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The True Value of Tangible and Intangible Assets

by Maxine Harrison on November 16, 2021
 
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Examining your tangible and intangible assets helps you answer critical questions.  What exactly does the company own? Can its assets really bolster revenue if leveraged in the right ways? And, what assets are volatile and need replenishment more often?

But sometimes, the answers aren’t clear cut, so you need to do some digging. Part of the job of executive leadership at a company is to determine what the true value of company assets are and then institute plans of action that make the organization profitable year-over-year based. Both tangible and intangible assets certainly hold value and can keep an organization running. But leaders must weigh the value of each asset so that their businesses deliver better efficiency and exponential growth. The status quo is simply not enough for most organizations. 

What is the difference between tangible and intangible assets?

An asset is anything that a company owns, whether physical or otherwise. Tangible assets refer to physical items, such as:

  • Computer hardware
  • Office furniture
  • Vehicles
  • Equipment and machinery
  • Buildings and land
  • Cash

Even employees are considered tangible assets. Intangible assets are not physical and include things like:

  • Intellectual property
  • Expertise
  • Brand attributes like trademarks or a copyright
  • Software and domain names

Tangible assets wear out, run out, or otherwise become obsolete over time. For example, the moving parts of a vehicle need replacement after a certain amount of mileage. Inventory gets sold and needs to be restocked. A fire ravages the building and the insurance company steps in to replace losses. Computer systems require software updates to protect against hackers or other digital threats, and workers eventually need time off for rest and recuperation. Understanding how and when your tangible assets diminish or wear thin provides key information to leaders about what to do next. 

Tangible assets can be broken down further into current assets and fixed assets. Current tangible assets are those that can be converted to cash, i.e. sold for a monetary value relatively quickly. Fixed tangible assets are those that usually cannot be liquidated in less than a year; buildings, heavy machinery, and land. 

Why does this matter? Why is it necessary to identify tangible and intangible assets in a company? Take stock of everything you need to fix, restock, or replace by identifying which assets are tangible and intangible. It provides the foundation for a better workflow. Furthermore, knowing which assets are tangible allows executives to understand where and how money is spent over time. It provides the true value of what the company holds.

How do organizations treat tangible and intangible assets? 

Businesses tend to focus more on tangible assets than intangible ones because they are vital to day-to-day productivity. To put things into perspective, a company feels an economic impact almost immediately if goods run out due to a breakdown in the supply chain. Here’s a similar example: your operations stall when a severe storm causes flood damage to office equipment or to manufacturing machinery in a warehouse.

Businesses must manage and account for tangible assets before any event can cause disruptions. Only the right asset management solutions ensures that this happens in efficient and cost-effective ways.

How can technology help you with tangible and intangible asset management?

Having a cloud-based asset management system at the ready makes keeping track of tangible assets easier, as it provides the “when,” “who,” and “how much it costs” elements you need to tackle organizational demands. 

For example, as an exercise in preventive maintenance, you know ahead of time when a vehicle in your fleet requires a tuneup. 

Diving deeper, let’s say it’s November and the cost of your consumer goods is on the uptick. You take account of these costs by vendor, where the vendor may be located, and the cost of gas. Over time, the data suggests that your costs are significantly higher during the 4th quarter. This informs your next few moves, and you purchase your goods during the 2nd quarter using a trusted, local vendor. Leveraging a cloud-based asset management system, you automatically initiate work orders so that your inventory never gets low and your costs remain predictable. 

Generally, managing assets and work orders promotes efficient productivity. Antiquated ways of asset management, such as the use of handwritten notes or spreadsheets, may help you keep control of your assets. But these methods also lead to downtime and lower output from your team. Communication between workers, both internal and external, stalls and the team can’t get the right work done. 

Asset management is just as important for intangible attributes that allow the company to stand out and hold longevity in the market. The company must stay up to date and protect its intellectual and digital properties. A robust asset management solution makes sense here. For example, if you’re running a corporate office, you know when it’s time to run security updates for your software. Scheduled maintenance on your digital assets is already set to go. The development team has already been informed that they have work to do.

ManagerPlus© Lightning helps you keep track of tangible assets, labor, and repairs. Because you can share real-time data across the organization. PM templates are available to save time and streamline work orders to internal employees and external vendors. 

Lightning is a mobile platform that eradicates information silos and connects your teams in ways that keep tangible asset management at the forefront. Easily pull asset performance reports that provide data on the health of your assets and subsequently, how valuable they are at any given time. 

Bottom line: all of your company’s assets are valuable. But they can only serve a benefit when and if they’re managed in ways that promote efficiency and growth. 

Next step

Set up a call with one of our experts to discuss how Lightning can help you transition to a new, more efficient way of working.

Summary

Companies commonly have a collection of both tangible and intangible assets they rely on to be productive and profitable. An easy way to think about the difference is that tangible are assets that wear down while intangible don’t. So, something like a piece of machinery is a tangible asset while a trademark or intellectual property is not. If companies want to succeed, they need efficient systems, including asset management software, in place to help them manage their tangible assets, to ensure they can pull as much value from them as possible. Leveraging the value of your company assets begins with effective asset management. The many moving parts of your operations, no matter the industry, requires leadership teams to know what assets are performing and what needs ongoing maintenance. 

Maxine Harrison
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Maxine Harrison

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