According to a study by ACFE, a typical business loses an average of 5 percent of their income due to fraud, adding up to a whopping $3.7 trillion in deficits. Fraud can happen with more than just money. Fraud can occur with physical property, as well, and even the hint of fraud can make any auditor break into a cold sweat.

Fraud can be used to illegally boost assets through phantom assets. These assets are anything showing on your books that doesn’t actually exist. Some companies dismiss these phantom assets as missing inventory, but it can include computer equipment, office furniture, or even manufacturing equipment. Neglecting to check items in or out of a company’s inventory of fixed assets can make it look like something has disappeared.

Phantom assets are a bigger problem than you might think. Here’s why you need to eliminate them in 2020.

How Are Phantom Assets Used?

Most companies just view phantom assets as a nuisance. There are some, however, who see them as an opportunity to do something questionable. These companies take the missing asset and continue listing it as an asset on their balance sheet. This results in inflated company value, making it appear as if the company has an item that can potentially be liquidated for cash.

Another problem arises when companies take phantom assets such as inventory and pretend it’s not missing. Not only does this cause headaches for sales and support when they tell customers items are in stock (and it turns out they’re not), but phantom assets can be used to cover up shrinkage. Any items missing from inventory—whether raw materials awaiting fabrication or a desk chair—must be investigated and accounted for immediately. Pretending items aren’t missing only empowers thieves to steal more.

At best, phantom assets reflect sloppy inventory and fixed asset management. At worst, they reflect downright theft. All are problems that smart manufacturing companies should solve quickly before they lose money.

Keep Tabs on All Your Fixed Assets

Solving for phantom assets can be accomplished with fixed asset software such as Sage FAS. This software package enables companies to track all fixed asset by geographic location. With Sage FAS, companies can manage manufacturing equipment, vehicles, computer equipment, office furniture, and more.

Mobile devices transform into handheld scanners through a downloadable app that enables users to swipe and scan barcodes affixed to the item as they move from one location to another. This means you never lose track of where an essential piece of equipment is located, limiting the opportunity for it to become a phantom asset.

Sage FAS also lets users record the actual value of fixed assets. Additionally, it takes depreciation costs into account, so the system maintains an accurate estimate of the value of all items included in the asset inventory.

Fixed Asset Software Means Better Planning

With the right information, you can plan capital projects, improvements, and investments in new manufacturing equipment or costly assets. Fixed asset software such as Sage FAS provides accurate reports on the status of all your assets so you can plan for new investments in technology, plant equipment, vehicle fleets, and more.

FAS Full Integration With Accounting Systems, Inc.

Like all Sage products, Sage FAS integrates with Sage ERP software, adding valuable data and information to an already robust software package for manufacturers.

Phantom assets can wreak havoc with your accounting. Worse, they can cover up theft or poor asset management, both of which contribute to lost profits and opportunities. But with the right fixed asset software integrated into your ERP and other systems, you can minimize this costly ghost.

Overwhelmed by the thought of hunting down all your phantom assets? Let Accounting Systems, Inc. help. With our proven, robust Sage expertise, ASI can take you from a simple accounting system that no longer meets your growing needs to a fully integrated software suite—including Sage FAS—that gives you complete control over your data … and your assets.

If you’re ready to get rid of phantom assets, get in touch with one of our Sage software experts today.