Are you considering doing your lease accounting in NetSuite?
Oracle NetSuite is one of the most well-known accounting software solutions on the market. Its popularity is due to its wide range of accounting functionalities and superb customer support. While NetSuite is an excellent general accounting system, it does not natively offer the lease accounting functionality required by the new lease accounting standards, ASC 842 and IFRS 16.
To get automated journal entries, customizable reports and required disclosures directly within NetSuite, the ideal solution is a lease accounting SuiteApp that’s built within NetSuite, like LeaseQuery for Netsuite. Our solution extends the power of NetSuite to your lease accounting and integrates seamlessly with your NetSuite instance.
If you are not using a SuiteApp, your lease accounting system should, at a minimum, produce journal entries in a format that can be accepted by Netsuite so it does not add extra work to your month-end close process.
Which companies need a lease accounting solution?
Companies with any number of leases benefit from a lease accounting software to facilitate compliance and gain lease accounting efficiencies. But for companies with complex leases, or more than 10 leases, a software solution can be critical. It’s important not to underestimate how significant the impact of each new standard is. We found that, on average, lease liabilities on balance sheets increased by 1,475% over their pretransition balances.
Particularly for industries with widely distributed teams or heavy lease obligations, such as restaurant and retail, healthcare, or banking and finance, a purpose-built lease accounting solution is highly recommended.
What to look for in a solution
It may go without saying, but the best solutions will have been built by accountants for accountants. Look for a solution that:
- Transitions your lease portfolio to the new standards
- Calculates the lease liability and ROU asset
- Produces amortization schedules
- Generates journal entries
- Classifies leases as finance or operating
- Centrally stores lease management information
The ideal solution will also seamlessly fit into NetSuite to integrate with your company’s chart of accounts, currencies, vendors, departments, classes, and locations; and even issue payments directly to the lessor.
You should consider the size of your solution provider too. You need a team with the size and expertise to assist you through the transition and beyond – keeping up with any updates to the standards, as well as being able to provide you and other customers with the support you need. To be extra sure, look for 3rd party validation such as a SOC or AUP report from a big four firm, strong reviews from accountants, and a large, stable existing customer base.
A purpose-built solution is easy to use
Any job is easier with the right tools. Using a retrofitted lease management software or ERP module, spreadsheets prone to manual error, or other make-do lease accounting solutions, will only end up requiring more time and effort in the long run. These systems are notoriously difficult to use, often resulting in one person becoming the “expert” on the system, while others have limited knowledge or access.
While NetSuite does offer a lease accounting solution in its fixed assets module which works for simple leases, this solution is not purpose-built for the task and suffers from limitations such as limited automation and lack of disclosure reports. Purpose-built lease accounting systems, like LeaseQuery and LeaseQuery for NetSuite, put the most pertinent data at your fingertips. Because they don’t have to be everything to everybody, they can focus on the features that are most important for lease accounting and management, and on being easier to use. The right purpose-built lease accounting solution will let you and your team ditch software workarounds and lease tracking spreadsheets and truly automate and consolidate your lease accounting processes. LeaseQuery for NetSuite is built entirely inside NetSuite allowing you to seamlessly integrate lease accounting into your existing processes and technology. And, in addition to making your monthly and annual tasks more efficient, an easy-to-use system facilitates onboarding new users and transferring responsibilities so the worry that your one lease accounting “expert” will retire or win the lottery is alleviated.
Ultimately, it’s about having better, faster access to lease data
ASC 842 and IFRS 16 aren’t just impacting the balance sheet; they’re having a long-term effect on procurement processes, contract negotiations, and financial planning. And with more standard updates coming, you need a system that minimizes hassles and gives you confidence in your data. A purpose-built system is the best way to achieve that goal.
Check out the following assets covering the additional benefits of LeaseQuery that you may not know about: