Asset Management 101 – Protecting Your Company’s Worth

Asset Management 101 – Protecting Your Company’s Worth

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What is Asset Management?

Assets have a very huge impact on a company’s operating budget. They are a vital component in any company’s balance sheet. They show what a company is worth, what your business is worth. It therefore goes without saying that proper management of assets is very important to a company’s financial performance.

Lets begin with a few definitions, so that we get to know more about assets and their management.

An asset is a resource that is owned or controlled by a company, or country if you choose, with the expectation that it will have future economic benefit.

In other words, it is a term that is used to describe something tangible or intangible that is held by a company or an organization, and it is owned or controlled by the company to produce positive economic value. We can classify assets into fixed assets and current assets.

Asset management therefore refers to the coordinated activities of a company or an organization, geared towards realizing positive value from its assets.

We can classify asset management into three categories. Financial asset management, Infrastructure asset management, and Enterprise asset management.

1. Financial asset management

Also known as Investment management, refers to the sector of the financial services industry that manages funds invested on behalf of clients.

2. Infrastructure asset management

Refers to the strategies used to sustain public infrastructure assets such as sewer lines. It basically focuses on the maintenance, rehabilitation and replacement of the facilities.

3. Enterprise asset management

Refers to the business processes that support the management of an organization’s assets, both tangible and intangible. Basically, it is the management of the life cycle of the assets of an organization and it covers the design, construction, commissioning, operations, maintenance and replacement of plant, equipment and facilities.

If you choose, you can breakdown Enterprise asset management into; digital asset management, fixed assets management, IT asset management and physical asset management.

Why is proper asset management important for your company?

Proper asset management helps you to paint a good picture of your company to creditors and potential investors. Efficient asset management also enables the top management of your company to manage an asset, and reap full benefits from it, over the different stages of its life cycle, i.e from the conception of the need of the asset, to the purchase of the asset, use and maintenance of the asset, disposal of the asset, and even managing any post disposal liabilities.

Asset management is basically aimed at maximizing the benefits of an asset while at the same time minimizing the costs related to the particular asset. In a nutshell, managing your company’s assets efficiently, helps you to protect your company’s worth.

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