What is the difference between equipment management and fixed asset accounting?

10.

One of the main goals of equipment management is to build a transparent and comprehensive view to all equipment.

The finance department usually has the best view to the fixed assets of an organization. And that’s because if other departments in the organization can only guess, finance at least has fixed asset accounting and reports to turn to. Now however, fixed asset accounting is not enough for obvious reasons. Why isn’t fixed asset accounting enough? The most important reason is that it’s not timely enough to give proper and reliable view of the status of fixed assets in an organization. Another important reason is that the information is not transparent – it’s usually available only to the finance personnel. Fixed asset accounting usually gives answer to the question of what has been purchased and which equipment still has value in the balance sheet. This has actually very little to do with the equipment that is being actively used in an organization. Fixed asset accounting doesn’t tell for example which equipment has been lost or broken. The information can be obtained only by completing an inventory which is normally rather time consuming unless smart asset tags are used. Traditional inventory reveals only what assets are found, not what is lost and why. In addition, for many devices the technical lifetime is multiple compared to the depreciation period for accounting. By relying on only fixed asset accounting, this information is not recognized. And it would only be smart to plan future purchases based on the end of actual lifetime rather than the one in the books. Fixed asset accounting is of course important. However alone it’s providing a narrow view of assets. Efficient equipment management processes help companies to maximize the lifetime and productivity of the equipment.

Whitepaper by Trail Systems Ltd

2021

11.

List of differences between fixed asset accounting and equipment management

Fixed asset accounting lists the assets that have been purchased and what assets are still being depreciated. Equipment management gives a comprehensive view of all owned and operated equipment. Fixed asset accounting information is available to only a limited number of people in the organization. Equipment management information is available to all who need it and operate with the assets. Fixed asset accounting doesn’t help in managing maintenances, reservations, investments or transfers between physical locations. Fixed asset accounting usually includes financial limits for the assets that are being tracked (for example €2 000 or €10 000) in which case the less expensive assets are not necessarily tracked at all. Equipment management reaches all equipment relevant for the company either via operations or via value.

Fixed assets accounting doesn’t include information about lost equipment, the reason or timing for getting lost. Equipment management system can log all this information.

Whitepaper by Trail Systems Ltd

2021