How to Eliminate Ghost Assets With Asset Management
Ghost assets can be found lurking in all types of businesses, from micro to large. Once formed, these assets can go on to cause a multitude of cost and productivity issues within a company.
Although extremely common when using a manual spreadsheet system, ghost assets can go unnoticed for a long time.
What are Ghost Assets?
Ghost Assets are assets that are listed in a company’s asset registry but are not physically available in the workplace. They either don’t physically exist or are unusable due to being broken or having parts missing.
A ghost asset commonly appears when certain parts are taken from working equipment and used to fix other assets. An example may include tools or machinery getting lost due to poor management. Another example could be an outdated computer not being disposed of correctly.
It could even be a piece of stolen equipment, or a fleet vehicle sitting unused and depreciating on site.
Any fixed asset that ends up being upgraded or donated elsewhere can also become a ghost asset if robust asset tracking measures aren’t put in place.
How Ghost Assets Can Negatively Affect a Business
Any business that is completely unaware of its ghost assets can eventually find them having an effect on both finances and productivity. Here’s why:
Paying Taxes on Assets That aren’t There
Ghost assets represent assets that aren’t available in a business’s physical inventory. For example, if a company can’t account for 20% of fixed assets, this would equate to them paying 20% more in taxes than they actually need to.
So, by eliminating these ghost assets, the reduction of a company’s tax bill could be substantial.
Inflated Insurance Premiums
Being completely unaware of ghost assets within the company means that they would be identified as working assets, thus being included in a business’s insurance coverage.
Again, as an example, if these assets equate to 20% of a business’s asset register then they could be paying 20% more on insurance premiums that they actually need to.
Reduced Productivity in the Workplace
As well as overpaying on insurance, income tax and property tax, ghost assets can also a business through decreased productivity.
Let’s say that one of your employees needs to locate and use a piece of equipment urgently. If that asset is missing or broken but is listed as available on the asset register, this would impact directly on productivity. The employee would be unable to do their job properly until they find another solution.
Having an asset exist only on white paper can also lead to additional, and unplanned, expenses. This can be caused by unexpected downtime and supplying extra funds to replace the asset.
How Effective Asset Management Can Scare Away Ghost Assets
As mentioned, ghost assets can most commonly appear when a company employs a manual asset management system. This can then lead to increased errors, which directly impact business operations.
But, by implementing effective asset management software, a business can make the process of managing assets easier and more accurate. This means that ghost assets are less likely to occur.
Most modern asset management vendors incorporate helpful features that make it easier to identify and eliminate ghost assets. These features can include:
- Asset life cycle monitoring to give a clear picture of all your assets and where they are in their life cycle. This occurs right at the very beginning of the asset life cycle with the planning, through to the disposal.
- Effective inventory management to continuously track assets through technologies such as barcode tracking and GPS tracking. This allows a business to know the real-time location of each asset and provide a detailed overview of stock level metrics.
- Maintenance schedule to plan preventative maintenance across all assets to help avoid deterioration and depreciation. In general, preventative maintenance can usually be more cost-efficient than reactive maintenance.
- Being able to manage work requests and enabling a company to assign maintenance jobs across a team of technicians.
- Generating detailed reports to ensure a business can carry out effective auditing and see how your fixed assets are performing. This feature can be crucial in the process of identifying ghost assets that are having a strain on finances.
- Cloud technology, which produces real-time data on all assets and is accessible across a range of devices.
Where to Find the Right Software
There is a vast amount of management software available for all types of businesses to help eliminate ghost assets.
So, the next step is to search, compare and shortlist the right software for your business needs with our free software search tool.