Fixed Asset Management

 Fixed Asset Management for Start-Ups & SMEs: 10 Proven Best Practices That Slash Risk and Boost Profitability

Discover the 10 essential fixed-asset management best practices every start-up and SME needs to protect cashflow, stay compliant, and drive long-term growth. Learn how to build bullet-proof policies, automate depreciation, and keep your Fixed Asset Register audit-ready.

Why Fixed-Asset Management Matters for Young Businesses

For fast-growing start-ups and small-to-medium enterprises (SMEs), fixed assets—laptops, machinery, vehicles, even custom software—often represent the single largest investment after human resources. Weak controls can lead to ghost assets, inaccurate depreciation, tax penalties, and drained working capital. By embedding the right processes early, you’ll:

• Protect cashflow by preventing duplicate purchases and spotting idle assets.

• Stay compliant with IFRS, US GAAP, or local standards.

• Speed up due diligence when raising capital or planning an exit.

1. Define Crystal-Clear Capitalisation & Depreciation Policies

·       Set thresholds: Decide the minimum acquisition cost (e.g., $1,000) and useful-life criteria that trigger capitalisation.

·       Match standards: Align with IFRS for SMEs, FRS 102, or US GAAP—your auditors will thank you.

·       Document methods: Straight-line, reducing-balance, or units-of-production? Publish the rationale in your finance manual.

2. Build a Bullet-Proof Fixed Asset Master Data File

·       A single source of truth prevents duplicate SKUs and mis-classifications.

·       Must-Have Fields: Asset ID & Tag, Category & Sub-category, Location & Custodian, Acquisition Cost & Date.

3. Classify Assets the Right Way

·       Property, Plant & Equipment (PPE): Buildings, machinery, leasehold improvements.

·       Motor Vehicles: Fleet cars, delivery vans, electric bikes.

·       Computer & IT Equipment: Servers, laptops, networking gear.

·       Furniture & Fittings: Desks, fixtures, showroom fittings.

·       Intangible Assets: Internally Developed Software—track “work-in-progress” separately. Purchased Software Licences—capitalise perpetual licences; expense SaaS fees.

4. Automate Depreciation—and Test It

·       Leverage cloud accounting platforms to schedule automated depreciation runs.

·       Run accuracy tests each quarter—compare book depreciation vs. an independent model.

5. Keep Your Fixed Asset Register (FAR) Audit-Ready

·       Live updates: Add assets on Day 1, not at year-end.

·       Attach invoices & warranties: Key for warranty claims and resale value.

·       Version control: Track changes in useful life or residual values.

6. Reconcile FAR to General Ledger—Monthly

·       Set a month-end close checklist that includes matching additions and depreciation across FAR and GL.

7. Tag Every Asset You Can Touch

·       Barcode or QR codes for low-cost, high-volume items.

·       RFID for rapid warehouse counts.

·       GPS trackers for high-value mobile equipment.

8. Schedule Regular Physical Verifications

·       Cycle counts: Verify 25% of assets each quarter.

·       Condition ratings: Capture maintenance needs in the FAR to plan CapEx.

9. Implement a Robust Disposal & Write-Off Policy

·       Approval matrix: CFO sign-off for assets > $10k.

·       Fair value checks and audit trail: Ensure compliance and transparency.

10. Review & Optimise Annually

·       Benchmark useful lives, update for new standards, and sell idle assets.

Key Takeaways for Founders & Finance Leads

1. Policy beats chaos: Start-ups that codify asset rules early avoid costly restatements later.

2. Automation pays: Cloud tools cut manual hours and error risk by up to 70%.

3. Visibility unlocks growth: A clean FAR gives investors confidence and informs smarter CapEx planning.

Ready to Bullet-Proof Your Fixed-Asset Process?

At Juttan Consultancy, we help venture-backed start-ups and ambitious SMEs design scalable finance frameworks that impress investors and crush audits.

• Book a free 30-minute strategy call