The new lease standards have already gone into effect for public companies and the deadline for private companies is around the corner. The new regulations now require accountants to be more transparent – lease assets and liabilities must now be accounted for.
Tracking your leases as a tenant, or a lessee in accounting, is certainly possible with an Excel spreadsheet or Google Sheets. However, the new standards mean that lease tracking will certainly be more difficult for your business using programs like these. This is especially true if the number of leases you have is in the double or triple digits, so implementing lease accounting software to help with tracking can streamline and improve your lease administration processes.
Under the new guidance, all companies with audited financial statements must now track and report their lease assets and liabilities. Because of the amount of documentation needed to stay compliant, accountants will be forced to take a hard look at their current software and processes to see if it is robust enough to track all their leases. With software built specifically for leases comes a certain intelligence that can benefit real estate and facilities groups in addition to the accounting team. It can help you report and forecast based on square footage, lease location, just to name a few.
There are many dates that you must keep track of, and automated alerts can save time, money, and stress. For instance, receiving an automated alert before a scheduled rent abatement can prevent you from making an overpayment.
Centralized lease documents
The more leases you have, the harder it can be to keep up with them. That’s why having a lease software which enables you to bulk upload your lease information, as well as perform a quick search to find the information you need about a certain lease, is key.
One of our clients, an engineering and consulting firm points out that lease accounting software has enhanced its efficiency. In the past, researching their leases often took 3-4 hours; now they have the information they need at their fingertips. Their General Ledger Manager reports that they are now saving “at least 200 hours a year,” and having quick access to lease documents is a part of that.
Ensure your leases are complete and safe
In the past, having all the information you need about your leases may not have been a priority. Now, it’s imperative for companies to track all financial information associated with their leases for reporting and auditing purposes.
Using software that allows you to store your lease information in a centralized location lets you use data to create a more complete picture of your lease obligations. Additionally, the amount of data you must now track now requires more layers of protection. Some programs are limited in protection, meaning that a person could easily gain access to your system and eliminate all of the information contained within. Lease accounting software usually comes with a two-step process of verification and will require permission for data to be changed in any way.
Streamline communication between departments
Often, there are several departments in an organization that need to access lease documentation. In the past, it was a difficult process to send information and report to several departments, as it would require pulling information from one document to another, creating a template, and disseminating the information via email.
Using a lease accounting software means you can create a template for your reports, review them when you need to pull, and export to your desired format knowing they are accurate. The right kind of software will enable you to report based on any allocation that you choose.
Additionally, lease software makes it easy for everyone in your organization to be on the same page, as our client Community Bank N.A. has stated: “It’s made it easier for other people in the company to have access to the same information that I have.”
Wrapping it up
The new standards require companies to be more transparent with their leases, which will likely require software that is more comprehensive. Having the ability to access all documentation in one place, along with receiving regular alerts about important dates, and easy reporting are just some of the byproducts of a comprehensive solution. Make sure to keep these benefits in mind as you go about reading reviews and looking for the best lease accounting software solution for your business.
If you would like more information on making the business case for software that can help with this challenge, check out this comprehensive guide.