Whether it is hard hats and drills on a jobsite, iPads in an office, or RFID readers in a warehouse, small tools and equipment have a tendency to disappear at many companies. The cost of lost, damaged, and stolen items can quickly add up, consuming profits and cash flow. What can you do to manage these items more effectively and create accountability among workers?

Technology to the rescue

Electronic bar-code technology that is used to track inventory also can be used to label, coordinate, trace, and catalog fixed assets in real time. These systems usually involve bar codes displayed on polyurethane labels on each tool or machine. The labels are designed to hold up under repeated on-the-job wear and tear.

These systems come with handheld devices that you can use to scan the bar codes when assigning tools and accepting returns. Tracking software sends the pertinent information to a database that also can be used for browsing, billing, and running reports. In addition, the program records repair histories and maintenance schedules.

The cost of bar-code technology varies, depending on the number of features included in the system configuration. How complex a system you will need will depend on the number of items you are looking to track. But if you are already using this technology to manage inventory, there may be economies of scale by choosing a system that can handle both types of assets.

Improving efficiency

Bar-code technology also has the power to improve management efficiency. How? You can let employees know that, if the system shows that the tools they have checked out have not been returned, the employee or the job they are working on, could be charged for the missing item. Thus, employees will more closely monitor and protect these items to avoid paying for lost items or having a project go over budget.

The right system also may reduce your legal liability. In some industries, federal regulations or union rules may require workers to wear safety gear, such as goggles, hard hats, and respirators. A formal tracking system allows you to show that you issued employees the proper equipment, which could in turn limit your accident liability.

Creating accountability

To take bar-code tracking to the next level, integrate it into your accounting system. For example, you might assign tools by employee name, job code, project number, date, time, location, or other criteria. Then you can generate a report of employees or projects where specific tools are being used.

In turn, you will foster an atmosphere of accountability by making managers and employees more responsible for these assets. There is no better way to drive home a point about wasted assets or money than to sit down with employees and show them, in dollars and cents, how a tool is being misused.

Bottom line

Bar-code technology is not new, but it has become more cost effective and robust. Even if you have been working with this technology for several years, it is time to consider upgrades that you might have missed or new vendors with tighter security measures or innovative features.

For help evaluating your current system or investing in a new one, contact your CPA. We can help you implement this technology and know industry best practices and potential pitfalls to avoid.