Member blog article from Real Asset Management:
Preparing for a New Era of Growth
The economy appears to be on the brink of an upturn. Global opportunities are increasing and there are clear signs that overseas investors are looking hard at UK businesses once more. But while organisations across the UK have undoubtedly achieved new levels of efficiency to ride out the last five years, the vast majority have radically underinvested in new equipment: sweating the assets has become a fine art.
While reinvestment is becoming a priority, business agility remains essential given the fragile nature of the recovery. Organisations need to both prove the business case and enable effective due diligence for potential investors and buyers whilst continuing to balance acquisition with utilisation. Yet with typically poor quality asset records, most organisations struggle to provide even the most basic insight into the value and location of the asset base.
So what is the first step to fixing the problem? A comprehensive asset audit using barcode or RFID tags provides a complete picture of asset location and state. This asset register should also be linked to the finance processes, ensuring any new asset purchase invoice can be clearly reconciled with the actual asset.
This single asset register then transforms business understanding. At the simplest level, it enables finance to take a capital view from the asset register each month – or at any other time demanded by potential investors. It supports due diligence activity, with proven and auditable asset records. It facilitates reallocation of assets between group companies – an increasingly important consideration in global operations. And it also provides the information to support asset utilisation processes – in line with ISO 55000 standards – that enable a business to maximise each asset’s lifetime value.
And critically, this trusted, proven view of the current operating asset base can underpin the business case for additional investment, whether from the bank, venture capital or even potential investors in the company. So what are you waiting for, get those assets in line!