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.

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