Basics of Assets Management for Sustainable Growth and Development

In this article on the basics of assets management for sustainable growth and development, I will be explaining in simple language how to manage the assets of your business in this technological age and beyond for optimal positive results.

What is an Asset?

Just for the purpose of this post, an asset is a resource that is controlled by an entity with the hope of getting all future economic benefits that may arise from controlling the asset and ready to shoulder any obligation(s) that may arise as a result of owning the asset.

What is the traditional meaning of asset management?

Asset management is the collection of efforts geared towards ensuring that an asset completes its life cycle as expected. An asset’s life cycle begins with purchase of an asset and ends with disposal of an asset. Other tasks in between include; servicing of the asset, protecting the asset, and improving the state of the asset.

The above definition of asset management is different from the newer definition of asset management refers to the management of investment for other people. Most asset management articles somehow tend to dwell on capital market activities. Fund managers and investment accountants are key experts in the area of financial asset management or portfolio management.

This points discussed in this article on the basics of assets management covers all facets of assets management with the exception of asset allocation – I will do a separate article on that.

I will be discussing the basics of asset management under the following five (5) headings:

• Recording
• Tracking
• Safeguarding
• Reporting
• Multiplying

BASICS OF ASSETS MANAGEMENT FOR SUSTAINABLE GROWTH AND DEVELOPMENT

Recording:

At the heart of asset management is accurate recording of all events that concerns the asset. The recording should start from the day the asset was purchased to the day it was disposed.

I will not go into the accounting technicalities of identifying what costs needs to be included as the costs of acquiring an asset as this is beyond the scope of this post on the basics of assets management.

We are lucky to now live in a technologically advanced world where virtually everything one can think of has become automated – the accounting software is configured in such a way that all you need to do is just enter the variables in the right fields.

One of the importance of an asset register is that it takes the recording of asset even a step further by bringing in comprehensive details of an asset into the record. You can read up my initial article on how to prepare an asset register for a detailed account on how to go about building an asset register.

Tracking

Another ingredient of asset management is the ability and ease of tracking the assets. For physical assets, tracking an asset is enhanced with the use of technology (e.g barcode) to know the realtime location of assets at any point in time. Financial assets on the other hand can be monitored from a simple dashboard usually provided by a brokerage firm.

Safeguarding

An asset will quickly loose its value if it is not protected. A critical step in safeguarding asset of a company is the asset verification process. Details of assets are collected during the verification exercise and matched to the details held in the system for the asset. Having insurance on the asset is also another way of safeguarding the assets.

Reporting

The reporting part in asset management is all about the stewardship. Remember our early definition of an asset. It must not be owned by the individual or organization controlling it. This makes reporting an essential phase of asset management. Without reporting, the owners of the assets will be kept in the dark. Shareholders of a company for example rely on the financial statement to know how their asset is faring.

Multiplying

The value of assets will simply diminish when it is not put to productive use. The multiplying process of an asset can either be done through investing the asset in a profit yielding venture or putting the asset to productive use.

All that has been discussed in this article on the basics of asset management falls directly within the role of a CFO and broadly within the functions of management.