly you will work with a team that understands your accounting needs.

In most cases good physical inventory service providers make extensive investments in technology, methodologies, and people. They barcode inventories and reconcile all your fixed assets, provide fixed asset tracking software, supply asset labels and barcode scanners. When they are done, you'll have a customized system in place that will make all your future physical inventory of fixed assets simple and more accurate.

Why not leverage the expertise and knowledge of the professionals in companies that specialize in asset management solutions?

Top Secret of Total Asset Management Control

The world over, very few asset managers are more concerned with proper asset management practices or finding the right asset management tools to track fixed assets for the purposes of financial accounting. 

In any given business or organization only two asset management extremes can be attained, and these are proper asset management practices and poor asset management practices.  But like a hunter, you have to learn how to hunt and never leave it to probability in order to make a good kill.

Asset management, broadly defined, refers to any system whereby things that are of value to an entity or group are monitored and maintained. 

Yet, many entities fail to realize the factor that is critical to proper fixed asset management in any business. “the practice of managing the whole life cycle of assets”

May this article help you understand the disadvantage of using a spreadsheet for asset control? Indeed, the very fact that you are reading this article suggests that you want to get off your spreadsheets or out of an out dated asset management software to make your life of fixed asset accounting enjoyable.

Firstly, spreadsheets lack audit trials and asset history tracking, secondly, your spreadsheet has no robust reporting unless you are a genius in spreadsheet manipulation.

Thirdly, you can not attach any other information on your fixed assets and most importantly, is the failure to integrate with other fixed asset solutions such as handheld computers.

Asset management software is the fastest way to manage fixed assets. Asset management software intergrates best asset tracking practices. Today, fixed asset managers in leading organizations depend on asset software to track everything from laptops and computer equipment to furniture and vehicles.

Solve Complex Asset Tracking Problems Using Simple Tools

Prosperity Agencies understands the need to achieve accurate Tracking of Assets. The primary purpose of physical inventory in asset management is

 "To establish a current, accurate baseline of existing capital assets, accurate insurance payments, depreciation schedules, tax, compliance reporting and a host of other financial considerations.”

In order to provide legal compliance, safety assurance and the effective management of fixed assets, every business must know “What assets they currently have, where those assets are located and how those assets are changing over time.”

The company celebrates the fact that its asset tracking services using RFID label tags and associated asset tracking technologies will serve Zambian Businesses millions of dollars a year and play a very critical role in addressing these asset management requirements.

Just look at the transport sector, with the cost of tyres exceeding millions of Kwachas, large fleets of buses and trucks in Zambia spend many millions of dollars on tyres alone. To most consumers, one tyre is virtually indistinguishable from another, save for the manufacturers name on the side wall as a result; expensive tyres easily get stolen or replaced with old ones when the vehicle is on a trip or even within the parking yard.

Inventory tracking is chaos, but today, technology has closed that gap, and industries from cattle ranching to asset tracking to fleet owners eager to track their fleet tyres have already put it into use-Radio Frequency Identification or RFID.

Through the use of simple asset tracking technologies available today fleets can dramatically solve even the most challenging inventory tracking tasks and decrease tyre-spending resulting in large cost reduction, increase vehicle and driver safety, slow down the depletion of natural resources and decrease pollution, all from a single effort - professional asset management.

RFID tags embedded in a tyre or a barcode tag affixed to the side wall can be a very powerful tyre tracking tool. It will deter theft and help minimize tyre substitution.

The era of hand writing on assets and using spreadsheets to control assets, is over for complex, asset intensive business units in Zambia. It is vital that companies begin using auto identification technology based on barcode and RFID technology to extract value, and to extend the useful and safe life of assets today, tomorrow and in future.

However, it’s believed that most companies in Zambia are at least many years away from deploying similar asset tracking systems in their asset management programs.

About Prosperity Agencies

Prosperity Agencies provides comprehensive Asset Tagging and Verification services, the objective of which is to help organizations create accurate and verified records of capital assets with significantly more details than the existing financial systems are able to provide. Since 2010, a major focus of the company’s development is the provision of asset tracking solutions based on Barcode and RFID technology supplying tags, on site tagging and data collection and asset management systems implementation. 

Prosperity Agencies is ready to actively cooperate for the development of the asset tracking market in Zambia and implementation of new and interesting asset tracking ideas, participate in joint asset management projects with Zambian asset management system integrators.

Inventory Tracking Software that works

Inventory is a valuable part of a firm; two key factors build or break the system of controlling your Inventory, the tracking software used and the internal procedures you put in place.

For a start, most but not all retail businesses generally do not take Inventory Tracking with the seriousness it deserves.

Not too long ago, I received this question regarding Inventory Tracking from a keen follower of this website, and I sort permission to share this extract from the letter.

“I am an Inventory controller, my company has just acquired Pastel Software inventory tracking module in a bid to solve the inventory tracking problems we had with the previous system. I have been searching for training materials on how to generate management inventory reports as well as detailed operational reports until I came across your website”

Well, I will leave my response, for another post, but the simple lesson I want you to draw from this extract is that, tracking of inventory matters not a little, but a great deal.

Secondly, not all Inventory tracking systems available on the market today have the same functionalities to meet you inventory tracking needs.

However, the very basic principle for any worthy inventory tracking software, no matter how basic it may be, is to indicate stock availability without the need to inspect the physical stock. In addition, it should help you to ascertain the stock position of a particular inventory item at a click of a button in response say to a telephone inquiry. It should as well be able to show you the need to re-order when stocks run low, act as a deterrent to pilferage (stock loss) and allow the stock movements to review easily.

Unfortunately, not all accounting software meets all the inventory trucking needs such as serial number tracking and lot tracking.

Frankly speaking, most businesses today are very slow in catching up with technology and innovation. Perhaps, this is to some extent, the reason why they don’t find success in retail business.

Supermarkets for example have taken full advantage to make use of cash registers to computerize their checkouts so that inventory records can be updated automatically.

Stock Accounting Software And Systems

In this article I will look at the two common Stock Accounting options for Stock Tracking, Issuance and advantages of Stock Accounting Software over a manual system of Stock cards.

The use of computers today provides stock Accounting options for small to medium scale business from the traditional manual stock record keeping methods.

The two preferred Stock Accounting methods are both designed with an intention to provide the information needed for daily Business decisions about Stock Management in your business.

The choice of the Stock Management System to choose depends on the size of your Business and the amount of stock maintained.

Stock Cards-Kardex Files

If you just started your business and you haven’t got any computer yet, you do not need to worry you can still manage your stocks effectively using the manual stock records maintained on kardex files as follows.

1. Open a stock card for every stock item in you Inventory.

2. Record all the opening balances of stock if any on the stock cards.

3. Record every stock movement such as Purchases, sales and returns as shown in the image.
From my experience of working with manual systems, the accuracy and discipline of the recording system is very critical or it may defeat the whole purpose of improving stock management.

If you are going to decide to maintain manual records in your business you should put in strict controls to ensure records are more accurate. However, as the number of items, supplies and general demand of the business increases, the manual record keeping system becomes difficult to maintain accurately.

Computerised Stock Accounting System.

This will be the time to consider a computerised system for Inventory control, but in order for you to get the right stock management system for your small business you need to identify your Inventory needs such as stock tracking, Invoicing, stock pricing, Issuing stock, storage of customer and vendor information, sales and other reports.

Lastly, various Manufactures of stock management systems have an assortment of retail stock management systems as well as other stock accounting software to choose from depending on your needs. If you have questions feel free to ask.