Although fixed assets are a crucial component of any business, not every system enables you to precisely manage their depreciation and life cycle. In reality, a lot of businesses still use spreadsheets to keep track of their assets. Your business can precisely track, manage, and depreciate its fixed assets with the help of NetSuite Fixed Asset Management.
Additionally, the Fixed Asset Management module is connected with NetSuite ERP, enabling your business to build assets from invoices or purchase orders and post devaluation or asset retirements straight to NetSuite general ledger accounts.
This NetSuite fixed asset guide will define NetSuite Fixed Asset Management and describe how it may make tracking fixed assets easier for your business. Let us start with understanding the meaning of asset management and its importance.
Fixed Asset Management- What Is All The Fuss About?
All operations involved in keeping track of and maintaining a company's assets are included in fixed asset management. It encompasses every stage of a fixed asset's life cycle, from planning and procurement to liquidation.
Vehicles, computers, equipment, furnishings, and other business tools are examples of assets. By carefully maintaining them, fixed asset management takes account of all the company's assets, ensures they are in good operating condition, and makes sure they retain their worth.
Software for fixed assets manages the organization's asset demands while assuring accuracy, enhancing efficiency, adhering to industry standards, and minimizing operating expenses. The company's attempts to manage its assets would be laborious, time-consuming, and rife with mistakes in the absence of fixed asset management software.
Is it Really Necessary to Opt for Fixed Asset Management?
The company's spending while purchasing them explains the significance of fixed asset management. In the majority of firms, fixed assets represent more than 40% of total expenses. Therefore, managing assets effectively is essential to getting the most value out of them.
Additionally, the likelihood of large losses increases as a corporation grows in size since it may be difficult to keep track of all of a firm's assets. Also, the output is impacted by fixed assets that are not in their best condition, which leads to subpar goods and services, decreased customer satisfaction, and a negative impact on the company's reputation.
Different Modules of Fixed Asset Management
There are four primary NetSuite fixed asset management modules:
1. Asset Creation and Proposal
All fixed asset-related transactions are tracked by NetSuite Fixed Asset Management. Bills, customer orders, and purchase invoicing can all be converted into fixed assets. The sole prerequisite is that the transaction posts to a general ledger account for fixed assets. A fixed asset cannot be generated from a transaction if it is not deposited into a fixed asset account. Additionally, you may manually generate assets or import CSV data.
Asset proposal is the initial stage in the creation of the fixed asset. The Asset Proposal page contains information about all transactions that post to a fixed asset account. You can accept or reject the suggestions on this page. If a proposal is approved, a fixed asset is subsequently established using the account's transaction-related default data for the Asset Type (e.g. Depreciation Method, Lifetime, Residual Value, etc.). Before approving the application, this information may be modified in the case that the value of the new asset changes.
Steps for Asset Generation:
Step 1: First, enter a PO, receive, or bill. You can do it anytime throughout the month. For Navigation, first, go to Transactions > Payables > Enter Bills to receive a PO or enter a bill immediately. The PO/Bill should be immediately connected to the asset account with a note field description of the asset.
Step 2: Next, propose an Asset in the NetSuite fixed asset proposal Module. You can do it once every month, preferably during the month-end closing procedure.
- Under Asset Type(s), choose one or more Asset Types to produce asset proposals from the menu options Fixed Assets > Transactions > Proposal.
- Choose one or more subsidiaries under Subsidiary (or click include a children check box for all subs)
- Select "Propose New Assets"
While it may appear that nothing is occurring, NetSuite is really processing the Asset Proposals. You may go to Fixed Assets > Transactions > Transaction Status to see what's going on. You may view a list of the ongoing and finishing processes on the Transaction Status screen. You may then click the hyperlinks for further information by going from there. You should be good to go as long as the "Record Processed" is shown.
Step 3: Finally, you need to Accept or produce assets. You can run it once a month, preferably during the month-end closing procedure. For Navigation, click on Transactions > Proposal > Fixed Assets
Reviewing each item being suggested is a good practice to make sure the information is up to date. For instance, if one of your bills/asset proposals calls for the purchase of five computers, you should enter five as the quantity in the FAM - Asset Proposal record. Other aspects of the asset, such as the depreciation method and start date, can also be changed at this point. When finished, press the saves button.
Tick the box to the left of the asset to choose it, and then click "Generate Assets" (or "Reject Assets") towards the top of the Asset Proposal page. NetSuite will seem to be idle, just like when recommending a new asset. The same navigation is used as in Step 1 to view the Transaction Status.
2. Asset Depreciation
The NetSuite fixed assets management software supports a variety of depreciation techniques and keeps track of the expected and actual decline for each asset. You may choose the asset type, the affiliate it belongs to, and the timeframe you want the journals to publish on the Depreciate Assets page. One or more fixed asset categories may be chosen. A journal entry is automatically made to reflect the depreciation to the general ledger when the depreciation for the chosen asset categories has been calculated. Sub-categories, parent assets, and asset types are used to summarize depreciation entries.
Steps for Asset Depreciation:
Timing: During the month-end closing procedure, once every month.
Navigation: Asset Depreciation > Fixed Assets > Transactions
- To create asset proposals, choose one or more asset types under Asset Type(s).
- Choose one or more subsidiaries under Subsidiary (or click the include a children check box for all subs).
- Enter the month's end date (12/31/2021) in the Depreciation Period area.
- You may leave the Depreciation Reference field empty to have NetSuite automatically produce a reference number, or you can put a JE Reference number in it.
- When ready, press the "Depreciate Assets" option.
This method, in contrast to the others, will lead you immediately to the Transaction Status screen, where you can check how many transactions were handled. To view the journal entries that have been uploaded, go to Transactions > Financial > Make Journal Entries > List and choose the most recent entry (i.e. you can sort by latest Internal ID).
By going to Fixed Assets > Lists > Assets and choosing the Asset in issue, you can also confirm the depreciation related to a specific fixed asset by looking at the depreciation record made to the FAM - Asset Record. By looking at the Depreciation History tab, you can see the amortization entries that have been posted.
3. Asset Revaluation, Disposals, and Reporting
The Fixed Assed module keeps track of asset sales and revaluations as well. Both of these transactions are started in the Fixed Asset module and result in the creation of the relevant journal entries that show the value change and any associated gain or loss.
Standard reports in NetSuite Fixed Asset Management let you manage your fixed assets. You may choose the report type, the period range, the subsidiary and/or regions, and departments on the NetSuite fixed asset reports page. Even better, you have the option to export the report as a CSV file.
Steps for Asset Revaluation:
You can conduct this whenever necessary.
Navigation: Asset Revaluation > Transactions > Fixed Assets.
- In the "Asset ID/Name" column, choose the asset.
- Enter a write-down percentage or amount, and/or change the residual value, lifetime, and depreciation method.
- Add a "Transaction Date" there.
Before processing, you can compute the write-down percentage by clicking the calculate button, or you can process by clicking the "Process Revaluation" button. When the revaluation is finished, you will be sent to the Transaction Status Screen.
By looking at the write-down entry made to the FAM - Asset Record and choosing the relevant Asset under Fixed Assets > Lists > Assets, you may confirm the amount. By looking at the Depreciation History tab, you can see the journal item that was published.
4. Lease Management
Both financial and operational leases are tracked by NetSuite Fixed Asset Management. Based on the monthly lease payments, interest rate, and lease duration, the lease values are automatically determined. Time will be saved during month-end closure by using the Record Lease Interest tool to automatically create interest cost journal entries for all leases.
Additionally, leases may be transferred to different companies, regions, or asset classes. The statistics for leases may include, but are not restricted to, the connected fixed asset, initial journal entry, payments, terms, interest expenditure, and net present value.
Steps for Lease Management:
You can conduct lease management whenever necessary. For navigation, first, select on Asset Disposition > Transactions > Fixed Assets
- In the "Asset ID/Name" column, choose the asset.
- If you are selling the item, you can create an invoice for the customer by entering the appropriate information in the "Sale Item," "Customer," and "Sales Amount" boxes.
- Make that your sales item is linked to a Gain/Loss on Sale of Asset G/L Account, as noted.
- Fill out the "Disposal Date" and "Disposal Type" fields (i.e. Sale or Write-off).
Note: If an asset record has various quantities, you can write off or sell a piece of it by entering the different quantities in the "Quantity Disposed" box. When ready, click Dispose.
When the disposal is finished, you will be brought to the Transaction Status screen. By going to Fixed Assets > Lists > Assets and choosing the disputed asset, you may check the amount by looking at the sale write-off item that has been added to the FAM - Asset Record. By looking at the Depreciation History tab, you can see the journal item that was published.
Go to Fixed Assets > Lists > Assets and pick the relevant Asset to examine the Disposal/Invoice that was submitted to the FAM - Asset Record. If you look at the Asset Sale/Disposal page, you may see the invoice that was sent.
Advantages of Opting For NetSuite Fixed Asset Management
Here are a few benefits of NetSuite Accounting Solutions
- Ensures Assets Are Visible
A firm has few easily identifiable assets when it first starts. Growth, however, necessitates the acquisition of more fixed assets, which are more difficult to track using basic spreadsheet software. The profitability of your organization is harmed by waste, damage, deterioration, and other losses that result from failing to account for all of your company's assets. Transparency and control of all assets are made easier by adopting reliable fixed asset management software, such as NetSuite.
- Offers Real-Time Asset Tracking
Tracking commercial fixed assets is essential for the reasons of security, safety, compliance, performance, etc. For instance, tracking the whereabouts of your fleet of vehicles helps you control fuel costs, enhance the overall efficiency required for profitability, and assure fast delivery and improved route planning. You wouldn't know if you were generating losses or profits if you didn't know where your vehicles were and how they were doing.
- Removes Phantom Assets
Your Company may misclassify certain fixed assets, lose some of them, or have some of them stolen. You wouldn't be aware of such changes if you didn't have an asset management system. Asset management keeps thorough records of every asset and its state, which makes it easier to dispose of assets that are no longer useful to the company.
- Quick Access To Data By Relevant Departments
Using fixed asset management software, precise records may be kept and shared with other departments, such as accounting or repairs and maintenance. As a result, they may immediately obtain correct records on which to make their judgments.
- Makes Asset Life Cycle Management Better
Fixed asset management software makes it simpler and more precise to understand an asset's life cycle than alternative manual methods like spreadsheets. Such knowledge is priceless for making future decisions about the purchase, use, upkeep, and disposal of assets. Furthermore, comprehensive asset performance data aids in the acquisition of assets in the future.
- Reduces The Use Of Manual Management Procedures
Fixed asset management software automates asset management procedures in place of using spreadsheets and whiteboards. There will be fewer mistakes, easier information exchange, quicker historical data retrieval for an asset, and simpler system adoption thanks to this approach. As said previously, spreadsheets are only so useful. Soon, you'll want features and functionalities that are only available from high-end asset management programs like NetSuite Fixed Asset Management.
Any firm faces challenges with asset management. The fixed asset management solution offered by NetSuite Fixed Asset Management is effective, simple to use, affordable, highly functional, and time-saving. Without diligent asset management, organizations risk seeing their profitability decline as their assets lose value and become ineffective, which would lead to decreased production.
An effective solution that may optimize the way your business monitors fixed assets is NetSuite Fixed Asset Management. With years of expertise deploying the Fixed Asset module for our clients, the certified NetSuite implementation partners at VNMT are eager to assist you. Contact our NetSuite team right away to get started.