Business assets are valuable items that a business creates, benefits from, or owns. They determine the success of any business. The assets can range from inventory, raw materials, and cash to buildings, vehicles, electronic devices, and machinery. If these assets are not well guarded and protected, the company could lose them, leading to a potential financial drain regardless of its size. Below are some tips and methods you can utilize to safeguard your business’s future financial status.
Invest in Umbrella Insurance
One of the best ways of protecting your business assets is by taking strong insurance covers such as umbrella insurance. This type of cover is applicable when your business faces a claim that exceeds the primary policies you have. It acts as an extra layer of asset protection and supplements other types of policies you have. You can also take primary insurance covers such as:
General Insurance Liability
Liability claims are widespread and unpredictable. They can become very expensive, especially for small businesses. It is vital to take a general insurance liability policy to cover claims such as property damage, bodily injuries, advertising injury, reputational harm, and copyright infringement.
Employers’ Liability Insurance
Employer’s liability insurance policy is a type of insurance cover that protects your business from work-related injuries or illness claims made by an employee. The most common employee insurance policies are Workers’ compensation insurance and employer’s liability insurance.
Hired and Non-owned Auto Insurance
This type of insurance protects your business from auto liability lawsuits. It covers damages caused by personal vehicles used for work, rented cars, and employees injured while driving for work errands.
Implement Security Measures that Curb Loss and Theft
A company can lose its assets through theft by employees. Therefore, it is essential to continuously monitor existing assets, share responsibilities, hold every employee accountable for the assets they use, and put security measures to prevent employees and unauthorized persons from leaving with the company’s assets. Some of these measures include:
You can install security cameras in all areas, including indoor and outdoor places such as storage rooms, garages, safe rooms, to monitor and record every movement within the premises. It will help you detect and suspicious behaviors and practices.
Hire a Security Team
Another way of enhancing security within your business premises is by hiring security professionals. You can also outsource from a security firm if you are not in a financial position to have an in-house team. These individuals will safeguard your assets and prevent asset theft.
Place Tags on Assets
Asset tags are used to mark and monitor specific items such as inventory and high-value items. You can put tags on your business items to prevent them from leaving the company’s premises.
GPS Tracking Systems
Another practical and affordable way to protect your business asset is by utilizing GPS tracking technology. It can apply to motor vehicles and inventory. The tracking technology uses inbuilt features such as live-time position updates, accurate location, high-resolution images, historical playback, and instant alerts. They also provide customized and detailed reports.
Have an Asset Protection Trust
Asset protection trusts to protect the business’s assets against lawsuits from creditors. The trusts can protect you from expensive litigation a well as influence the outcome after settlement negotiations favorably. A business protection trust can be either revocable or irrevocable. A revocable trust can be altered, and you can change the terms at will. This type of trust does not provide complete asset protection, and you get to retain full control of the assets.
On the other hand, an irrevocable asset protection trust is whereby the assets are put under the trustee’s name, leaving you with limited control over them. The terms are irreversible. In a lawsuit from creditors, the assets will not be considered for settlement as they are in the trustee’s name. Irrevocable asset protection types can be classified into 2:
- Domestic APT
Domestic asset protection trusts are only applicable within the United States territories. They are very flexible and popular. The only drawback about these trusts is that they are not entirely bulletproof as the assets are under the domestic legal system making them open to lawsuits and court orders.
- Foreign APT
Foreign asset protection trust makes the assets fall into a different jurisdiction, legally protecting them from seizures when faced with a lawsuit. However, its effectiveness highly relies on the economic and political atmosphere of the chosen jurisdiction.
A business must implement measures to safeguard its assets. In addition to the actions above, conduct background screening before hiring anyone to prevent employee theft and losses. However, it is crucial to note that some losses are inevitable regardless of the preventative measures you take. Protecting your assets is safeguarding your current and future cash flows and financial success.