This article will show you how to manage your financial assets by giving you the best tips proven by financial experts. If you are reading this article, it means that you are looking for the best tips to help you manage your financial assets. You must have plunged into one of the dangers of poor financial asset management.
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How to Manage Financial Assets
For the sake of clarity, below is a concise definition of financial assets.
What Are Financial Assets?
The term financial assets are used to describe liquid assets such as stock equity or bank deposits that get their value from a contractual claim or ownership on an underlying asset.
Generally speaking, assets are anything you own that has value. Financial assets are assets that derive their value from a contract or a claim. These assets can be in physical forms, but most of them are not physical.
The most common type of financial assets is bank deposits and investment portfolios. According to recent data, the majority of financial assets are held specifically in checking accounts. The second most used financial asset is retirement accounts.
Financial Assets Example
Now that we have a very solid financial assets definition, let‘s look at some examples. The list below contains some perfect examples of financial assets;
- Stocks
- Bonds
- Commodities
- Mutual funds
- Index funds
- Private Equity
- Hedge funds
- Managed futures
- Real estate
these are perfect examples of financial assets.
Financial assets management is not a very easy task. There are lots of aspects to it and it needs lots of dedication. Financial asset management plays a major role in maximizing.
Now that we know what financial assets are, let‘s get a basic understanding of financial asset management.
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What is Asset Management?
Assets Management is the process of tracking, monitoring, and managing assets. Experts most commonly use software called Financial Management software.
Many big organizations have different types of financial assets, as listed above. It is very important to know who is using the assets, and the maintenance need for the assets, all these things can be handled with some software and financial assets management systems. This software can keep track of these assets, and save them from misuse and loss.
The tips below are the best practices that can help any person, or organization manage their financial assets with ease.
Best Tips For Financial Assets Management
The tips below will you effectively manage your financial assets. They are advisable for both individuals and businesses.
Understand the Reason for the existence of the Financial Assets
This is a very important aspect of financial asset management. Here, you should understand the purpose that the asset serves, and why it was procured.
Learn About Your Assets Condition
After knowing the reason why the financial assets exist, it is best to know the present situation of your financial assets, the asset‘s current situation, how well it fulfills its major purpose, and how reliable such asset is.
Know How Effectively the Financial Assets are Being Utilized
It is best to know what value your financial asset is delivering currently. And if it is fulfilling the existing expectations.
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Identify the Future Demands of your Assets
The best step to take now is to know how best your financial assets serve the future. know if there will be a change in the service expectations of your financial asset and if the asset is robust enough to deliver future demands.
Access the Existing Maintenance Program
Now, access what is being done presently to maintain and improve the asset‘s lifecycle, how effective the current assets maintenance program is, and have estimated the maintenance cost for your asset maintenance.
Predict the Depreciation Rate and Associated Risk
The things to consider here are; the useful life of the asset reviewed periodically, you also need to know if the expectations significantly differ from the previous estimates. It is also very important to know the impact of depreciation and devaluation.
Forecast Assets Disposal
It is very important that you know when your asset is expected to be permanently withdrawn from use. Know if the gain or loss from the disposal of the asset is noted in the Financial statement.
Top Financial Management Tools
There is no such thing as a perfect financial asset system, but listed below are tools in the industry that are good to try out.
ServiceNow
This app is designed for enterprises, and it offers a range of asset management services like inventory management, financial and contractual information management, resource tracking, and even more. with a comprehensive asset management tool like ServiceNow, most businesses won’t have to switch between niche software solutions for each specific type of HR function.
IBM Maximo
IBM Maximo is an asset management solution that has a detailed maintenance module as its main functionality and other additional tools for procurement and inventory management. The framework of the product is very effective.
Oracle E-Business Suite
With this software, you can get an all-in-one solution to manage asset management. This software provides a visually rich reporting interface that stakeholders can use to create a very good and customized analysis report. Organizations can integrate it with other applications using REST API or SOAP connectors.
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Kissflow Finance and Operations Cloud
Kissflow Finance and Operations Cloud is not strictly an administration-automation tool, but a finance cloud that can be used to manage some basic operation tasks like asset management, facility management, and much more. Kissflow is a very simple and powerful finance and operations cloud for all sizes of organizations.
Frequently Asked Questions on How To Manage Financial Assets
Why Is Asset Management Important?
Asset management helps companies to keep track of all their assets, such as vehicles, equipment, and investments. It helps you keep tabs on the assets, and streamline operations, especially about their sale or disposal.
What Are The Challenges In Asset Management?
The 6 major challenges in asset management are;
- Ensuring enough Asset Visibility.
- Sharing Asset Information.
- Making the Most out of Warranties.
- Making Correct Replacement Decisions.
- Avoiding Maintenance Errors.
- Aligning Asset Management With good Business Goals.
How Do You Develop An Asset Strategy?
There are five steps to take here ;
- Align your asset management program with your business objectives.
- Assess the risk and prioritize asset focus.
- Implement your asset strategies to mitigate risk.
- Avoid failures.
- Governance and visibility.
What Is Asset Maintenance Strategy?
Asset Maintenance Management is a continuous process improvement strategy that helps to improve the availability, safety, reliability, and longevity of your physical assets.
