ARTICLE
The Top 10 Fixed Assets Challenges
August 23, 2022
Managing fixed assets today still represents significant challenges for organizations. Getting your fixed assets management wrong can lead to costly inefficiencies, longer quarterly or year-end closings, and poor internal controls that can cause material weaknesses and audit risks. But getting it right can lead to valuable tax savings opportunities, new efficiencies, and improved bottom lines. Are you prepared? Are you surviving or thriving in meeting today’s fixed assets challenges?
Top 10 Fixed Assets Challenges
1. Overcoming manual mistakes and inefficiencies
Manually managing and tracking asset transfers, disposals, and additions takes time and increases the risk of errors that can lead to missed deadlines for period-end closings and a staff that is stressed and stretched thin. Tax planning, data manipulation, and reconciliations can be significant resource strains.
2. Avoiding the pitfalls of spreadsheets
With time consuming, error-prone, standard spreadsheets it’s easy to overlook tax law updates that can lead to costly miscalculations. Plus, without visibility and automation for critical functions, spreadsheets present a continuity problem when the spreadsheet’s owner and knowledge base leave.
3. Managing financial close pressures
The flow of information from multiple departments, reconciliation of data from disparate systems, and manual processes are regularly faced by organizations as they attempt to close their books, leaving little time for analysis or strategic financial initiatives.
4. Sharing data across departments
Sharing crucial tax information across departments is more difficult with older ERP systems or custom spreadsheets. Today there is a greater need for real-time visibility between departments that handle tax and GAAP accounting books.
5. Maintaining strong controls
Today’s fixed assets systems must do more than ensure compliance. They must be an integral part of an organization’s strategy for maintaining operational effectiveness, efficiency, and reliability in financial reporting.
6. Overcoming ERP system inadequacies
ERP systems lack the level of detail needed for safe compliance. They lack support for GAAP and tax depreciation, audits, and tax law updates, and can make data extraction and re-entry a tedious necessity. Plus, organizations often turn to IT departments to update ERP functionality and customize data causing delays and strained resources.
7. Developing effective and customizable reporting
It can be difficult and time-consuming to create regular, flexible reporting that allows for asset type and class depreciation for different scenarios. Some businesses need to find creative ways to explain and reconcile differences in data.
8. Managing increasing and changing data
Updating and collecting massive amounts of data from different systems and sources can be overwhelming. To keep up, many organizations turn to outside firms to collect, standardize, perform, and re-enter calculations into the appropriate systems. It, therefore, becomes increasingly important for businesses to consider both immediate and future data collection needs.
9. Keeping up with M&A activity
After mergers and acquisitions, organizations will be tasked with combining their new fixed assets data and systems with the old. To make their acquisition strategies viable they will need to implement strong processes and controls.
10. Accurately tracking fixed assets inventories
It’s not uncommon for more than 50% of a company’s fixed assets data to be incomplete or inaccurate. As assets are tracked in multiple locations and tax jurisdictions, the amount of data continues to increase, as does the need to accurately manage it.
[Learn how to solve fixed assets data challenges and pain points by following our five steps for implementing workflow automation.]
How to Protect Your Company
How can you overcome today’s fixed assets challenges? How can you manage your fixed assets to minimize risks and maximize rewards? What’s the safest path forward?
Start with your fixed assets management system.
- Take a holistic approach: A single fixed assets system will let you draw and standardize data from many sources and systems. It will improve access to data between your Tax and Accounting departments and automate processes improving your data accuracy.
- Reduce your margin for error: Use solutions with built-in accuracy and compliance that follow the latest tax code, accounting rules, and tax updates. Make sure you can run complex calculations involving cost segregations, tangible property regulations, and other detailed functions.
- Strive for total integration: Integrate your fixed assets software with your enterprise tax and compliance systems or ERPs. You can manage all your data from a single source and automatically reconcile your latest inventory data from multiple systems. Without manually reentering data, you can reduce errors and gain visibility across your entire business.
- Analyze and strategize: High-performing organizations take advantage of tools that help them analyze their data in-depth. With actionable insights, what-if-analysis, and scenario building capabilities you can optimize your planning and processes.
- Plan for growth: Use software that’s scalable, flexible, and customizable so you can adapt to your changing needs whether corporate structural change or mergers and acquisitions. As you evolve, your software should easily accommodate more fixed assets data and complexity.
- Document in real time: Make sure your software gives you added audit protection whether from the IRS or for your own internal processes. Real-time documentation will ensure you always have the crucial information you need for complex audits and other data management demands.
- Tighten controls: Key internal controls, such as process/sign-in audits and detailed documentation capabilities are crucial. Other features such as built-in validation controls will add safeguards to protect against bad data or errors such as asset duplicates or inconsistencies.
- Track in detail: Your solution should give you a complete, detailed picture for reporting, tax savings, compliance, and critical business decisions. Again, by integrating all your systems you will gain even more visibility and insight across your entire business.
[We’ve untied the asset management knot. Reduce risk and ensure both compliance and accuracy by relying on corporate tax management software solutions for correct calculations – every time.]
The Answer to Today’s Fixed Assets Challenges
From total integration to built-in compliance, Bloomberg Tax & Accounting Fixed Assets checks all the boxes to master today’s fixed assets challenges. No matter what your company’s size, number of fixed assets, business units, or locations, Fixed Assets optimizes your asset management and maximizes your return.
Fixed Assets saves CBS more than two person-months each year, which lets us focus on more strategic efforts that can potentially save the company money and help us make better business decisions.
The pain our company used to go through managing fixed assets was ridiculous, but with Bloomberg Tax & Accounting Fixed Assets everyone is extremely happy. in years past, our return-to-provision adjustments were several million dollars. With Bloomberg Tax & Accounting Assets, the adjustments were less than one million.
- Improved planning with tools for “what if” scenario planning help you make informed business decisions that reduce tax liability and risk.
- Total integration with your ERP and/or tax and compliance systems increases efficiency and saves your staff time.
- Enhanced controls and visibility increase accuracy and decrease risk of financial or tax failures.
- Automated accuracy and compliance with built-in federal and state tax law, updated seamlessly to keep up with tax law changes.
- Flexible and customizable to grow with your business and meet all your fixed assets needs.
- Helpful and responsive customer support team with 24/7 service.