When to Switch to FAMe – Quantity of Assets or Value of Assets?

This is a question we hear Often in our Fixed Assets: Enterprise webinar series.   Should clients make the decision to switch to FAMe based on the number of assets they are managing or their capital value?  The surprisingly short answer to this question is “yes”. quantity-vs-value

Asking the Right Question

Before we dive into that answer, let’s back up a step and answer another important question first.  SAP Business One (version 9.0) already includes basic functionality for Fixed Assets Accounting, and SAP continues to endorse the use of a Fixed Assets Accounting system for almost every organization.  So why is there even a need for a solution such as FAMe?  What does FAMe do that SAP Fixed Assets does not?

Glad you asked.  It all comes down to Accounting vs. Management.

Fixed Assets Accounting provides users with accurate accounting and depreciation methods that track their assets and ensure that the company has an accurate estimation of their worth on balance sheets and financial statements.  This is important and must be done well.  Improper accounting of assets affects a company’s credit worthiness, tax burden, and general financial health.

Fixed Assets Management does this and helps to maximize the value of the assets.  Not limited to what can be seen on financial records, Fixed Assets Management empowers businesses to actually manage the equipment.  Just as most employees have someone above them who tracks and measures performance, most Fixed Assets benefit from a system that ensures each is working as efficiently as possible, as much as possible, for as long as possible.

So let’s ask the original question in a different way: When does a company need more than a Fixed Assets Accounting system?

Quantity of Assets

The more assets you have, the more differences there will be between them.  Not every asset should be depreciated and managed the exact same way, nor will they all be kept for the same period of time.  Additionally, the more assets you manage the more you have exceptions.  And though we refer to them as exceptions, they are events that happen quite frequently in business.  Improvements, impairments, physical location transfers, and custodial changes are just a few ways assets change over their life, and all of these must be noted and tracked accordingly.

So as the number and complexity of assets increases, so does the need for a stronger system.  In our experience, we have found that companies who cross over the 100 assets threshold typically have the need for FAMe over SAP Fixed Assets.

Value of Assets

For assets to actually be valuable to an organization, they must be used for their intended purpose consistently and with little down time.  Businesses need a way to initially and continuously account for this – the most basic form is via a physical inventory.  They also need a way to ensure that each asset is managed and maintained properly.  If warranties or maintenance agreements exist, it is critical to utilize them to avoid wasted expense on repairs.

We should also point out the importance of evaluating an asset’s relative value to the company.  Managing thousands of assets that are not mission critical may not require the same time and attention as managing 10 assets that are the lifeblood of an organization.  It’s important to know and understand this distinction.

Attending to the needs of assets is difficult, if not impossible, to manage with only a Fixed Assets Accounting solution.  It’s a bit like understanding your work force by looking at your payroll.  Assets can be complex, and they cannot be ignored.  They must be managed.  It’s worth spending some time considering the differences and implementing a system that properly manages, what is typically, the largest or second largest item on your balance sheet.

If you would like to discuss how to manage your assets better, let’s chat!  We’re happy to discuss your situation and even arrange a demo.

How One of Our Clients Saved $250,000 Per Year

Everyone loves a great story.  Things are going fine until tragedy strikes.  After a heart breaking loss, someone comes in to save the day and restore everything to the way they should be.  But in some cases, disaster strikes and no one even knows it.  But that same “someone” comes in and restores everything just the same.

The latter version of the story is much like one of our clients.  A leader in the Medical Services industry operating 50 centers in the eastern United States with 6-10 medical imaging devices in each location.  Some of these highly sophisticated pieces of equipment use nuclear devices.  By U.S. law, all nuclear devices are required to have comprehensive maintenance contracts in place to ensure that they continue to function as designed and avoid lighting someone on fire by mistake.  We wholeheartedly agree that maintenance is vitally important for nuclear devices for this very reason.

When they reached out to us, they had been operating for about 4-5 years using spreadsheets to organize and manage their maintenance records.  One thing we have learned with maintenance management (and Fixed Assets in general) is that problems typically arise from two things: a lack of resolve or a lack of systems (sometimes both).  And while this company is run by competent business minds very capable of managing a process such as this, their situation was a direct result of rapid growth meeting tapped out resources and systems.  They knew they needed something better in place if they were going to continue to grow in the right way.

When we started implementing FAMe:Maintenance, we also suggested that several best practices be implemented immediately including a thorough reconciliation to account for each and every piece of equipment.  In the process, we discovered multiple pieces of equipment that were no longer in existence!  And no one knew it!  Adding further insult to injury, this company was still paying for maintenance contracts on the non-existent equipment.

Imagine reporting that to your Board of Directors.  That’s a bad day.

In the end, our client estimates that just implementing FAMe:Maintenance has saved them more than $250,000 annually.  But just as important, having a near-enterprise level maintenance management software tool in place to properly and effectively manage their assets brings tremendous confidence in knowing that each individual piece of equipment is accounted for, operational, and properly maintained.

It’s great to know how much your assets are worth.  Most CFO’s can recite that from a balance sheet in less than 5 seconds.  But do you know all you need to?

  • How much are they costing your organization?
  • Are all of your assets accounted for?
  • Are they being used appropriately?
  • Are you sure?

If you don’t have this confidence that our client now has, we want to talk to you about FAMe:Maintenance and see if we can help you uncover any problems of your own.