Fixed asset planning — or Construction in Process (CIP) accounting — is the process of taking control of your fixed assets before they’re placed into service and begin depreciation. It involves keeping a detailed record of all expenses incurred while constructing a long-term asset — and it’s a smart, strategic approach to tracking capital expenditures for building projects and improvements, helping your business stay organized, compliant, and on budget.
Whether you’re building out leased space in a mall, replacing an aging HVAC system, upgrading kitchen equipment and plumbing to add a new bar, or just replacing carpet, every project involves costs that accumulate over time — often from multiple vendors and invoices. That’s where Sage Fixed Assets – Planning comes in.
Sage Fixed Assets – Planning lets you manage and track all the moving parts of your capital projects before they officially become fixed assets. From assembling complex equipment to renovating facilities or improving infrastructure, it helps you plan smarter, track spending accurately, and streamline the eventual handoff to Sage Fixed Assets – Depreciation. The result? Better cash flow, cleaner books, and less time spent chasing down details.
The Basics of Sage Fixed Asset Planning
Fixed assets are any company-owned assets that have an expected useful life of more than one year. After they are placed into service, you must depreciate these assets over a set period.
Some assets, like office chairs, are fast and easy to place into service. Just click the seat into the rolling base and they’re ready to go. Other assets can take longer before you are ready to place them into service. Think of the time it takes to renovate a property or complete a new construction project. Consider the months it takes to assemble multi-component equipment. The timespan on these types of fixed assets require varied management processes.
Midsized businesses typically use specialized software to manage their fixed assets, and yours may as well. Managing depreciation is important but, when you’re required to accumulate many separate invoices, receipts, and POs potentially years before you can place an item into service, the files and spreadsheets that you’ll have to manage for that process are likely to get out of hand … if you don’t have software to help with that too.
Sage Fixed Asset Planning helps with your pre-depreciation process because it gives you a way to easily organize all your sales documents for physical items or components, shipping costs, labor or assembly charges, and all those other miscellaneous costs.
How Good Planning Software Can Help You Improve Cash Flow
Using a Construction In Process (CIP) solution that’s specifically engineered for fixed asset management helps you maintain a proactive stance toward your business finances and improve the flexibility of your cash flow. Why? Because it keeps track of every cost related to the fixed asset and allows you to create new fixed assets when you place them in service.
By gaining comprehensive insight into your costs, you can:
- View current actual vs. budget variances at a moment’s notice
- Slice and dice the numbers to see where costs are adding up, or where you may have flex room
- Update your initial budgets to reflect more recent data
As you can imagine, having this insight is likely to help you pull ahead of competitors because it empowers you to make more agile, more confident, and smarter decisions with your money. Considering how unpredictable the business landscape has been the past few years, it can be a relief to know that you’ll always be able to see precisely how much cash you have available – even in the midst of a large project.
An extra benefit of planning software is that it can help you take advantage of emerging tax bonuses. Tax legislation changes all the time so, when a fixed asset project takes years to complete, you may find your company eligible for tax benefits before the project is fully completed. Using asset templates that contain the proper tax depreciation methods, and lives ensures a maximum tax depreciation deduction the company is entitled.
How Planning Software Helps You Save Time
If you’ve managed the details for new construction, a renovation, or equipment upgrades before, you know how often other company stakeholders ask you for project status updates. You also know how much time and effort it can take to compile reports to answer their questions fully. (The answer to both is: “a lot.”)
With a dedicated fixed asset planning solution, you can save time on administrative work related to the project and answer status questions instantly. That is, if your software empowers you to:
- Keep all related project information in a single database, including contacts, notes, financials, documents, plans, or anything else related to the project
- View current project status and details at a glance
- Consolidate reporting for all work in process, so you can provide total or individualized costs across multiple fixed asset projects
Use Sage Fixed Assets and Make Your Work Easier
Using a leading fixed asset management solution like Sage Fixed Assets can help make your planning tasks much easier because it was designed with built-in tools to help you control your costs.
With Sage Fixed Assets – Planning, you can manage unlimited fixed asset projects as they’re happening, gain comprehensive insight into your projects’ costs, and even flow your fixed asset planning data seamlessly into your Sage Fixed Assets – Depreciation solution the instant that you place each item into service.
It’s time to start managing your fixed assets confidently, accurately, and proactively with a fixed assets planning solution.
Discover More About Sage Fixed Assets – Planning
Serving clients since 1985, Paragon International, Inc. provides independent, impartial and accurate cost segregation analyses, and property valuations and appraisals to assist in and support decisions related to taxes, risk management, investment, financing and corporate planning. Our consultants have extensive fixed asset experience – they’re fixed asset experts. Because of that we are able to offer a unique combination of irreplaceable human resources and advanced technology. We have specialists experienced in valuing closely-held securities, patents and other intangible assets, business enterprises, buildings, equipment and real estate. In addition, Paragon provides complete inventory and asset management services and solutions, including software customization and training, barcode labels and scanners, and tailored inventory services such as data conversion and integration, asset inventories, asset policies, cost reconciliation, and appraisal services. Contact Paragon International to discover how we can help you.
