In this blog, you’ll learn:
- Paper audits hurt enterprise asset management programs.
- Poor enterprise asset management practices lead to higher taxes, bigger insurance premiums and more regulatory fines.
- Questionable data cuts productivity.
- Digital transformation improves enterprise asset management processes and financial reporting.
Bad data can have a big impact on your bottom line. Companies increasingly depend on data to make decisions. This is especially true for asset management, which rivals sales in its effect on company finances.
What exactly is asset management? InvestingAnswers.com explains:
Asset management is the process of ensuring that a company's tangible and intangible assets are kept, accounted for, and put to their highest and best use.
Tangible (or capital) assets include buildings, plants, machinery, equipment and vehicles. Companies get benefits from them for more than a single year. As these assets have finite useful lifespans, companies can capitalize and depreciate their taxable value over time. (Land is also a tangible asset but doesn’t depreciate for tax purposes.)
All organizations have to report their assets each year for taxes. Public corporations must also state them in their annual reports. Companies perform regular audits to determine the assets they own, their current condition and present value.
Many firms still rely on paper-based processes to accomplish this. Paper audits are cumbersome, slow and error prone. The result is often an inaccurate accounting, which leaves the company exposed to greater financial risks and other costly threats.
On the financial side, these risks include overpaying taxes, erroneous depreciation, penalties and fines. Inaccurate financial statements can also ruin the company’s reputation with lenders and investors, stunting future company growth. It gives the impression leadership doesn’t know what’s happening in their company or are dishonest.
In the regulatory arena, risks involve compliance fines and sanctions. Safety threats can also arise from poor asset management data and practices.
Gartner has found CEOs believe poor data quality has led to an average of $15 million per year in losses.
Bad data comes with other costs as well. The Harvard Business Review has reported:
- Knowledge workers waste 50 percent of their time hunting for data, finding and correcting errors, and trying to confirm information they don’t trust.
- Record keepers spend 60 percent of their time organizing and cleaning up bad data.
Good data fosters proper asset management and financial reporting practices, such as:
- Accurate, high-quality data leads to more knowledgeable, informed decisions based on facts rather than assumptions.
- Better data supplies greater visibility into current conditions. Companies can clearly understand their financial, regulatory and operational status and risks.
- Staffs spend less time validating information and fixing errors. They can spend more time on mission-critical tasks.
The ability of people to synthesize and understand data quickly – and react to it – is probably the differentiating factor that will define those who are successful and those who are not.
James Bracken, CEO, Fortitude Re
(2019 KPMG CEO Outlook)
Companies are turning to digital transformation to solve their enterprise asset management and related financial reporting problems. What is digital transformation? Essentially, it’s the integration of digital technology into all areas of a business. It’s changing how problems are solved and value delivered to customers. It’s challenging the status quo, rethinking operating models and becoming more agile in responding to issues.
Innovapptive, a digital transformation provider, offers solutions that deliver clear operational insight and visibility. Such high-value data gives decision makers relevant, verified asset management data to make informed choices. Users can:
- Reduce errors due to incomplete information.
- Release more accurate financial statements.
- Eliminate overpayment of taxes and insurance premiums.
- Ensure compliance with safety and environmental regulations.
- Make decisions based on facts rather than intuition/experience.
To learn more about Innovapptive and its digital enterprise asset management solutions, schedule a free demo today by calling 844-464-6668 or by clicking here.
