Why use third party software as your Fixed Asset Depreciation Module?

But our ERP has a fixed assets module...

We are sometimes asked the question:

Why should we use a third party piece of software to manage our fixed asset depreciation instead of our accounting system or ERP?

Given a lot of such systems do have a native fixed asset module, it’s a fair question to ask and this article addresses some of the issues to consider.

Before we get into the details, it’s worth outlining how a third party depreciation system is best set up.

With the increasing availability of APIs as more and more businesses move to cloud-based systems, it is easy to transfer data automatically so use of different systems doesn’t cause the manual effort it once did.

At AssetAccountant™, we integrate with a growing number of accounting systems and ERPs where we are able to automatically extract “draft assets” from the underlying GL or AP system that allows users to set their tax and accounts depreciation.

Once this is done, AssetAccountant™ posts the journals back to the accounting system and/or reporting data into tax compliance systems so even those steps are automated.

AssetAccountant™ is free to use or trial for up to 25 assets.

So, what are the advantages of using a dedicated system to manage your depreciation?

There are a wide range of scenarios that we see at AssetAccountant™, and we’ve given some examples of these further down below.

For our users who are faced with these requirements, the benefits that they get from using AssetAccountant™ include:

  • No requirement to work on custom development within the core accounting system. Some larger accounting systems and ERPs are capable of custom development to meet user specific requirements. However, this work is often time consuming and requires a specific skill set which means it can be expensive. Further, custom development can cause issues with later updates and upgrades where these may not be compatible with the custom work that has been done.
  • Avoiding ongoing maintenance of the accounting system. Even in the cases where an accounting system has been perfectly configured, requirements frequently change – this could be caused by a new business process, acquisition or updated tax rulings. In these scenarios, updating the custom configuration can add further ongoing material cost.Third party dedicated software can materially reduce this cost by providing coverage for all these needs as standard functionality.
  • No need to resort to spreadsheets. In many cases, either when the accounting system cannot be customised or you encounter a scenario it can’t handle, there is often no choice but to adopt some form of spreadsheet use as a workaround to one or more limitations. Time after time, we see this happening and once a spreadsheet has been created for this purpose, it is very hard to then move back into the accounting system without a large scale project to undertake.

Our organisation was looking for a standalone cloud-based fixed asset register that could calculate depreciation for multiple companies. AssetAccountant was a perfect solution that removed the need for tracking assets and calculating depreciation through spreadsheets.

The team at AssetAccountant were very responsive throughout the implementation process. The system is straightforward to use and has various options for both asset tracking and depreciation to make it suitable for most organisations.

Con Kirgianis - Finance Manager, KWP!

When is it appropriate to consider a third party depreciation management system?

If your fixed asset depreciation calculations are relatively straightforward, the use of your native accounting software module is almost certainly appropriate. It will (or should) work well as part of the suite offered by that provider and it makes sense that there is a general preference to minimise the number of systems that you might use. However, for many businesses, their accounting system will not handle all their requirements meaning that the reasons that they look to a third party system to manage depreciation include:
  • A requirement for multiple sets of books for accounts and tax
  • Large volumes of data to manage meaning that functionality such as the following saves a vast amount of time:
    • Unlimited classifications such as cost centres, locations etc
    • Custom fields per asset
    • Audit trail reports
    • Efficient performance at scale
  • Some specific treatments that occur frequently:
    • Different cost bases and acquisition dates by book
    • Components
    • Partial disposals
    • Bulk actions (disposals, revaluations, etc)
    • Work in progress / Assets under construction
  • Forecasting
  • Management of complex accounting matters such as:
  • Enablement of full tax calculations:
    • Pools such as the Low Value Pool, Small Business Pool or Software Pool
    • Second element of cost
    • Private/taxable use
    • Tax rulings maintained and updated by AssetAccountant™ including the real-time ATO effective life lookup tool, backing business investment & luxury vehicle cap limits
  • Leases and hire purchase calculations are also required

Depreciation calculations and journals for both tax and accounting methods is made easy

  • AssetAccountant™ is a comprehensive cloud-based fixed asset register for managing depreciation developed by Accountants for Accountants.
  • AssetAccountant™ combines sophisticated interpretation of Tax and Accounting rules with a modern user interface design, to simplify the process of creating and maintaining fixed asset registers.
  • AssetAccountant™ is priced to suit accounting firms and businesses of all sizes.
  • AssetAccountant™ is currently available in Australia and New Zealand.


Australia/ New Zealand

Contact us to learn more about AssetAccountant™ & how it can help you master asset depreciation

P (+61) 1300 984 378

E info@asset.accountant

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