Implementing a complete fixed asset management solution increases return on investment (ROI) through tax and insurance savings, and productivity improvements – and generates valuable cash flow for the company.
Pitfalls of Poor Asset Management
Many companies overpay thousands – and sometimes millions – of dollars in taxes, insurance and redundant purchases due to improperly or ineffectively tracking, managing and depreciating their fixed assets.
Accurately managing and reporting fixed asset depreciation expense is a challenging task, further complicated by ongoing changes in federal tax laws. Special up-front bonus depreciation tax laws allow companies to immediately write-off 100 percent of qualified capital investments in assets, versus depreciating them over time – often up to 39 years.
Without a clear link between the entry recorded in the asset ledger and the physical item in use, over time, the discrepancies continue to develop as assets are purchased, transferred, sold or disposed. Too often managers fail to reconcile the differences, especially if they don’t have a clear and organized method for ongoing fixed asset management.
Outdated records cost money. Without the right tools, tracking fixed assets and maintaining an accurate database to calculate depreciation can be a huge and costly endeavor. Ignoring this area of financial responsibility can be even more costly.
Benefits of a Complete Fixed Asset Management Solution
Cleaning up fixed asset records can have a tremendous positive effect on the bottom line. Identifying these assets via a fixed asset inventory and cost segregation analysis, and managing them in a dedicated fixed asset management solution saves both time and money.
Most companies look at the initial costs, but fail to realize the bottom line benefits of implementing a complete solution. The focus should not be on the initial cost, but on the following often-overlooked tax and insurance savings, productivity improvements, return on investment (ROI) and cash flow benefits.
- The solution typically pays for itself. A complete implementation typically uncovers 15 to 30 percent unrecorded retirements in an organization. Correcting this discrepancy results in an immediate write off, reducing income taxes, property taxes, and insurance premiums!
- Increased tax depreciation deductions. Fixed assets are accurately identified and segregated into appropriate tax lives, and easily updated and maintained as tax laws change. This allows companies to fully take advantage of accelerated depreciation
- Audit support. Records are now more accurate, tied directly to a tagged physical asset inventory, updated annually, and facilitate auditing tests. This helps to ensure compliance with ever-changing tax laws and provisions of the Sarbanes-Oxley Act.
- Reduce property taxes. Only pay taxes on assets that are in use and at the location. This is especially important when a company has multiple facilities located in different tax jurisdictions with different tax rates and exemptions.
- Leased equipment tracking. Avoid lease termination penalties by simplifying the process of tracking, locating, and returning equipment when the lease term expires.
- Avoid unnecessary purchases. Reduce spending money on additional equipment by reassigning and using idle equipment, and identifying Zombie Assets, instead of purchasing new.
- Accurate insurance premiums. Eliminate the concern that the firm is over or underinsured. Match your insurance coverage and premiums with the actual assets in service. Eliminate Ghost and Zombie Assets.
Implementing a complete fixed asset management solution increases return on investment (ROI) through tax and insurance savings, and productivity improvements – and generates valuable cash flow for the company.
Get a Complete Solution – and the Help You Need
With Sage Fixed Assets, fixed asset managers have one of the most powerful, comprehensive tools for managing fixed assets from cradle to grave — from asset tracking and depreciation calculations, to capital budgeting and financial reporting.
By outsourcing the cost segregation analysis and the initial physical inventory and implementation of a fixed asset management solution to Paragon, companies can reduce insurance cost, take advantage of accelerated tax depreciation, and gain additional cash flow.
Best of all, the ongoing fixed asset management process is simplified and fixed asset teams can get up and running quickly without burdening their already limited staff and resources.
Ready to get started? Contact us today.
