Asset Management: Definition, Benefits, Functions and Tips for Companies

Asset management – Every company must have one or several assets at once, ranging from tangible to intangible such as land, buildings, production machinery, production equipment, copyrights, stocks, trademarks and others. Companies need to manage their assets by carrying out proper asset management.

This needs to be done because assets are the most important part of a company that must be managed properly. That way it can provide benefits for the company, as well as encourage the achievement of company goals.

In this article, we will discuss in more detail about asset management, starting from the meaning, benefits and goals, cycles along with tips that you need to apply in managing assets.

Definition of Assets

Before knowing what asset management is, first consider the explanation of assets below.

Assets are all things or things that have economic value that can be owned either by individuals, companies or organizations and even the government that can be assessed financially.

If seen explicitly, from an economic point of view, assets are goods (thing) or something (anything) . These goods can be owned by a person, private organization or government that have economic value , commercial value , and exchange value .

In addition, assets can also be interpreted and viewed from an accounting perspective such as:

  • Current assets (cash and other current assets)
  • Long term assets or fixed assets ( long term assets such as houses, real estate, factories, tools and equipment)
  • Prepaid and deferred assets ( expenditures for future costs ) such as insurance, leases and interest
  • Intangible assets such as brand or trademark rights , patents, copyrights and goodwill .

Well, that’s an explanation of assets. Now you can understand more about what asset management is.

Company Management

Definition of Asset Management

In general, asset management is a process of managing assets owned by individuals, organizations or companies that are carried out effectively and efficiently, so that the goals set can be achieved.

According to Gima Sugiama (2013), asset management is a science or art that provides guidance in wealth management. This asset management includes the process of planning, acquiring, appraising, operating, maintaining, renewing and writing off to transfer assets effectively and efficiently including inventory and legal audits.

According to Hariyono (2007), asset management is a structured process that includes all assets as a wealth to support the provision of services. The concept of managing or managing assets and liabilities simultaneously was first developed by the banking and insurance industry. This concept can also be used to improve the operational activities of any business, including the MSME business.

Meanwhile, Kaganova and McKellar said that asset management is the process of making decisions and their implementation in accordance with the acquisition, use and distribution of the assets themselves.

According to Danylo and Lamer (1999), asset management is a methodology for efficiently and fairly allocating resources among valid and competitive goals and objectives.

Asset Management Objectives

After discussing the meaning of asset management, the next discussion is the purpose of asset management. There are several objectives of asset management in a company, including:

1. Ensuring the Ownership Status of an Asset

Asset management is carried out in an effort to avoid the risk of asset misuse. With proper management, ownership of an asset can be clear.

2. Choose the Right Asset Investment

Reducing the number of losses is the goal as well as the benefit of carrying out asset management. By making a priority scale and using a budget on the best assets, the company can reduce the risk of future losses.

3. So that asset values ​​remain high, maintained and have a long life span

Asset management is carried out as an effort to build awareness of the owners so that they continue to maintain the value of their assets. In asset management, the owner will learn if the value of the asset increases or decreases depending on how the company or a person manages it.

4. Ensuring an Asset, So It Can Generate Maximum Profits

Asset management is carried out to determine the status and condition of assets. When carrying out planning and maintenance, the owner of the asset can find out whether the asset still has a high value and continues to increase or not. This asset management can aim to write off assets if they do not have high value and instead cause future losses.

See also  difference between atomic mass and atomic weight

5. Achieving Optimal Use and Utilization of Assets

Asset management has a goal so that business owners can also utilize their assets optimally and get the maximum benefit from the assets they own. Periodic management of these assets can make the company’s assets more careful before purchasing assets, so that the company will choose assets with increased profit levels in the future.

6. So that costs can be minimized during the age of an asset

With asset management, company costs can be minimized, so that the company’s finances can run well.

7. As a Requirement for Safeguarding Assets and Funds

Asset management is carried out by the company in an effort to allocate assets so that they can be used efficiently in the long term. That way, companies can prevent asset values ​​from dropping or wasteful use of assets and funds.

8. As a reference in preparing the balance sheet in preparing reports

The purpose of carrying out further asset management is as a reference in making a balance sheet. By knowing a balanced balance sheet, the preparation of financial reports can be maximized.

Asset Management Benefits

By implementing asset management in a company, the company can reduce non-optimal expenses and increase income. However, there are other benefits of asset management, including:

1. Maintaining Asset Value

This benefit is to maintain the value of company assets. With careful planning, the company can reduce the risk of losing the value of its assets due to loss or damage. Therefore, the company’s asset value will remain high and can survive even in unfavorable situations.

2. Increase Security

Considering that the number of assets owned by a company is not small, the implementation of asset management will be beneficial to keep assets safe and avoid the risk of loss or damage. In this case, there will be a special team that has the task of handling it, so the company doesn’t need to worry because the assets have been recorded and stored properly and safely.

3. Facilitate Budgeting

Asset management is carried out with a special system, so that it can facilitate the preparation of the company’s budget. This information system allows companies to know the condition of their assets, so that the budget preparation process is more practical and flexible.

4. Prevent Excessive Purchases

Another benefit of asset management is that it prevents companies from over-purchasing assets. With existing data from the asset management team, companies can prepare budgets based on priorities and reduce costs.

5. Make Risk Management

Asset management is carried out to manage assets and prevent the company from experiencing losses in the future. However, asset management cannot predict future threats. Therefore, the application of asset management must also be complemented by the creation of risk management to help companies manage the uncertainty of their assets in the future.

6. Monitor the arrangement of assets

The preparation of these assets is an activity that the company needs to watch out for. If used continuously, the quality of assets will decrease in terms of function and value. Therefore, the role of asset management is to monitor the required assets.

How Important is Doing Asset Management?

If you look at how important it is for companies to carry out asset management, then asset management is very necessary and important to do. This is because with proper and clear asset management, the company can maintain the value of its assets to remain stable.

Asset management can also help company performance to increase profits both in terms of income and achieving goals.

If the company implements good asset management, the company can also minimize risks that can occur and cause damage or decrease in asset value.

However, if a company does not carry out asset management, it cannot know what has happened to its assets, whether they have experienced depreciation or profit. If the company’s assets experience depreciation, the related team in asset management must make asset management. In addition, there is also a report that must include data on depreciation in the financial statements, which will then be considered in the steps to be taken.

From a financial point of view, recording of asset management can be done by compiling a company budget, for example, construction, purchasing and maintenance of goods. From this record, it will be a consideration for the company in making decisions to purchase new assets in order to save expenses.

In accordance with the explanation above, asset management also goes hand in hand with risk management. This is because the company also needs to consider the risks that will come in the future or those that may threaten its assets.

Asset management is very helpful and makes work easier in compiling financial reports. The finance department requires data and must be attached when reporting the Corporate Income Tax Return at the end of the tax year. Assets owned by the company also affect the calculation of income tax that must be reported at the end of the tax year.

Stages in the Asset Management Cycle

In carrying out asset management, there are several cycle stages that will occur, including:

1. Planning for Asset Requirements

The first cycle is to plan the company’s asset needs and make a management plan for both the short and long term. This includes provision, maintenance, inventory and other needs. This process aims to minimize losses and increase profits.

2. Asset Procurement

The company will then procure assets by buying goods or services according to the company’s needs. This can be done personally or through another party to provide the asset.

See also  What is Economic Growth Theory

3. Inventory

Furthermore, in this stage or cycle, the company will carry out an inventory process such as recording and checking the quality and quantity of assets. In this cycle it is necessary to pay attention to several conditions such as assets in good physical or non-physical condition as well as juridical or legal.

4. Legal Audits

The next stage in asset management is a legal audit or legal due diligence. This cycle has the objective of examining ownership status, procurement procedures, system and flow of asset transfers and finding solutions if assets get caught up in legal issues.

5. Operation and Maintenance

In this cycle, each asset owned will be used to carry out tasks and work according to its function in order to achieve company goals and carry out maintenance so that it can be used in the long term.

6. Assessment

In this cycle, the company will determine the value of the assets owned so that it can find out in detail the value of the assets owned and the history of assets that have been transferred or have been written off.

7. Removal

If an asset is considered unprofitable and will be written off, then this process is divided into two parts, namely:

  • Transfer of assets is the transfer of rights and/or responsibilities, authorities and utilization of a work unit to another work unit within one’s own environment. For example equity participation, grants and others.
  • Asset destruction is an act of destroying or destroying assets to reduce assets because they are considered to be no longer being used.

8. Asset Renewal

After an asset has been used for a certain period of time, the value or function of the asset may experience depreciation. Assets that are not considered productive can be renewed so that they can be used again until their economic life ends. This renewal or rejuvenation is carried out in the form of repairs or replacement of spare parts so that the assets can work as before.

Tips for Doing Company Asset Management

In carrying out asset management, there are several tips that need to be considered so that mistakes do not occur in your business. Here are tips on doing asset management:

1. Monitoring or Checking All Owned Assets

When you are just starting asset management, it is important for the company to routinely check the value of the assets it has. This check can be done to avoid the risk of unexpected expenses due to the burden of unrecorded asset ownership. An example is carrying out inspections every month so that the company does not have to pay taxes on cars or motorcycles that have been damaged.

2. Understand the Life Cycle of an Asset

You need to understand the asset life cycle which can make it easier for companies to manage and use their assets. In addition, companies can also save time in making decisions to update or delete assets.

3. Create a schedule of incoming and outgoing cash flows

A company must have a lot of cash flow and outflow, so it’s no wonder people often forget that this is related to the company’s total assets. But to keep it under control, you can make a schedule that shows when cash flows in and out. This schedule will be useful for maintaining the balance of cash assets and business liabilities.

4. Determining Person in Charge of Assets

In a company, of course, asset owners cannot continuously monitor the condition of their assets. This is because there are also many other obligations and businesses that must develop, making one’s time in supervising assets increasingly limited. Then the owner of the asset or company can choose someone to take responsibility for the company’s assets.

5. Study Asset Depreciation

Depreciation or depreciation of assets is an important point in carrying out asset management. That way the company can avoid and facilitate decision making when assets cannot be used optimally.

6. Use Smart Set Management Solutions

At present, of course, there have been many technological advances and can help the process of managing company assets. The asset management process no longer needs to be recorded manually because there is already a company asset management information system, so you can do wealth management more easily without having to flip through thick paper.

Fundamentals of Corporate Financial Management


Well , that’s it, Sinaumed’s is an explanation of asset management starting from the definition, benefits and functions, the asset management cycle and tips on managing assets. Hopefully all the discussion above is useful for Sinaumed’s.

If Sinaumed’s is interested in corporate management books, then Sinaumed’s can find out more by reading the books available at . sinaumedia provides books to enrich your insight so that you have #MoreWithReading information .

Author: Christin Devina

Also read: