Asset Management Wollongong

Professional Asset Management Wollongong

Most businesses have more money tied up in assets than in the bank, and these are often mortgaged to obtain cash for expansion or for a line of credit. Their value calls for careful management, and because assets depreciate, the depreciation needs to be recorded, as there are tax and profit implications.

Businesses can be over and undercapitalised. Too many non-cash assets may cause cash flow problems, which in turn may case a business to fold. Undercapitalisation may cause inefficiency driving up prices and potentially losing custom. Both need to be managed, and without data it’s very easy to make a wrong decision.

Similarly organisations may hold inventory. This also needs to be managed, again because there are cash flow and profit implications.

Stock moving too slowly reduces profit. Not enough stock may cause lost sales. Either way opportunities are lost. Without proper costing along the supply chain, decisions on pricing are not much more than guesswork.

Budgets
Budgets are a primarily a method of managing mainly cash but also other assets as well. They also bring in the important variable of time. Good budgets go a long way in managing an organisation’s cash flow in specified time frames. Budgets are an important yardstick to compare actual against projected, and to make timely adjustments when required.

Allocations
Often costs need to be split up between different processes or users, a good example, which has tax implications is the split between business and private use. However there are other places where the allocation of cost can have broader implications. Consider a manufacturing or service organisation: cost of materials, cost of production, delivery, and labour. Then there can be return of faulty goods, or reworking of a job. All these impact on profits. All too often guess work is not enough.