Assets are possessions owned by a company or individual that have value attached to them. These can be either physical or intangible. Physical assets, such as buildings, machinery and vehicles, are tangible things you can see and touch. Intangible assets are, for example, patents, brand names or goodwill. These have value, but you cannot physically hold them. Their main characteristic is that they contribute to the financial health of a company. They generate revenue, save costs or can be sold to generate cash. Managing them is crucial for companies to remain profitable and maintain or even grow their value.
Origin of the concept
As early as the time of ancient civilisations, such as the Romans, traders and artisans used systems to keep track of their assets and income. The term “assets” as we know it today took shape during the development of the modern accounting system in the 15th century. The Italian monk Luca Pacioli introduced the double-entry bookkeeping system in 1494. This system divided property into assets and liabilities. Assets then, as now, were possessions that add value to a business. This way of thinking about assets and liabilities laid the foundation for the financial reporting we use today.
This is how it works
Assets play a crucial role in day-to-day business operations. They help companies generate revenue or reduce costs. Management starts with identifying which assets add value. This value can vary depending on their nature. They are then classified into different categories, such as fixed assets (buildings, machinery), current assets (inventory, cash) and intangible assets (patents, trademark rights). Each type has its own function within a company. For example, fixed assets can be used to make products, while current assets can be quickly converted into cash to cover short-term expenses. Managing well ensures that your business operates more efficiently and is better prepared for future growth.
The role of assets
Assets play a key role in achieving your business goals. By making smart use you can improve your organisation’s efficiency and profitability. It starts with mapping all the things you own. Think of buildings, equipment, vehicles and intellectual property such as brands and patents. You can then use this strategically to optimise your business processes. For instance, you can use fixed assets, such as machinery, to increase production, while you can use current assets to respond quickly to market opportunities. In addition, you can use intangible assets, such as patents, licences or brand values, to gain competitive advantage and increase the value of your business.
Laws and regulations
The management and use within an organisation is regulated by various laws and accounting rules. For companies operating in the Netherlands, for example, the rules of the Civil Code and International Financial Reporting Standards (IFRS) apply. These rules prescribe how to value and include in your financial statements. For example, companies must depreciate fixed assets periodically to accurately reflect their value. Intangible assets, such as intellectual property, are subject to specific rules regarding property rights and protection. In addition, there are tax rules that determine how you are taxed. For example, investments may be entitled to tax benefits, such as investment deductions. As an entrepreneur, it is essential to be aware of these regulations to avoid penalties and legal problems.
Recent developments
The world is constantly changing, mainly due to technological advances and new laws and regulations. One of the most notable developments is the digitisation of management. More and more companies are using sophisticated software to manage their organization. This allows them to make faster and more accurate decisions. In addition, sustainability plays an increasing role in management. Organisations are looking for ways to make their assets more energy efficient or to reduce their carbon footprint. There are also new accounting rules that require companies to be more transparent about the value and use of intangible assets, such as data and intellectual property.
Management
When managing assets, it is important to consider several factors to avoid mistakes and inefficiencies. First of all, make sure you have a complete and up-to-date overview. This will prevent surprises and help you make better strategic choices. Furthermore, it is essential to regularly evaluate the value. This applies to both fixed and intangible assets. By performing timely maintenance and checking for wear and tear, you extend the life of physical assets. It is also important to pay close attention to depreciation. This ensures that your balance sheet gives a realistic picture of the value of your business. Finally, you should always be aware of the relevant laws and regulations to avoid legal risks.
TriFact365’s role in improving asset management
TriFact365 can play a big role in improving management within your organisation. This platform offers automated solutions for processing financial administration. By using TriFact365’s automation, you can manage more efficiently. Think, for example, of processing purchase invoices faster. This prevents errors and ensures you always have an up-to-date picture. This helps you make strategic decisions about the maintenance, replacement or sale, allowing your organisation to operate more profitably and sustainably.
