Every company should keep track of its assets. When it comes to asset management, managers frequently face two major concerns. The first question is: how important is fund management? Second, how can a business develop a successful asset management strategy?
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Fund Management - Why and How?
Every company should keep track of its assets. When it comes to asset management,
managers frequently face two major concerns. The first question is: how important is
fund management? Second, how can a business develop a successful asset
management strategy?
Importance of Asset Management
Asset management is critical for various reasons:
1. Enables a business to track all of its assets.
Businesses may easily keep track of their liquid and fixed assets with this procedure.
The location of assets, how they are used, and if they have been updated will all be
known to business owners. As a result, asset recovery can be accomplished more
quickly, resulting in increased revenues.
2. Assists in the appropriate calculation of amortisation rates.
Because financial statements are checked on a regular basis, asset management
ensures that they appropriately reflect assets.
3. Assists with risk identification and management
The process of identifying and managing risks connected with the usage and
ownership of certain assets is known as asset management. It suggests that a business
will be ready at all times to deal with any risk that may arise.
4. Removes ghost assets from the company's inventory.
Assets may be wrongly documented as lost, damaged, or stolen in several cases.
Thanks to a strategic asset management strategy and led financial advisory services,
the firm's owners will be aware of the assets that have been lost, and they will be
erased from the books.
Developing a Strategic Asset Management Plan
Asset ownership is required for any public or private enterprise. In order to efficiently
manage assets, a business owner must have a strategic strategy.
1. Make a list of your assets.
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Firstly, an owner must list out all of his assets. He won't be able to manage his
inventory properly if he doesn't know how many assets he has. The following items
should be included in an inventory of corporate assets:
Total number of assets
Where are the assets located?
The value of each asset
When were the assets purchased?
The assets' expected life span
2. Calculate the life-cycle costs
If a business owner wants to be certain about his asset management plan, he should
look at the overall life-cycle costs of each asset. Many entrepreneurs make the mistake
of focusing just on the acquisition price.
During the asset's life cycle, additional expenditures such as maintenance, condition
and performance modeling, and disposal charges are expected, especially if venture
capital is involved.
3. Define service levels.
The next stage is to identify service levels after calculating life-cycle expenses.
Simply put, it involves characterizing the total quality, capacity, and function of the
assets' numerous services.
4. Make financial decisions that are long-term.
In theory, a company's asset management strategy should easily translate into long-
term financial planning. With a good financial plan in place, the business owner can
figure out which objectives are realistic and which should be emphasized.
Keeping track of assets can help you get things done faster, especially when selling or
disposing of them. The approach eliminates the danger of registering ghost assets
because all available assets are properly accounted for.
