Is It Necessary To Have FSA For The Physical Asset Management?
Babies were born to be a great individual. They could do nothing than crying and playing with toys. But when they grew up, their life had been changed. They wouldn’t think about toys anymore, they thought about how to live, how to survive, and they started to make some businesses to support themselves. They bought some assets, physical and non-physical that needs to be managed. Today, they know that living in the year 2017 is very difficult. They need physical asset management for their business to stay alive. Physical asset management is the practice of effectively using the physical assets of the company. Many companies have an in house department taking care of that but in some cases, an outside party is called in to help them out. For this to work, the team has to know first hand the assets of the company. To prevent duplication, it should point out the depreciation value and the utility in the process of production. This process is better known as cost analysis as this will increase economic life and reduce component failures such as the incidence of theft and mistakes in the procurement of supplies and equipment.
It can also assist management in tax planning and forecasting business solutions which could save the company millions of dollars. For instance, production suffers if machines break down frequently. This is normal if the machine being used is already old. The company can try to repair it but if the cost is much higher than a brand new one, then perhaps they should try to sell this at a reasonable price then use the money to buy a new one. The same goes if a company has hundreds of stores and only a few of them are making a profit. Since the unprofitable ones are not really bringing in revenue, perhaps it will be a good idea to close them.
This is something that a lot of companies are doing now due to rising costs of fuel and the economic slowdown. Rather than filing for bankruptcy, they would rather slash a few thousand jobs and close down stores. Some companies that have done so include Starbucks, American airlines, JP Morgan and a lot more. The other option is for some companies to merge just to stay afloat. The bottom line is that physical asset management gives the company an idea as to what they actually have. This will prevent them from missing out on opportunities which they could have jumped to when this presented itself.
One way of keeping track of the company’s assets instead of doing it by hand is by investing in asset management software. This will allow those in management to gain access to it whenever it is needed via the company’s intranet. This can be done by bar coding everything similar to what is done in the supermarket. This will enable the in house team to just scan the item which not only increases accuracy but helps to save time on repeated inventories.
There are four stages which make up the physical asset management reach the best results (it is based on my own experiences, the result may very depends on how the condition is):
- Planning and procurement. Here the company sees what is available and then assess what is needed. They will look at various suppliers and then buy the machine that is affordable and efficient.
- Using Equipment. those who use it have to use the equipment in order to maximize its productivity.
- Manage Your Finance. is called financial management. Here, the company will see if it was worth getting the equipment. It also includes ensuring accurate tax, depreciation and other costs.
- Disposal and Replacement. If the machine is obsolete, it has to be replaced in compliance with environmental regulations.
Companies will be able to practice effective physical asset management by following the life cycle. Sometimes tough decisions have to be made in order for the company to survive. But those 4 stages would be great if those are supported by a good financial situation, at least….you have a small business in your own home. As you know that asset management is very important nowadays, then you have to do something for your family, your wife, your son.
Perhaps, all of you asked me “how to do that?”
Well, this is the answer: You should have a flexible savings account to manage your physical assets. Is it necessary? Yes, it is. You must. Because there are so many people looking for ways to save money, and in that endeavor there is one financial tool that has become very popular. Known as a flexible savings account, or FSA, they are an easy way to help set aside funds that can be used to cover certain expenses that might be incurred. In these programs, an employer will take money out of an individual’s paycheck and place it in a separate account. It is a financial account that offers certain tax advantages, the most common of which is having the deposited amounts tax deferred. Another advantage of them is that they are not subject to payroll taxes. This also works to increase the donated amount. These plans are also known as flexible spending arrangements, with the most common type being a medical FSA. These are used strictly in instances when an individual incurs medical expenses above and beyond what their insurance plan will cover. Some of the most common needs for these accounts are for deductibles, co-pays, and charges such as out-of-network billing.
The great benefit of the FSA is that the money can be taken out before the worker sees or misses it. But the money does not have to be used at that moment. Generally, it is placed into the account and builds until such a time as expenses become too much and the individual needs assistance paying them. At that point, the account can be accessed and the funds used in the appropriate way. When utilized as a medical FSA, the money is meant to only be used for their specified purpose. However, monitoring this is quite difficult. Often, individuals will have these accounts established and, later in the allotment period, they may find themselves in a bind financially.
There are certain methods used to withdraw funds from these accounts. The owner can either go with a paper transfer, but more than likely everything will be handled with a FSA debit card. It is much easier to use and simplifies the bookkeeping process for the employer. FSA funds are started over at the beginning of the annual cycle, which is determined by the employer. Employers do take a risk in establishing these plans for employees since the maximum allowed amount of the fund might be accessed at the beginning of the cycle, regardless if the entire amount has been set aside or not. For example, if the account is set to have a balance of $2,000 by the end of the 12-month cycle, the employee may access the entire $2,000 the first month of the cycle, even though it has not been deposited. If the employee leaves before the money can be repaid, the employer loses out on the difference.