Enterprise current asset management process

1. What is enterprise asset management?

Enterprise asset management is the process of managing, monitoring and protecting the assets of an enterprise, including both tangible and intangible assets. The main objective of enterprise asset management is to ensure that all assets are used effectively and protected from risks and losses.

Managing the process of using corporate assets is an important task, requiring meticulous management and the use of appropriate asset management tools to ensure that corporate assets are used effectively and contribute to increasing competitiveness in the market.

2. Current asset management process

2.1. Step 1: Classify current assets

Types of current assets include:

• Cash and cash equivalents: Includes cash and assets that are easily convertible to cash such as short-term deposits, checks, and savings accounts.
• Inventory: These are goods, products or raw materials that a company holds for sale or use in the production or business process.
• Accounts receivable: Usually appears in the “short-term receivables” account and includes amounts that a company has provided for goods or services that have not yet been paid by customers or partners.
• Other current assets: Include short-term investments, remaining contract values, other short-term payables and other assets that the company owns and intends to use in less than one year.

2.2. Step 2: Identify related risks

• Liquidity risk: This is the risk associated with the ability to convert assets into cash quickly and without losing too much value.
• Value risk: This is the risk associated with fluctuations in the value of current assets. Assets such as cash, inventories and receivables may be subject to value risk due to changes in market conditions, supply and demand or changes in prices.
• Credit Risk: The Company may face credit risk when customers do not pay on time or do not pay their debts in full. This may affect the financial capacity of the Company.

2.3. Step 3: Plan for current asset management

• Identify current asset management objectives: Objectives may relate to optimizing liquidity, enhancing asset value, reducing risk, or improving financial performance.
• Develop policies and procedures: Policies and procedures should include rules for collecting, tracking, reporting, and disposing of current assets.
• Working Capital Budgeting: Ensure that there is enough capital to maintain day-to-day business operations and meet short-term financial needs.
• Monitoring and evaluation: Helps detect problems early, identify improvement opportunities and adjust current asset management strategies as needed.

2.4. Step 4: Monitor and control current assets

• Track current assets online: Update information on cash balances, inventory, receivables, and other current assets to get an overview of current assets.
• Analyze financial ratios related to current assets: Through ratio analysis, you can spot potential problems, identify opportunities for improvement, and make data-driven decisions.
• Make adjustments as needed: Consider decisions such as controlling spending, increasing financial leverage, or adjusting collection policies to ensure current assets are managed effectively and meeting business objectives.

2.5. Step 5: Reporting and Evaluation