Asset management has become a relevant component of the resource optimization and the maximization of the returns in the highly competitive business environment of the recent times. 

In case of Chief Financial Officers (CFOs), asset tracking KPI can be vital. In the current paper, we consider the most significant KPIs related to asset tracking as a CFO and their meaning.

Asset Tracking is understood as monitoring the movement of assets.

Knowledge of Asset Tracking 

Asset tracking is known as the monitoring of the flow of assets.

Asset tracking refers to checking physical assets to ensure that they are utilized and deployed an appropriate way. This includes property like office equipments to automobiles and heavy machinery. The tracking of items properly eliminates the situation when anything is lost but also enhances the productivity and effectiveness of the operations. Maintaining a proper asset register helps companies to reduce unnecessary expenses and raise the efficiency of work.

Asset Tracking Key Performance Indicators

The most important KPI s CFOs consider in terms of the asset tracking are as follows:

Asset Utilization Rate

A high use of assets results in increased returns. The Asset Utilization Ratio is used in assessing the utilization of the resources. Increase in the utilization rate implies that the assets are fully utilized. CFOs consider this KPI to identify items that are not utilized well and need to be redeployed or disposed of. This assists them in cost-saving and enhancing efficiency.

Return on Assets (ROA)

ROA is a measure of profitability of a given business in respect to its assets. This is a critical ratio to the CFOs since it communicates how efficiently the management uses the assets to make profits. The greater Return on Assets means that the company is using its assets to make profit in an effective manner. By monitoring this KPI, it is possible to match financial goals with asset management activities.

Total Cost of Ownership (TCO)

This highest TCO (total cost of ownership) presents a pithy argument of comprehending the entire expenditure factors of an asset in its life cycle. The total cost of ownership (TCO) is made up of the initial purchase price, the maintenance, operating costs, and the disposal costs. TCO enables the CFOs to be trained on the issue of whether to purchase or lease assets. This is so because they are able to budget and project as well as to make sure that there is proper utilization of the financial resources.

Depreciation Rate

Assets as we all know, depreciate over time and it becomes significant to keep a track of them in order to get the true financial statements and calculations of tax. The CFOs should be able to monitor the depreciation level of an asset and the financial expense using the depreciation rate. Depreciation will assist in the wise expenditures planning and encourage the adherence to the rules of GAAP.

Maintenance Compliance

Maintenance ensures the extension of the life of assets, avoidance of unforeseen failures and is a consistent need. Maintenance compliance refers to the degree of adherence of an organization to the scheduled maintenance requirements. This means that the assets are in good condition and reduce the chances of high cost of repairs and enhance the rate of compliance. This KPI is valued by the CFOs as it has both the direct and indirect effects on operational sustainability and cost-efficiency.

The Role Of Technology In Asset Tracking

Technological advances have changed the nature of asset tracking. Indicatively, it offers RFID, GPS, and IoT based solutions that have the potential of providing real time information and insights. This enables close monitoring of material and therefore, there is less risk of loss and higher level of security. Automated systems make the life easier and enable CFOs to get a glimpse of the performance of assets without going too far.

Challenges And Solutions

On the one hand, asset tracking has many advantages, but there are also a number of challenges. The typical problems are the accuracy of data, integration with other systems, and adoption. The solution would be based on the multi-faceted and strategic solution based on:

• Data integrity: It is important that the data is fixed and updated on a regular basis. Data integrity can be ensured by using routine auditing and verification processes.
• System Compatibility: In order to effectively track products, there is a need to identify a system that will perfectly integrate with the existing systems. The problem of integration can be prevented by using compatible solutions.
• User Adoption: Sometimes it is hard to make employees adopt and embrace new systems. Training can be provided and why it will be beneficial to them shown to raise the level of acceptance and decrease the level of friction or resistance.

Conclusion

Asset management is not an administrative necessity or even a strategic advantage. Asset utilization, ROA, TCO, depreciation, and compliance with maintenance is another type of KPI that the CFOs can use to enhance the financial performance. An effective tracking plan would be that which takes advantage of technology and address the hitches. These are the signs that no CFO should fail to learn as a significant objective towards a more successful management of assets and, eventually, a more secure balance sheet.