Are you new to fixed asset tracking software? To better understand this technology, here are common terms to learn.
Asset management keeps both personal finance and business finance growing. You need to know where your money is and how much of that money is accessible at any given time. This is especially important for something called fixed assets.
Keeping track of your fixed assets is crucial to business success, but it’s not always that easy. Those new to fixed asset management need to understand some common terms in order to maximize their organization.
To get you started, we’re breaking down the must-know terms for fixed asset tracking software success.
Fixed Asset Tracking Software Terms
Fixed assets refer to tangible (you can hold them) things or property. They’re often seen in agricultural environments, as well as oil and gas. For instance, keeping an oil and gas database of fixed assets allows those businesses to catalog their liquid capital.
Like the name itself suggest, fixed asset tracking software isn’t always straightforward. There are enough ambiguous terms that understanding the technical jargon gets confusing.
Put another way, many terms simply don’t do the best job describing what they’re talking about.
That’s why our list is so important.
Acquisition Cost
This is an asset’s cost before accounting for sales tax but after factoring in discounts and incentives to purchase.
Barcode Scanning
While self-explanatory, this term deals with specific barcodes. It’s a tracking method that utilizes barcodes to catalog your assets within your management software. Scanned barcodes are added to the software database.
Depreciation
This is the value an asset loses over time, even if fixed. A portion of the cost of the asset is immediately allocated as a loss.
Ghost Asset
This is an asset in your database that’s on your books but no longer is in use. This means the asset is either missing, obsolete, etc. Ghost assets have typically been depreciating.
Liquidation
This is the process of moving assets from tangible to capital. Fixed assets are very difficult to liquidate into capital.
Radio Frequency Identification (RFID)
RFID is a method of cataloging fixed assets into the database that utilizes data-encoded RFID tags. The tags are wirelessly read through a special device that then transmits the data to the fixed asset tracking software.
Residual Value
This is the anticipated value of an asset after it’s reached the end of its usable lifespan (becomes a ghost asset). The rest of depreciation.
Spreadsheet
This is a backup to asset management software. Spreadsheets keep information organized in an easy to read format. Some software allows exporting to a spreadsheet.
Useful Life
This is how long an asset is expected to stay viable before becoming a ghost asset. The longer the useful life, the more depreciation, and the lower the residual value.
This Important Software Summed Up
Fixed asset tracking software helps you keep track of assets not easily turned into capital. That is, your tangible assets. It’s important to both utilize and understand the software to keep your business running as smoothly as possible while maximizing return on investment.
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