If your business has assets, you are bound to have a need for asset recovery at some point. But what is asset recovery?
Every asset in your business has value, and there are ways to maximize said value once the asset is no longer viable. Figuring out how to make the most of your assets isn’t always easy, though. What is the best way to handle recovering assets? How do you get the most value out of your assets?
Keep reading to learn what asset recovery is, its three components, and why your business needs to have a plan in place for recovering assets.
Usefulness of Asset Recovery
Asset recovery is a pretty simple concept – your assets have value as you use them, but what happens to them at the end of their life span? What happens if the asset isn’t being used? What if the customer didn’t pay for delivered assets and you want to recover the assets?
These questions point back to asset recovery. Asset recovery is making use of your unused or end-of-life assets so they add value to your company’s bottom line – essentially a way to make the most of assets that are no longer in use or viable. It is also important to point out that asset recovery can be used for assets owned by your business, and it can also be something you do when your assets have been wrongfully or fraudulently taken.
Regardless of the situation, the end goal is the same – to maximize the value of your unused assets, or, in other words, to recover their value.
3 Components of Asset Recovery
Depending on the type of assets you have and whether you are recovering assets internally or from someone else, you will use one of the following three components of asset recovery to repossess your assets.
1. Idle Asset Identification
Whether for general accounting, tax, or other business purposes, it is crucial that you properly identify your unused, end-of-life, or unpaid assets. The failure to identify them as idle assets, they are effectively draining value from your company’s books.
Assets can be anything – heavy equipment, buildings, or even land or landed property – and surplus assets may be non-capital surplus or capital assets. You need a consistent plan in place to ensure your assets are properly labeled before deciding whether to redeploy them or divest.
Once you’ve identified your assets, you can figure out what you need to do with them to maximize their value in your company. Redeployment is the most practical method of recovering assets. Not only will the asset find use elsewhere, but you would also not be needing a new asset. This saves money and time.
One way to redeploy assets to use pieces and parts of an unused or end-of-life asset as replacement parts. This is common in both the electronic and automotive industries as some parts last much longer than others.
If you have assets that cannot be redeployed, there are still ways you can recover them. Disposition encompasses the many ways you can get rid of an asset: disposing of, donating, recycling, scrapping, or selling.
Selling or scrapping it should provide capital to recover some of the costs of the asset and donating it or recycling it may have tax benefits or other write-off opportunities – this depends on where you live and what you are getting rid of. Disposing of an asset is likely the least productive approach.
Why Use Asset Recovery to Maximize Value
Without asset recovery, you may have surplus assets on hand that contribute little to no value to your company. Alternatively, you could have rights to assets that are in the possession of another entity and want them back.
Asset recovery gives you the platform to manage unused assets, end-of-life assets, and fraudulently-acquired assets. If you don’t use asset recovery, everything you’ve invested in that asset has effectively gone to waste.
Below are three key reasons to use asset recovery for your unproductive assets:
- Accounting benefits: Assets that sit on your books without a use cost you money. Getting unproductive assets off your books will help balance your assets and liabilities.
- Capital benefits: An asset that isn’t being used isn’t providing any value. Selling unused assets is one way to add value to your bottom line through asset recovery.
- Tax benefits: Certain types of disposition may provide tax benefits. Donating or recycling assets are two ways to receive tax benefits for your asset recovery practices.
Every type of asset you have may provide a different benefit. It’s good practice to put a plan in place for asset recovery based on the type of assets you have.
How Asset Recovery Services Can Help
While some people and organizations can handle their asset recovery internally, that’s not always the case. If you need help recovering assets in court because of embezzlement cases, bankruptcy proceedings, or matrimonial disputes, an asset recovery service can help.
Asset recovery services, mostly comprised of investigation professionals and former law enforcement, are trained and specialized in asset searches and private investigation. They can uncover hidden assets, overseas bank accounts as well as financial fraud. Asset recovery specialists are also acquainted with the legal system, can resell or repossess seized assets and properties.
Looking for a private investigator to help you with your asset recovery needs? Contact Beau Dietl & Associates today to find out how we can help you recover your assets.