RFID Technology And Its Role In Eliminating Ghost Assets

RFID Technology And Its Role In Eliminating Ghost Assets

RFID Technology And Its Role In Eliminating Ghost Assets

Ghost assets are not a supernatural problem that haunts businesses but rather a grounded one born when fixed assets on a business’s balance sheet are rendered unusable or missing in the real world. These assets can take on various forms, ranging from unused software licences to outdated physical equipment, as well as from many different sources, such as new equipment that never got fully incorporated into operational workflows or unreturned equipment from employees. There are also cases wherein ghost assets arise due to deliberate fraud, but they are generally caused by inaccurate record-keeping and carelessness.

The negative impact of ghost assets on businesses

Having ghost assets on the company balance sheet negatively impacts the business in many ways, including:

  • Increased financial risk

If unaccounted, ghost assets could increase the company’s risk of underlying financial problems as they could indicate an inaccurate picture of its financial position. This may lead to avoidable difficulties when securing investments or loans. Lastly, they could be an indication of concealed fraudulent activities within the organisation.

  • Unnecessary tax liabilities

Ghost assets remain a part of the company’s taxable property, which means they still incur property taxes as they are recorded in the accounting books. Furthermore, when these assets are sold or disposed of, the company may be subject to capital gains taxes along with higher insurance premiums as insurers factor in the possible liability when setting rates.

  • Reduced profitability

Ghost assets reduce profitability in several ways: tying up funds that would otherwise be better used elsewhere, causing higher maintenance and depreciation costs, creating accounting problems if their value decreases yet is not recorded, and being a liability if not disposed of. In summary, ghost assets cause businesses to bleed money that is unaccounted or is not part of its inventory.

  • Compliance issues

Ghost assets can potentially cause compliance issues with relevant regulatory bodies. For instance, incorrectly classifying a ghost asset as an active asset may lead to the company overstating what it has and violating regulatory guidelines. Conversely, if they are unaccounted for in the balance sheet, it could cause the company to understate its liabilities and breach accounting standards. Getting caught with ghost assets may result in the business getting subjected to hefty fines and other penalties.

Identifying and eliminating ghost assets

Suppose an organisation believes it may have ghost assets. In that case, the first step is to conduct a comprehensive asset audit that includes a review of all intangible, physical assets and financial records as it investigates the possible discrepancies between the written records and the physical count. After identifying the ghost assets, the next step is to eliminate them through disposal or recycling or write-offs. That said, simply removing them physically and in the records does nothing to prevent new ones from resurfacing again in the future.

This is where an RFID asset tracking system comes in to help eliminate ghost assets by providing organisations with a real-time view of where each of their assets is located and the people using them. The data gathered can then be utilised to reassign or remove idle assets from inventory.

In addition, RFID systems can prevent this problem from occurring thanks to the asset utilisation visibility it provides via asset tagging. Tagging all assets with unique identifiers allows for easier tracking and identification of whether an asset is needed in the business, enabling its removal from the fixed asset ledger. By using RFID asset management solutions, organisations can easily prevent ghost assets from appearing and increase operational efficiencies through total asset visibility.


The best approach to dealing with ghost assets is preventing them from happening. This means being proactive, conducting periodic asset audits, and leveraging modern asset tracking solutions like an RFID tool tracking system. This is critical when managing fixed assets to keep ghost assets from disrupting business operations.