In construction equipment management, assets fall into two main categories:
Fixed assets and current assets.
Understanding the difference is key for tracking fleet value, managing cash flow, and staying audit-ready.
Fixed Assets
Fixed assets (also called property, plant, and equipment or PP&E) are long-term, tangible resources a construction company uses to run operations. They are not held for resale and typically have a useful life of more than one year.
Examples in construction
- Excavators, dozers, graders, wheel loaders.
- Service trucks and mechanics’ rigs.
- Cranes, lifts, and telehandlers.
- Job site trailers, generators, and large compressors.
- Company-owned shops, yards, or land improvements
Key points
- Recorded on the balance sheet as non-current assets.
- Depreciated over time (except land).
- Provide long-term value but are not liquid.
Current Assets
Current assets are short-term resources expected to be converted into cash, sold, or used within one year (or one operating cycle). These are what keep day-to-day construction projects running smoothly.
Examples in construction:
- Fuel on hand (diesel, gas).
- Parts and consumables inventory.
- Small tools intended for resale or turnover.
- Accounts receivable (customer invoices).
- Cash and prepaid insurance/rent
Key points
- Recorded on the balance sheet under current assets.
- Used to cover immediate expenses like payroll, fuel, and materials.
- Directly impact cash flow and liquidity
Key Differences: Fixed Assets vs. Current Assets in Construction
| Aspect |
Fixed Assets |
Current Assets |
Timeframe |
Used over multiple years; long-term investments. |
Consumed, sold, or converted into cash within a year. |
| Financial Planning |
Tie up capital for the long term (e.g., equipment purchases, buildings). |
Keep projects funded week to week (e.g., receivables, inventory). |
| Accounting Treatment |
Capitalized and depreciated over time. |
Expensed directly or liquidated within the year. |
| Fleet & Equipment Control |
Misclassification can lead to ghost equipment, overstated value, or missed depreciation schedules. |
Misclassification may distort working capital and short-term cash flow reporting. |
| Liquidity |
Low liquidity, difficult to convert to cash quickly. |
High liquidity, can be quickly turned into cash or used for ongoing expenses. |
| Usage in Construction |
Heavy equipment, vehicles, and infrastructure critical for long-term operations. |
Materials, spare parts, and receivables that keep day-to-day projects moving. |
Construction Crews & Managers
- Fixed assets = your heavy iron and long-life equipment that drives productivity over years.
- Current assets = your cash, receivables, fuel, and inventory that keep projects moving day to day.
Managing Fixed and Current Assets in Construction
Fixed Assets
- Track equipment lifecycle: Monitor purchase, depreciation, and disposal to keep fleet value accurate.
- Prevent ghost assets: Regularly audit your fleet to ensure only active machines are on the books.
- Plan capital spending: Use utilization and maintenance data to decide when to invest in new equipment versus extending the life of existing assets.
Current Assets
- Control fuel and parts: Monitor consumption and prevent waste through accurate usage logs.
- Stay on top of receivables: Track customer payments to ensure steady project cash flow.
- Inventory management software: Keep just enough materials and consumables on hand to avoid shortages without overstocking.
How Clue Helps in Asset Management
Clue is centralizes construction equipment management software for both sides of the balance sheet:
- For fixed assets, Clue records usage, maintenance, and depreciation so your heavy iron stays productive and accurately valued.
- For current assets, Clue helps track fuel, parts, and consumables tied to equipment operations, giving managers visibility into day-to-day resources that impact cash flow.
Managing both correctly keeps your fleet valued properly, and your cash flow predictable.
For construction companies, the line between fixed assets and current assets is simple but critical. Fixed assets are your long-term equipment and facilities that build lasting capacity, while current assets are the cash, fuel, and parts that keep projects running every day.
