Cost benefit of a fixed asset management system

To demonstrate the cost benefit of a specialist fixed asset management system, consider the following ROI calculation.

Example ROI Calculation for ABC Company:

Facts:
2,500 Assets
GBV = $2,500,000 (average asset cost = $1,000)
NBV = $1,250,000

Calculation of Benefits:
Current Scenario
Accountant I spends 25 hours per month manually entering data into an Access® database, generating basic reports, and processing transfers and disposals on a monthly basis. Based on a total, yearly salary of $65,000 (includes benefits and overhead costs), divided by 2080 total working hours per year, the hourly cost works out to around $32.00.

Annual cost for Accountant I = $9,600 ($32.00 X 25 hours X 12 months)

Accountant II spends 30 hours per month performing asset splits and more complex accounting events, producing depreciation calculations, posting to the G/L, closing books and generating senior management reports on a monthly basis. Based on a total, yearly salary of $80,000 (includes benefits and overhead costs), divided by 2080 total working hours per year, the hourly cost works out to around $39.00.

Annual cost for Accountant II = $14,040 ($39.00 X 30 hours X 12 months)

ABC Company has not conducted a complete physical audit  in four years. Two members of the maintenance department and two members of the IT department performed the last physical audit. The inventory audit was completed with pencil and paper over a two-day period; total costs came to $2,000. During that two-day period, the IT helpdesk and maintenance work order support fell behind schedule.

Current Total Costs = $25,640 ($9,600 + $14,040 + $2,000)

Stay tuned: next week see the cost benefits of a fixed asset management system.