Xero has a built-in fixed asset register, for the recording and tracking of all the fixed assets, owned by the business, for example computers or motor vehicles.
Utilising the fixed asset register is critical for ensuring accurate financial reporting, as once all the asset additions and disposals have been recorded each month, depreciation can be accurately posted to the Profit and Loss Account.
Xero makes this process even easier to check, via the fixed asset reconciliation report, which can be run off at the end of the month, to check that the fixed asset register is up to date compared to the items posted to fixed assets on the balance sheet.
However, financial accuracy is not the only benefit of using the fixed asset register tool in Xero. The fixed asset register provides a list of all the fixed assets the company owns at any one time, which can be used for:
- Guarding against loss or theft.
Each asset in Xero is given an asset number. These identifiers, along with the company name, can be used to label higher risk assets, to protect against theft.
The fixed asset register also has a field available to record the asset’s serial number, as well as a description for the asset, which can be used to note who the asset is allocated to, and the asset’s location. This can be useful for monitoring the location of assets, and, for example, ensuring all allocated company assets are returned to the office, when an employee leaves the business.
As the search function in the asset register enables a search by name, number type or description, having the employee’s name in the description enables all the assets allocated to that employee to be quickly identified.
- Support for insurance claims.
Handling insurance claims for damage or theft can be handled much easier and more efficiently, when the asset’s serial number, and specific model details are recorded in the fixed asset register, alongside the original bill being uploaded to the asset purchase in Xero.
The fixed asset register has a field to record the date of expiry of any warranty, which is then easy to refer to in the event that a repair is needed.
- Decision making on asset investment
The asset register view can be sorted by purchase date and purchase price, and can also easily be exported for review. In this way, decisions on replacement policies for computer equipment, plant and equipment or vehicles can be made based on the financial data in Xero.
A review of the fixed asset register may also highlight assets, which are underutilised or unused, which may be able to be sold or put to alternative use.
The asset description may also be used to note major repairs needed for a high value asset, which can then be reviewed to determine if it may be more cost effective to replace the asset.
Having all the information on an asset purchase in one place, alongside uploading the purchase bill into Xero supports the company’s claim for capital allowances each year.
If you need help with this, or with other advice, then please get in touch with our accounting team.