What is asset management for small businesses

1 February 2023

5 min read

Please be aware that this is a guide only and you should seek specific advice for your business*

Every business needs to have some form of asset management in place, but this will vary depending on the size and maturity of your company. For some businesses, this may simply mean keeping track of your assets and their changing value over time, so that you can accurately record them on your books.

For others, it could mean investing in stocks and other financial instruments to help grow the value of your profits and fund further expansion.

First, you should re-familiarize yourself with the difference between fixed assets and current assets, and the role they play within your business.

What are fixed assets?

Fixed assets are those tangible, long-term assets that a business uses in its day-to-day operations. This includes things like land, buildings, vehicles, machinery, office furniture and computers.

Keeping track of these fixed assets is important for several reasons. First, it means that as a business owner you’re aware of where all your assets are located, helping you to keep track of loss and theft. By managing your fixed assets closely, you can also identify damage and other problems quickly, allowing you to prevent equipment from falling into disrepair and saving money in the long run.

Finally, fixed asset management is important for recording depreciation in your company accounts. It’s important for both accounting and tax purposes, as it allows you to write down the cost of a fixed asset over the course of its life span, which can have an impact on your bottom line.

Managing your fixed assets

You can hire an accountant or fixed asset manager to oversee your fixed assets and keep your books updated, or you can keep on top of these assets yourself. Use a spreadsheet to create an asset register with a record of key information about each fixed asset within your business. This includes the purchase date and price, the location of the asset, and any changes over time such as repairs, refurbishment or damage incurred. You can also use asset tracking software to help you maintain accurate records and calculate depreciation over the life cycle of your assets.

Current assets

Current assets are a company’s short-term assets that can be readily converted into cash. This includes inventory like stock and raw materials, money owed to the business, investments in financial instruments like stocks and bonds, and cash deposits.

Current assets are usually liquidated within one financial year and therefore provide businesses with quick access to cash. This is important in times of emergency, such as when a business is facing cash flow problems. It can also help to finance expansion plans or shareholder dividends if financial investments are used to grow the value of company profits.

Managing your current assets

You could hire an accountant to manage your current assets, do it yourself, or appoint an asset management firm. Such a firm can provide you with a dedicated investment plan based around the financial needs and goals of your business. Their primary role is to make informed investment decisions on behalf of their clients, which will often involve creating a diversified portfolio of different investments. The aim is to maximise returns for your business and reduce risk.

However, remember that many asset management firms require a minimum level of investment, which may be more than your business is willing to pay. Instead, you may find that a business savings account is a better way of growing your finances and achieving your business goals.

Choosing the right asset manager for your business

It’s essential to do research before hiring an asset management firm. This includes checking the firm’s legal credentials, its testimonials from previous clients, and its investment record. For example, it may be important for you to check that your company’s finances would not be used in any unethical investments.

Remember that your approach to asset management will vary depending on the size, maturity and aims of your business. Whether you choose to do it yourself or hire additional support, there are lots of resources and options available to you.

Further resources to support you and your business

As you can see, there are several ways to approach asset management depending on the size and goals of your business. For more information on other ways to manage your overall business finances, we’ve put together a guide to help you.

At The Co-operative Bank we care about you and your business, which is why we’ve created a number of these useful guides.

If you’d like to learn more about creating a business continuity plan, our guide can provide support.

If you’d like support on invoicing, you can find our guide on chasing unpaid invoices here.

For more helpful support and resources, our Business Exchange hosts a wide range of content tailored to you and your business.

*While all reasonable care has been taken to ensure that the information provided is correct, no liability is accepted by The Co-operative Bank for any loss or damage caused to any person relying on any statement or omission. This is for information only and should not be relied upon as offering advice for any set of circumstances. This is merely a guide and each business is unique in its requirements. Specific advice should always be sought in each instance.