How a CMMS impacts the financial statements of a company

The high levels of automation incorporated into the different processes of the company, have forever transformed the focus and importance of asset management and maintenance. From the manufacturing plants with their production lines, through to customer service, to the most diverse business processes all depend on the availability and good condition of the equipment and physical assets.

It is clear that a large volume of vital activities within the organization depend on the design and effective execution of asset management plans and maintenance management. Otherwise, the productivity and finances of the company can be seriously compromised.

Asset management and maintenance in annual financial planning

Both asset management and maintenance management are now integral elements in the planning and annual budget of companies, as well as in the general business strategy.

This is not accidental, since asset management plans and controls one of the most important investments within the organization; that of the equipment, installations which convey product, essential supplies of utilities and spare parts required to ensure productivity, quality and performance.

For its part, maintenance management is concerned with care of plant assets, ensuring the good state of assets and equipment, its safety, quality, reliability and availability.

The acquisition, management and maintenance policies of installed assets cause variations in the availability and reliability of the equipment and, therefore, affect the profitability and the return on investment.

FRACTTAL CMMS and its impact on the financial statements of a company

The impact generated by the use of Fracttal CMMS in the financial statements of a company, varies depending on the type of company, the business sector to which it belongs, the type of assets which its production supports, its size and the type of policies it implements for asset management and maintenance.

Each organization has its own identity, with unique characteristics that make up its brand. However, in general terms, there are two aspects in which the use of Fracttal CMMS affects the financial statements of the company:

  1. Depreciation of fixed assets: From a financial point of view, depreciation is the mechanism by which the process of the life cycle of use by physical assets is measured. This wear and tear is reflected in the financial journals to the extent that companies establish, based on their calculations, the amount of annual depreciation of their assets. This depreciation gradually decreases the book value of assets until it is reduced to zero, at which point management of physical assets either invests in the technical mechanical /electrical update / restoration of the assets or the decision to purchase new equipment.

FRACTTAL is the CMMS / EAM designed to facilitate and guarantee the effectiveness of both the management of physical assets and maintenance management, which extends the depreciation time and, therefore, the value of the assets in the accounts. In addition, by lengthening the useful life of physical assets, the company obtains a greater return on its initial investment, and greater gain on the production generated by the assets.

  1. Cost of asset stops: Unforeseen stops occur as a result of breakdowns and failures, which generate varying degrees of losses to the company. These losses can be divided into two groups.
    • The first contemplates the expense that generates the repair, and includes from the materials and necessary spare parts required to carry out repair, including the resources used and even, in the worst case, and depending on the magnitude of the fault, the loss total of the equipment or physical asset, which would imply its replacement. 
    • The second, includes the cost of the number of units that down-line are inactive in production during the stoppage time due to no or reduced input, raw material lost in defective products due to malfunctioning of the equipment and labour loss. These are unrecoverable costs.

      FRACTTAL CMMS has all the features and functionalities necessary to support maintenance management, and dramatically reduce unforeseen failures, guaranteeing greater availability of equipment, as well as its absolute reliability.

How FRACTTAL CMMS manages the impact of assets on the business operation

FRACTTAL is a CMMS / EAM 100% cloud-based SaaS software solution that helps companies in any sector and size execute their asset management and maintenance plans more effectively, to the extent that:

  • It has a flexible database, which allows to the organization and storage of all the vital and historical information of the assets of the company.
  • Because it is a 100% cloud-based database, it not only allows quick and simple access to the information necessary to carry out maintenance and asset management tasks, but also offers mobility and immediate access from any location through mobile devices.
  • It plans and generates accurately the maintenance tasks, based on the historical data, current warranties and data of each asset. This type of maintenance extends the useful life of the assets and avoids the occurrence of failures and unforeseen stoppages that generate losses to the company, impacting its financial statements in a negative manner.
  • The high level of forecast competency provided by Fracttal CMMS helps to better plan the asset care tasks and stops of equipment for maintenance. When the stops occur intentionally, they also allow planning and coverage in advance of the production quotas corresponding to the stop period, minimizing losses, and keeping intact the fulfilment of the production goals.
  • It has automatic notifications to warn the members of different working groups about the expiration dates of the warranties, which allows greater control of asset management and maintenance.
  • Automatically records all the information on current inventory, providing the members of the working groups with details about the availability of parts, spare parts and consumables, as well as their location in real time. This facilitates carrying out of maintenance tasks and their completion in the desired time periods.
  • It provides clear visibility on to whom a task is assigned, on response time, and on pending and completed tasks.
  • Combining the features of Big Data and Deep Learning, integration of different types of data is made to offer useful information for decision making and efficient use of resources. Readings obtained from the sensors connected to the assets, combined with the machine specifications of the OEM, the particularities or intensity of use of an asset, materials, location and historical data are all data that can say little separately, but correctly integrated, offer a clear vision of a asset status that otherwise could be indecipherable as pure data.

The impact of FRACTTAL CMMS on the financial state of the business is directly measured by its capacity to delay the depreciation of fixed assets in the accounts, insofar as it contributes to lengthen the useful life of the assets, through effective maintenance management, making them more productive.

Extending the useful life of the assets, it also increases their reliability, as well as their availability, and with this, the unforeseen stops, as well as the costs, the losses and the negative impact they exert on the company's financial statements, decrease significantly.

If you are not yet a FRACTTAL CMMS user, we invite you to sign up for a no-obligation FREE CMMS trial