Our physical inventory and fixed asset register have not been formally reconciled in years, and we know this will cause friction during due diligence. How do we use our EOS framework to assign ownership and clean up our physical asset tracking on our exit runway?

Question

Tyler Smith · Accepted Answer

Neglected physical assets and sloppy inventory records represent hidden liability to a buyer. If your balance sheet shows assets that are obsolete, broken, or missing, a buyer's due diligence team will quickly lose trust in your overall financial reporting. You must clean this up systematically well before you go to market.

Start by looking at your Accountability Chart. Ensure there is clear, single-point accountability for asset management and inventory tracking. Usually, this falls under the operations or finance seat. The person in this seat must own the task of reconciling physical reality with your balance sheet.

Next, create a specific, measurable Rock for the upcoming quarter to conduct a complete physical inventory and fixed asset audit. This Rock should involve identifying every piece of equipment, verifying its condition, and reconciling the physical list with your accounting records. Discard or write off any obsolete or broken equipment to clean up the ledger.

Once the cleanup is complete, establish a repeatable process for asset tracking and make it a regular part of your operational discipline. Track inventory variance as a weekly metric on your Scorecard. This proactive maintenance ensures that when a buyer conducts a physical audit during due diligence, your records match reality perfectly.