How frequently do you update your asset records to avoid ghost assets?
Ghost assets refer to the lost, stolen, or unusable assets still on your company’s fixed asset ledger. Often these assets are represented by equipment, vehicles, real estate, and property. Having some of your software and digital assets fall under this category is also possible.
If you’re like 70% of other U.S. businesses, up to 30% of your reported assets could be classified as ghost assets.
Any asset you cannot physically account for but present as a fixed asset in your general ledger is a ghost asset. These MIA assets are physical property you cannot account for, often represented by the outdated computers stocked in the storeroom, broken hardware with unclear scrapping options, or telephone systems you don’t use anymore.
Tip: You can avoid these problems with the help of reliable RFID asset tracking software. RFID tracking can provide an accurate asset history and will save time before and during audits.
Accruing ghost assets is easier than most companies think. If a device is lost or stolen and another is purchased in haste and without a paper trail, the lost device can be easily forgotten and become a ghost asset. Laptops and mobile devices are common culprits due to how agile these devices make us.
When the original device has insurance or maintenance fees, you could be paying for it in error. Imagine if your business was one of the many sufferers of 30% of its assets in this ghost category?
Sarbanes-Oxley (SOX) audit requirements require that your balance sheet accurately reflects your physical assets and that you have a documented process that results in credible, reliable reporting. Your organization faces heavy fines (reportedly between $1 million and $5 million) or its leadership imprisonment for either the mistaken or willful ignorance.
Ghost assets are most often an accident and accumulate in businesses primarily because of miscommunication. For example, an asset change in the finance department might not be communicated or updated in the IT department. This is especially common if different departments lack a seamless communication channel. In these cases, asset data is often duplicated in error.
Businesses pay property taxes on machinery and equipment based on this reporting. A long list of ghost assets has significant implications on your property tax liability.
The impact of ghost assets can be worse for businesses in the manufacturing, transportation, utilities, and construction sectors because they rely on physical assets with hefty price tags, maintenance fees, and insurance. The income and property tax paid for these assets also becomes massive.
Growth is crucial for any company, and ghost assets can stall growth in a hurry. Most businesses are unaware of the ghost assets on their balance sheets and believe they can meet customer demand with current assets on any typical day.
But what happens when they’ve based this projection on the availability of non-existent assets? Business stalls when the equipment needed to ensure a steady production flow is out of order.
Inventory theft stalls business growth. If unscrupulous staff, contractors or associates discover you keep loose asset records, they may see stealing business assets as an easy score and feel they won’t get discovered.
Another way ghost assets can stall business growth is by preventing you from taking on new investments or buying needed equipment. This includes funding for new projects and purchasing long-term assets such as property or equipment.
To eliminate ghost assets, invest in an integrated and automated asset tracking software solution for your business. This definitive system can provide you with a central asset registry where every purchase is tracked, monitored, updated– and cloud accessible.
Automated asset tracking helps to reduce ghost assets and simplifies the process of tracking and monitoring your assets with minimal errors and delays.
Ghost assets can impact your company’s ability to grow. Make no mistake, ghost assets are real, and the solution doesn’t include the “Ghostbusters.” Avoid ghost assets altogether with the right asset management platform for your business.
This is an asset on your general business ledger, but it does not physically exist in the business. A good example is a computer that is no longer in use but is still part of the IT inventory list.
Ghost assets increase tax, maintenance, and other fees since they remain accounted for even though they are not used.
Yes. An asset tracking software ensures that every asset is tracked and monitored, on location or remote. The software solution also provides productivity, workflow, and audits that happen instantaneously.