Twitter
LinkedIn
Facebook
5 Mistakes Companies Make When Retiring IT Assets
1. Warehouse the retired equipment allowing it to lose value every day
Once equipment has outlived its usefulness, it can consume valuable floor space, as well as impact your bottom line if not dispositioned quickly. The traditional way of retiring assets is to first replace them, run them in parallel for a period of time, and then de-install the old equipment. The best practice is to offer it for re-sale at this point. However, the owners of these assets understand that this equipment is fully depreciated and do not spend time managing it. The equipment has value that can be optimized by applying a small amount of planning before the units are replaced. ServoTerra offers an asset planning tool and trading platform that allows the owners of assets to sell them while still in use reducing downtime to an absolute minimum.
2. Assume that because an asset is used, it has no value.
Used IT assets have value, even when sold at wholesale. Even while IT assets depreciate, they still have residual value even to the point where it is recycled. Some companies feel that once an asset is fully depreciated, there is no compelling event to address them and over time the recovery value can drop significantly. ServoTerra’s Asset Planning tool looks at the equipment NOT as a depreciated asset but as having value throughout its entire lifecycle and provides a platform for these assets to be sold and reused to build new. According to a recent report, 15% of companies still throw e-waste in the dumpster!
3. Receive pennies on the dollar from middlemen who sell the assets and leave with the majority of the profit.
More than 70% of the asset disposition market is controlled by middlemen who add little value to the equipment but resell it for up to 60% margins. They must offer you the lowest price possible in order to resell it for a profit. Why give this margin away when you own the equipment and could receive the bulk of the profit by placing it on the eXchange? By connecting buyers and sellers directly on the eXchange, sellers can benefit from a global marketplace of qualified buyers and competitive offers, receiving the highest possible price for their assets.
Bulk selling “Pallets” or “Lot’s” is very popular today because some seller’s believe they are not selling only quality product but are off-loading undesirable product as well. They hand the assets to the middleman as he is offering to “take it all”. However, the middleman will account for the undesirable products by increasing his margins.
4. View their depreciated assets as a cost center instead of a profit center
Depreciation is a great tax strategy. However, in a typical “tech refresh” event you might be happy to get 5% of your original purchase value from your assets being de-installed and sold to at least mitigate your costs. What if the resale value of this equipment was actually 20% of your original value, would you be happy to forfeit the majority of that value to a broker or trade-in program? That cash goes right to your company’s bottom line increasing your profit margins and with margins getting thinner in these tough economic times, you need those dollars to the bottom line now.
5. Get three bids, accepting the largest, but have no idea if it reflects the true value of the assets
Having tools that give you the ability to understand the real value of your equipment is key to managing your costs and profit. What system is currently in place in your company to measure your return on your depreciated assets? Most companies do not have one and do not understand the market value of their used assets and therefore do not know their ROI.
Most current systems are not set up to plan the retirement of these assets at the optimum time. It makes sense to upgrade when they are at their highest value. Our SaaS Asset Planning tools give you this ability. You can plan and implement resale events netting you a higher return on your investment. Since it’s a customized business network, you control every aspect of your trading. If you do not have the infrastructure, our customer service organization can assist you in managing your assets helping you to trade easily.
