For decades, chief financial officers (CFOs) and their teams have relied on spreadsheets for fixed asset accounting. Even with the introduction of powerful fixed asset accounting software, more than 70% of companies still use spreadsheets for this purpose. However, many asset-heavy companies are learning that the old way isn’t always the best way.
As financial reporting demands become more intense and regulations change, organisations must decide whether to continue using spreadsheet-based asset tracking or shift to purpose-built, enterprise-grade software.
Take a closer look at the potential pitfalls of using spreadsheets for fixed asset accounting and how FMIS’ fixed asset accounting software can help your organisation protect, report, and optimise its physical assets more efficiently and effectively.
The Problem with Spreadsheets
There are several reasons why organisations, especially asset-heavy companies, should switch from spreadsheets to FMIS’ powerful fixed asset accounting solutions. Before considering the benefits of fixed asset accounting software, it helps to understand the potential problems associated with relying on spreadsheets.
1. Errors Have Ripple Effects
Manual data entry is one of the biggest risks of using spreadsheets. Capturing fixed asset data incorrectly or making errors in formulas can have a range of ripple effects. One error can result in incorrect forecasting, and decisions based on these forecasts could lead to various failures, reporting that is not factual, and compliance issues. This may result in severe financial consequences for your organisation.
2. Lack of Scalability
Spreadsheets aren’t made for scalability. While businesses with few fixed assets might not have too much trouble using spreadsheets for fixed asset accounting, problems may creep in when those businesses start growing. Tracking an increasing number of fixed assets on spreadsheets can lead to incorrect data being used. This could lead to misunderstandings within the company or with vendors or customers, negatively affecting business operations and reputation.
3. Spreadsheets are Time-Consuming
Using spreadsheets for fixed asset accounting takes time. Teams need to consolidate data manually, double-check figures, and ensure that formulas are updated in line with relevant accounting standards. The time spent on tasks that can be automated with FMIS fixed asset accounting solutions could be spent on other tasks that improve productivity and, ultimately, the organisation’s bottom line.
4. Spreadsheet Security and Compliance Issues
Security and compliance concerns are another reason some CFOs are switching to reliable fixed-asset accounting software. Spreadsheets are vulnerable to hackers, as they don’t allow for comprehensive audit trails, aren’t encrypted, and do not feature strong access control. This also raises red flags regarding compliance frameworks such as GDPR.
The Benefits of Fixed Asset Accounting Software
Fixed asset accounting solutions from FMIS eliminate the concerns associated with using spreadsheets. The following benefits are among the reasons why more CFOs are ditching spreadsheets for software designed for the task:
1. Simplified Tracking and Depreciation
Fixed asset accounting software offers simplified tracking of and easy access to capital investments, disposals, labour, locations, materials, and GAAP transfers. This software can be integrated with existing ERP systems for real-time asset visibility, depreciation accuracy, and readiness for audits. With top-notch software, financial teams can:
- Customise tracking data points to save time and for more accurate analysis and reporting.
- Create tailored depreciation methods for easier and more detailed real-time tracking of different assets.
High-level asset tracking gives organisations real-time visibility over asset locations, helping protect against loss, misplacement, and theft. It simplifies lifecycle tracking, budgeting, and planning for replacements, while fixed asset accounting software automates depreciation and streamlines management. Custom reports also provide valuable insights beyond what spreadsheets can offer.
2. Enhanced Tax Compliance
The right fixed asset accounting software simplifies compliance with tax laws and standards like GAAP, IFRS, and SOX by ensuring accurate asset recording and depreciation. FMIS’ solutions stay up to date with tax legislation changes, automatically reflecting these in depreciation calculations. This helps organisations avoid errors, audit issues, and costly fines.
3. Easier Physical Inventory Reconciliation
Powerful fixed asset accounting software eliminates the difficulties involved in tracking asset transfers and disposals, as there’s no need for multiple spreadsheets. In addition to ensuring that organisations’ inventories are accurate, this also prevents organisations from underpaying or overpaying for insurance. Having accurate inventory records also prevents organisations from duplicating assets and makes it easier to allocate assets effectively, ensuring they make the most of them.
Rely On Fixed Asset Accounting Software
FMIS’ fixed asset accounting software makes it easier to stay on top of the rules, legislation, accounting standards, and depreciation methods that apply to fixed assets, especially when those assets are spread across multiple locations.
By switching from time-consuming, labour-intensive spreadsheets to software from FMIS, your organisation can save time and money while freeing up staff for other tasks. Enjoy the peace of mind that comes with assured accuracy in asset tracking, transfers, depreciation, reporting, and compliance.
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