Financial visibility of assets: Out of sight shouldn’t mean out of mind!

As with our first blog, by assets, we mean the equipment used to make a finished product (i.e. manufacturing) and those businesses that make money from their assets by leasing or renting them out – from trucks to scaffolding. In either case, the assets generate income for their owners, so need to be kept in tip-top operational order and deliver an ROI. In other words, like any human resource, they too need to earn their keep.

Why does financial visibility matter?

The hard truth is that you can’t effectively report on or make decisions about assets you can’t see in your financial systems. And the chances of doing so (easily) if you are reliant on integrated or otherwise third-party software or cumbersome manual processes are low, or at the least, challenging.

As a workaround, companies have been known to create projects to log maintenance work and associated costs. While this works after a fashion, this approach often results in disjointed data and a lack of actionable insights – so is less than ideal.

So, what benefits would having complete financial visibility of your assets deliver your business – all from one place? How would it make life easier and make the range of information generated for reporting (and decision-making) more accurate?

How about unified financial reporting across multiple assets?

Now, it’s one thing to be able to track how much you’re spending on maintaining your assets, but imagine if you could also see the revenue they (all of them) generate and any decline in productivity that impacts their financial value. And, if you could see what happens to your bottom line if you replace all or some of them?

That’s where a unified financial report shines. By having everything you need to know about your assets in one place (including make and model), you can evaluate their overall and individual performance - leading to more informed decision-making about the value they collectively or separately deliver to your business.

Unified financial planning also enhances your risk assessment capabilities. How? It allows you to take a holistic view of the risks associated with each asset, helping you to identify potential vulnerabilities (for example, asset 32A, in particular, is breaking down regularly) and implement mitigation strategies (like sending your engineer to asset 32A to overhaul or service it before it grinds to a complete halt – right in the middle of a critical production run of chocolate bars for your new client).

How else can full visibility help? As you have the make and model of each asset all in one place, you can spot if you’re having ongoing issues with any particular brand of asset (in terms of performance, downtime, running costs, and lifespan). Which, in turn, helps you make better procurement decisions when you go to replace them or expand.

Getting real with budgeting and forecasting for capital-intensive projects

Access to accurate financial data about your assets helps you create realistic budgets and forecasts. This can enhance your financial planning and make sure that funds are allocated to the most beneficial initiatives. So, when you want to expand, you know exactly how much you need to forecast to spend on the extra assets needed.

And with an accurate budget in front of you, you have a clear financial framework.

With the level of detail available when you have united financial visibility, you can anticipate your maintenance expenses for any project (including labour costs), and improve your ability to predict resource allocation. This means you’ll not only be able to ensure you have enough fit-for-purpose assets for a critical project but also come up with a budget to improve resourcing. All while your business remains on the right side of liquidity.

And if things start to go wrong with an asset (and because you’re constantly monitoring each and every asset)? You can make a timely decision about whether it’s pulling its weight financially or its value is rapidly depreciating, so it’s due for replacement, refurbishment, or a long and happy retirement.

Managing costs and maximising ROI on assets
When you can record your scheduled preventative and corrective maintenance procedures, inventory costs, and expected and actual outputs against an asset's ownership budget, you can easily check if it’s delivering a return on investment (ROI).

And if you can automatically highlight (say, on a customisable dashboard on your operations manager’s device) a particular asset that’s consuming way more than its fair share of maintenance (from ad hoc to preventative), labour costs, and inventory – then even better.

This means you can take a proactive approach to ensuring that failing assets are identified and replaced or upgraded before they impact your operational capabilities and upset your financial performance. You won’t get caught out and miss or muck up delivery deadlines or have to pay frustrated employees to stand around drinking coffee because the production line has stopped.

Going back to dashboards, your CFO could also have an assets dashboard so they can see at a glance their total value and if they are costing more than they should. And your maintenance manager could have one, too, to highlight (in order of urgency or probability) which assets need to be serviced next.

Power-up your asset management with Dynamics 365 Finance and Operations

With Microsoft Dynamics 365 Finance and Operations (F&O), you have fingertip access to a complete range of fully integrated Asset Management (AM) capabilities.

In fact, it takes care of all the ‘what-ifs’ discussed in this blog. You can run cost-benefit analysis reports at the drop of a hat and track asset value, performance and ROI. You’ll be able to set and meet accurate budgets, forecast future costs, and more – meeting the needs of the multiple stakeholders in your asset management activities.

If you’re in an asset-intensive industry, you’ll know that financial visibility isn’t just about tracking costs; it’s about understanding the full lifecycle of each asset and its impact on your bottom line. However, by integrating financial perspectives into asset management processes, Dynamics 365 F&O users can track financial impacts, generate purchase orders, and manage asset-related costs seamlessly – all within the one environment.

Microsoft Dynamics 365 F&O offers a comprehensive solution integrating asset management with financial reporting. Outcome? You can make informed decisions that drive operational efficiency, performance, and, critically, your profitability and ability to compete.