Discuss about the Importance Of An Asset Register For Your Business.
Assets are defined as resources or things of value that are owned by the company. For a restaurant, company assets can be resources as it is used to run its operations and serve its guests. Assets can be categories into short term assets and long term assets .Each assets are used differently in the business and have got own qualities. Accounting for an asset become easy if we know the item falls under which category as a fixed asset or a current asset.
Physical asset is a tangible asset that has an exchange value and has a material existence. For most business, Physical assets refer to cash, inventory and properties owned by the business. (Keythman, n.d.)
Non-physical assets are non tangible assets such as Goodwill, leases, computer program or agreements.
Asset management is an approach on how a company manages his assets, by preparing an Asset management plan the company can analyze the future cost and value of the assets and can get the highest amount of worth from its assets. (Newman, 2018)
Before making an asset plan one’s focus would be to collect information about the assets that you are planning for. This will help us know which assets are necessary for the restaurant business and which are not suitable for the business.
Once we have a good understanding of the assets, we need to focus on than create a strategy and plan for each asset and so that you can utilize full benefit out of it. A basic strategy generally includes:
Preparation of asset register is must as it shows the assets which the organization owns. These assets may include in case of restaurant company’s chairs, tables, air conditioner, cash vending machine, Credit card machine, carpet, coffee machine. Information that must be included in asset register is
Any assets disposed during the year the same should be accounted properly and it should include proper details in the register with proper serial number it should consist following details:
Asset of any organization should be physically verified at a reasonable interval and the frequency of examination of an asset should be monthly basis and person involved in stocktaking should keep a proper record of the asset and the stock counted during the physical verification of an assets.
There should a security system for the asset for an unforeseen circumstances and an appropriate theft detection technique if any done by the inside staff, Proper CCTV camera must be installed in order to decrease the irregular activities, which will curtail the loss to the business.
Maintenance of an asset is required on timely basis in order the serve the organization continuously. Strategic asset management plan allow you to plan for the future maintenance of an asset. This strategy helps us determine what maintenance an asset need and who will be responsible for such maintenance.
Conclusion
So we can conclude from above that for opening a café with internal sitting of 10 customers and four staff members the above are the guidelines, which the management should take into account in order to create an asset management strategy.
The task of identification of an asset is very important unless we know the location and values as on date one cannot analyze the time, money and effort that should be required to spend on the assets in order to secure them. (Newspapers, n.d.)
The steps, which are required to follow for asset classification and control, are as follows:
What is critical asset? Firstly, the management needs to analyze the assets, which are critical. In a café shop, generally coffee machine, air conditioner, chair table and cup and cutlery items are very much critical. Suppose if there is only one coffee machine and it stops functioning than the café will face a huge loss, so the management needs to keep a back up of coffee machine or should have a alternative arrangement same goes for the air conditioner the management should be prepared with a alternative source of power and should have a stock of cup and cutlery.
Assets can be classified into following categories:
Every piece of information about your organization, customers, sales, staffs falls in this category. This information is critical for your business.
Therefore, a continuity plan should be developed to overcome any disaster and maintain the continuity of the business.
Two types of software, application software and system software are there, but this is a small café with 10 People sitting capacity, one is required to invest only on system software like operating system, software packages, tools and utilities.
There are various tangible assets in the café shop like
After the asset is acquired by the management, next step is to manage the physical assets and to monitor the condition and performance of physical assets. Policies and procedures are required to frame to monitor the condition of assets.
Regular reporting practice is very useful to ensure effective performance of an asset and an organization. Reporting about an asset can be through from customer, staffs feedback about performance of assets. The feedback and audit practices help management to identify the problem early and can take corrective action before the assets stop functioning.
Regular inspection of assets helps the management to identify the problem related with the assets. Regular checking of assets gives a clear understanding of the problem and one can take an appropriate action related to those assets. Depending upon the nature of problem and your company policy you may decide either to repair the assets to improve the performance or to replace with able assets.
In monitoring the condition of physical assets, one is required to evaluate need for, and access, special assistance.
It involves:
Specialist assistance includes:
Purchasing of physical assets has long-term implications. To help with the acquisition of assets you will need to prepare accurate equipment specifications so that you will not need to spend extra resources to fix the problem caused by wrong selection. It is more important when one is acquiring assets from a foreign country a wrong specification will involve lot of cost or the money will be blocked for a long period if you decided not to use the assets due to wrong specification, specification includes:
It is very important to ensure that the asset, which you purchase, is financed properly. Before acquiring an asset, you need to choose the method the financial, which can give the best value for your money. Some of the financing methods available are:
A Finance lease Provides 100% of finance to acquire the asset for use in business. It is rental agreement between the lessor and the lessee where the lessor rent the assets for an agreed term and rental amount.
Assets can be acquired on Finance Lease for a restaurant café:
Therefore, the management while taking the Premises café shop should follow the finance lease modeling.
B.GST benefit can be taken for payment of rental and other charges.
Novated leasing provides a flexible and convenient way to acquire a motor vehicle as part of an employee salary package. Employees lease a motor vehicle of their choice and while they are in employment, their employer agrees to pay the rental amount and other costs associated with it directly from the employee gross salary. (Roche Finance, 2018)
Hire purchase is an agreement to purchase assets between two parties subject to payment terms. Ownership is automatically transferred when you make the final payment. One also has the option to purchase the equipment during the tenure of the agreement.
In a Café Shop, one can acquire air condition, coffee machine, cash machine, carpets, cutlery items on hire purchase, as the ownership will also come into existence after the final payment is made over a certain period.
An operating lease is an agreement between you and the bank to rent equipment for use in the business for a fixed period .This lease has an advantage for those who are continually involved in upgrading their assets or if you do not want to own assets and take it on rent. No liability of residual value is left at the hands of lessee.
In a café restaurant the management should opt for operating lease for such asset whose technology changes frequently in the market and the café has to adapt themselves according to change in the latest technology.
Hyman, I., 2015. The Importance of an Asset Register for your Business. [Online]
Available at: https://hymans.com.au/the-importance-of-an-asset-register-for-your-business/
[Accessed 5 June 2018].
Keythman, B., n.d. What Is a Restaurant’s Long-Term Assets vs. Short-Term Assets?. [Online]
Available at: https://smallbusiness.chron.com/restaurants-longterm-assets-vs-shortterm-assets-69852.html
[Accessed 5 June 2018].
Newman, J., 2018. How to Develop a Strategic Asset Management Plan. [Online]
Available at: https://www.wikihow.com/Develop-a-Strategic-Asset-Management-Plan
[Accessed 5 June 2018].
Newspapers, I. E., n.d. Identifying and classifying assets. [Online]
Available at: https://www.networkmagazineindia.com/200212/security2.shtml
[Accessed 5 June 2018].
Roche Finance, 2018. Home/Car Finance/Salary Packaging Benefits. [Online]
Available at: https://www.rochefinance.com.au/car-finance/salary-packaging-benefits.html
[Accessed 9 June 2018].
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