When developing a business plan, there are many things to consider. One aspect that could prove to be essential in operations is how asset recovery is managed. Asset recovery is defined as the concept of re-using end of life or unused assets to maximize their value. The reason this is important is that ultimately, assets will translate to capital, which will help to ensure the success of the business.
Asset recovery can be utilized in several ways, including repairing existing machines and parts, returning unused materials to their original manufacturer, recycling materials to be reconditioned for different uses. For instance, manufacturing firms make use of enormous machines. Repairing these machines instead of replacing them will decrease depreciation expenses and sales taxes among other expenses.
As a business expands and life cycles of products evolve, unused materials will accumulate. Applying the concept of asset recovery here entails returning those materials to the original manufacturer for cash. Recycling of materials and parts will also serve to decrease supply costs as well as keeping levels of landfills low. Examples of this include recycling disposable clothes and shipping pallets to be used again.
These aspects of asset recovery are linked to the efficiency of the business operations. When the operations of a business grow to be inefficient, it leads to higher operational costs. If and when operational costs can be trimmed, it will free up capital to be used for more necessary expenses, such as research and development.
The idea of asset recovery could also be applied to labor costs. Maximizing the value of both direct and indirect labor will improve operations of the business. This could mean confirming that personnel will maintain machinery and equipment properly to maximize its useful life. Human capital is an important thing to consider because people need to be trained properly in order to function properly in their roles.
Thinking of asset recovery in the form of a contingency plan is an easy way to incorporate it in to the business plan. If capital is the lifeblood of the business, improving its health will have a rippling effect on every aspect of the business. Asset recovery could also refer to the idea of recovering assets that were wrongfully taken or allocated from the business.
Asset recovery also affects the supply chain. Lag times in production, shipping, or billing can lead to unnecessary costs or decreased sales. There are unforeseen circumstances for every business. Yet, having plans of asset recovery in place beforehand will minimize the costs.
Asset recovery is an important concept that should be part of the business plan. In some ways, it is a form of insurance against operational inefficiencies. In other ways, it is a means to recover capital waste either through negligence or fraudulent activity.
About AER Worldwide
AER Worldwide mitigates risk and provides global solution to handle your entire end-of-life materials management needs. We provide eco-friendly solutions and services throughout the entire IT product life cycle. Our Reverse Logistics efforts, or “aftermarket” services, help organizations after the initial sale and provide IT asset disposition support throughout the life of the equipment. With global locations, AER Worldwide will provide eco-friendly services, with certified brand protection techniques. To learn more about AER Worldwide, visit www.aerworldwide.com.