Benefits of Asset and Liability Management

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Benefits of Asset and Liability Management
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Enhances Productivity of Employees
The quality and quantum of assets available in a
firm has a direct impact on the functioning of
employees. It is therefore necessary to manage
your assets well. Having insufficient assets can
cause delays in work and thereby reduce the
productivity of your employees.
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Prevents Duplication of Assets
Just like it is undesirable to have insufficient
assets, it is important to not have them in
excess either. This is because asset acquisition
and maintenance often involve huge costs that can
be covered only when the return on the asset is
higher than such costs. Any asset that isnt in
use or does not generate revenue, will only act
as a burden on the finances of a firm. Having
assets and liabilities managed well can prevent
such a situation.
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Reduces Risk Of Failing To Meet Obligations
Unless a firm has a good balance of assets and
liabilities, its likelihood of faltering
obligations becomes higher. A good bank of assets
acts as a cushion to fall back on during bad
times while having a controlled liability base is
essential in aiding liquid cash availability. All
top asset management companies in India would
focus a lot on this element as it can even lead
to unplanned liquidation of the organisation.
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Increases the success rate of bank loan
portfolios and pension plans
Having a well-balanced asset and liability ratio
often leads to attractive bank loan portfolios
and pension plans. It makes acquisition of credit
easier and ensures longevity of pension plans.
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Reduces a Mismatch in Assets Liabilities
Change in interest rates, illiquidity, inflation
and changes in accounting procedures can lead to
a mismatch in the asset and liability balance.
Although some can be adjusted, others may require
severe cost cuts and disinvestment to rectify. It
is therefore advised to manage your assets and
liabilities well and avoid such situations.
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Thank You
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