Best Practices On Fixed Asset Recovery In LATAM Market Intelligence

*This report was last updated in Q4 2018. Please click on request customization if you are looking for an updated version of this report

Report Coverage

  • Identifying Buyers
  • Role of a Asset Management Broker and KPI's
  • Asset Management Broker vs. Supplier
  • Negotiation Areas for Fixed Asset Recovery Process

Table of contents

  1. Executive Summary
  1. Solution Design
  1. Global vs. LATM Fixed Asset Recovery Process Overview
  1. Fixed Asset Recovery Process/ Best Practices
  1. Role of a Asset Management Broker and KPI’s
  1. Asset Management Broker vs. Supplier
  1. Negotiation Areas for Fixed Asset Recovery Process

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Regional Market Outlook on Best Practices On Fixed Asset Recovery

The best engagement model is to associate with a asset management broker, as there is ease of doing business with them, takes full responsibility of the asset being disposed, has good financial control, national or global level service coverage, sub-contracts with local/small/large asset management players, reduced operational overheads, increase in cost savings by consolidation of asset management vendor to one.

Identifying Assets

Create an inventory spreadsheet

  • To begin selling your business assets, create a spreadsheet which be can use to inventory all of the company's assets, with columns for financial information and a description of each item.
  • You also want to create columns that will allow you to list the year each item was bought or placed in service, its condition, and any deductions that have been taken.
  • Note particularly items that you purchased with your own money (rather than with business funds), or that you previously bought for personal use and then converted to business use.
  • Create a description column and use key words that are useful to identify particular items. For example, if you have two printers which are different colors, you might include the color in the description.
  • Put the tax category of each item in a separate column. You'll want to identify whether each piece of property is a capital asset, a depreciable business property, business or commercial real property, inventory, or raw materials.

Determine who owns the property

  • Determine how each asset was purchased, who paid for it, and whether there are currently any liens or outstanding loans or other encumbrance
  • Even though you're using something in your business, it may actually belong to someone else. If that's the case, you don't want to sell it.
  • For example, if  business as a general partnership, and your partner purchased two computers for the business from their own funds, it's up to them whether they want to sell those computers. If they do, that money technically is theirs unless they choose to pour it back into the business
  • If a property is financed or is being used to secure another debt, you'll need to check your records to determine how much is owed on the property. If you owe more on the property than the item is worth, you won't be able to sell it.
  • On the other hand, if you want to sell an item that is worth substantially more than what you owe on it, you're free to sell it provided you pay the creditor the amount you owe them

Separate salable assets

  • When organizations is just selling assets to free up a little more cash for the business, focus on those with no liens and that have the most value. These items likely will bring you the most cash
  • Typically, when not liquidating your business an not want to give the appearance that you are. Selling significant assets could give that impression and make your clients or customers feel less secure about continuing to give you their business.
  • Other property that probably should be included in the salable pile includes items that are outdated or in need of an upgrade. For example, if you have three computers, two of which are more than five years old, you probably want to sell those old computers and raise some cash to replace them with newer, more efficient machines that will be under warranty.

Valuing Assets

Check the tax basis

  • When to  sell business assets, one must report the resulting capital gain or loss on the business's taxes
  • Whether you realize a gain or loss depends on the amount for which you sell the property and your tax basis in that property.
  • To determine your tax basis, organizations have to look at your records to see exactly how much business have paid for each asset, or the value business claimed on your taxes

Assess the overall condition

  •  The condition of each piece of physical property, and its general usefulness, will play a large role in determining how much money business is  likely to get for it, as well as what would be considered fair market value for that item.
  • One can categorize your assets according to general grades that correspond to the condition of each item, such as excellent, good, fair, and poor
  • Items in excellent condition typically are considered to be as-new, clean items with little wear and tear.
  • In contrast, an item in poor condition would be something that wasn't currently in working order and would need a lot of repair to get it back into working order.
  • This information can help you determine how you want to advertise the sale of your assets, and where advertising would be well placed.

Research fair market value

  • For many items of physical property that business want to sell, one can find a decent estimate of fair market value by simply looking at sales and auction websites to find out what similar items are worth of.
  • For production machinery or other items used specifically in your industry, you might want to look at industry and trade magazines to get a sense of how much these items are worth
  • Company vehicles or office equipment such as computers have price guides that provide a nearly universally recognized assessment of value based on the age and condition of the property
  • Online auctions and similar guides can provide information about fair market value for general supplies and property that can be easily converted to personal use

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