In business terms, an asset or assets are resources of great economical value. They can either be tangible or intangible products, often owned by an organization or company and their value yields financial benefits.
These assets are further divided into
PERSONAL ASSETS – These are things of economic value that are owned by individuals or households. These items of value can be in the form of
- Property or land
- Cash and its equivalents, savings accounts, treasury bills, certificates of deposits, etc.
- Personal property which can either be basic properties or aesthetical belongings such as boats, yachts, private islands, jewelry, vehicles
- Investments such as life insurance policies, bonds, annuities, stocks, mutual funds, etc.
BUSINESS ASSETS – These are assets purchased to aid the business operation of a company or an organization. These are either tangible business assets such as property, machinery, and raw materials or intangible business assets such as royalties, patents, and intellectual property.
CURRENT ASSETS – These are assets that can be converted into cash within one year of business operation. These are often used as the working capital of a business. The current assets of a business are either
- Cash or its equivalents
- Accounts receivables
- Market securities
FIXED ASSETS – these are assets or properties that a business entity purchases for long-term use and are not likely to be converted into cash within the shortest possible time.
This article has taken the time to analyze in detail the types of assets as this will provide a reader with a better perspective on how to manage an asset.
The best ways to manage an asset for higher income or better yields can be better illustrated with adequate knowledge of the term asset management.
ASSET MANAGEMENT (PERSPECTIVE & OVERVIEW)
Asset management as the name implies is a series of strategic approaches dedicated to the process of developing, operating, upgrading, and disposing of it, most productively and cost-effectively.
ASSET DEVELOPMENT- Developing an effective asset management plan will enhance a business performance status and objective optimization of resources. The plans should also embrace the operating timeline of the business as it has a resulting impact on the short and long-term goals of the company. The asset management process entails
- Accessible background information that provides a good data system that captures the age, size, capacity, performance, working condition, and the entire current value of a company or organization’s assets. It is a detailed asset information profile.
- Adequate risk management plan should be put in place to have a broader view of the risks that can interfere with the business operations. These are risks associated with service delivery, production, business compliance, etc. Having a functional risk assessment plan will enable a company to take cognizance of the impact of these risks on the general structure of the business. An evaluation of this nature can promote an established risk management plan designed to mitigate these risks if the need arises.
- A grasp of the operating plan of a business can help improve the asset development process because the strategies, and methodology employed to maximize business potential and generate good returns on investment are taken into consideration.
- The equipment maintenance plan that can provide service delivery optimization through efficient maintenance tasks to achieve maximum productivity is also a key factor in asset development.
- Capital planning and strategies
- Recapitalization plans and strategies
- Asset disposal plans
OPERATIONAL COST- These are costs incurred from the daily operational activities of a company and keeping track of such expenses can help manage assets for a higher income. These costs are either administrative costs such as payroll, rent, raw materials, and overhead costs or maintenance costs such as those incurred from equipment maintenance, etc.
UPGRADING COST-These are costs that are required for an upgrade or update in business services or operations. These could be for an upgrade in office space, purchase of new equipment, hiring of more staff, incorporation fees, compliance, and patent fee, and even intellectual property protection.
ASSET DISPOSAL METHOD -These are methods employed for the disposal of a long-term asset from an organization’s account books or records. The disposal methods are as follows
- Ensure that the cost of the asset that is being sold is transferred to the necessary account such as the asset disposal account in the company.
- To ensure good bookkeeping, the total accumulated depreciation value of the asset is transferred to the date of sale of the asset into the disposal account.
- The amount that the asset was sold should be recorded as well
- The profit or loss ratio should be calculated and recorded too.
BEST WAYS TO MANAGE ASSETS FOR HIGHER INCOMES
The best effective way to manage an asset for higher income is for a company or organization to have.
- The statistical value of the assets – Every business owner must keep track of the assets in the firm. This is done through accurate data management and statistical analysis of the value of every asset owned and managed by the company.
- Evaluate the value of the assets – for adequate asset management for a better earning or yield, the value of each asset can be evaluated, and it’s worth ascertaining.
- Proper documentation of the business assets should be done for reference, data survey, and asset analysis purposes. Keeping these records can prevent poor utilization of resources and inefficient financial management. Good bookkeeping is an essential component of business management and can strengthen the management of assets owned by a firm to maximize profit.
- Get the assets insured to provide more security and prolong the value it offers to the company. These can be done through an insurance policy that provides coverage for assets in an organization
- Understand the relationship that exists between the assets and their corresponding tax payment schedules.
- Incorporate the assets during business status evaluations and ensure the company leverages its operation by utilizing the assets of the company
- Ensure the assets are disposed of most cost-effectively.
In conclusion, adequate management of assets can bring outstanding benefits to a company and in turn, poor management will present dire consequences as the company’s stability is hinged on it.