ERP Software

Accounting Software as an Useful Tool for Asset Management

Asset management is becoming a software industry in and of itself.  As such, the ability to use accounting software as a tool for managing company assets, tangible and intangible, is increasing the flexibility of accounting software across the board. Companies are shopping for accounting software that spends their capital budget dollars most wisely and gives them the tools to best manage company dollars and assets.

Examples of tangible assets that should be on the company asset radar can be machinery, buildings, fixtures, computer hardware and stock, to name a few.  The criteria for designating something as an asset can vary from company to company and is closely linked with the capital budget.  

Often a dollar figure is designated as the principle criteria for defining assets.  Accounting software is then set up with capital accounts or specific cost centers and those things that are considered capital purchases charged to the appropriate account.  Depreciation models are set up within the accounting software and applied in a case by case basis.   This part of asset management is fairly straight forward and something that accounting software routinely deals with.

Now for the intangibles…software licensing, maintenance and intellectual property.  Often this is where asset management becomes more difficult to deal with.  Software licensing always involves a licensing agreement or contract.  These are big dollar items negotiated in multi-year deals and often representing some of the largest investments that a company can make in its infrastructure.  Without these, business stops.

A company’s computers run the show and the platform on which they run is licensed. So is every piece of software, every add-on, every plug-in, every third party design tool or proprietary software developed for an individual company’s use.  This software is often delivered electronically.  Keeping track of how many users and available licenses is a monumental task that carries certain risks.  Accounting software producers have recognized this need and are seeking to meet it within accounting software products. For software licensing, asset management tools track licenses as they are purchased and distributed and then returned to the pool when a machine is retired.

Though a tedious process, asset management has significant rewards and mitigates considerable risks. Similarly, whether it is intellectual property developed by a company or intellectual property purchased or leased from another, this is a part of a company’s asset portfolio and therefore subject to administration and depreciation models. Accounting software has become an effective means of asset management.

Written by :

kristine H