What Can an Investment Recovery Program Do For You?

What Can an Investment Recovery Program Do For You?

Last updated on May 25th, 2022

If you’re looking around your operations and thinking maybe it’s time for a garage sale, think again. Your company may benefit from an investment recovery program.

An investment recovery program enables you to recoup some of the initial investment you made in materials or equipment that are obsolete, extra, or no longer needed. You can use it to sell, trade, or donate anything from spare parts, returned investment, raw materials, and piles of scrape to obsolete equipment, furniture, and machinery.

Not only can it help keep your facilities clutter free and make better use of your business’ facilities, but an investment recovery program can boost your profits.

According to the Investment Recovery Association, a trade group for managers of idle and surplus assets, 70% up to 90% of every dollar that comes from investment recovery directly contributes to a company’s bottom line as profit. In fact, most association members save an average of $8 million a year and some save as much as $150 million (of course, most members are Fortune 1000 companies, but even recouping a portion of the savings they realize is worth it.)

Before you start hanging the garage sale signs, it’s important to note that inventory recovery is a serious business.

Your goal should be to get back as much of your capital investment as possible, rather than getting whatever you can for idle assets. To do this, you’ll need a formal investment recovery program that becomes a regular, ongoing part of your operations.

Start by finding a certified investment recovery manager or appraiser who knows or can find out the fair market value of what you are selling and knows the best channels for making those sales. Experienced investment recovery specialists know how to use a variety of strategies to recover a portion of the cost of an asset. These include returning an item to the manufacturer or distributor, selling it, or trading it for something else. Potential customers can be found:

  • Inside your company. While your Maintenance Department may be done with a forklift purchased for a special project years ago, your Inventory team may be able to put it to good use today.
  • Among your employees. Especially when it comes to office equipment and supplies like cabinets, computers, desks, and tools, employees may be interested in getting a deal and taking them off your hands. Not only do you benefit from the money, but you build good will among your employees.
  • Charity. Nonprofit organizations always welcome donations – especially in the form of equipment and furniture. Build your business’ reputation as a good corporate citizen while getting a charitable tax write-off by donating equipment, furniture, and supplies you no longer need or use.
  • On online auction sites. There are sites dedicated to selling just about anything (they can also be a great place to turn if you’re looking to make purchases).

Is investment recovery worth the time and effort?

According to the Investment Recovery Association, it would take $20 in sales to achieve the same net effect on profit for every dollar generated by investment recoupment. So, yes, it’s worth it.

To learn more about how investment recovery could affect your accounting processes or taxes, RBT CPAs is always here to help — give us a call.