For organizations across the world, lease administration and accounting can be an overwhelming prospect. As companies continue to grow and expand, so does their ability to handle lease management.
In today’s competitive world, companies that thrive can utilize available technologies to find efficiencies to get to market faster and focus on the customer experience. With a lease administration and accounting software solution, organizations can take the first step into full transparency into your entire lease portfolio, allowing you to make better decisions faster and more efficiently.
What is Lease Accounting and Administration Software?
What exactly are lease accounting and administration software solutions, and what do they do?
Lease accounting and accounting software allow organizations to manage the full breadth of their lease portfolio, ranging from simple real estate leases to more complex forms -- including lease types such as equipment or operational leases.
Where the difficulty arises for most organizations is with scope. A company that grows larger will inevitably purchase more real estate or establish additional lease agreements. At a smaller stage, handling leases is reasonably easy -- most organizations can get by using homegrown solutions. However, lease management becomes more complex and increasingly difficult for systems not designed to scale as a company grows.
A dedicated lease accounting and administration solution can expand alongside a growing portfolio, giving organizations a leg up and allowing them to focus on other areas of their business.
The Basics of Lease Administration and Accounting Software
Lease administration and accounting software are systems designed for storing, managing, accessing, and tracking lease information across single or multiple organizational units and asset types.
Lease management software is typically used where complexity, geographic diversity, and frequently changing compliance standards make manual processes complex and error-prone for lease managers and accountants.
A best-in-class software solution will allow organizations to:
- Achieve FASB and IASB compliance to meet regulatory requirements
- Gain cost and time efficiencies by automating your lease functions
- Improve cost analysis (KPIs) and benchmarking with a single data repository
How Lease Administration and Accounting Software Could Benefit Your Organization
With a lease administration and accounting software solutions, an organization will be equipped with:
FASB & IASB Compliance
Due to the new FASB and IASB accounting standards, organizations must now include both lessee and lessor lease obligations of all real estate and equipment assets with lease terms of more than 12 months on their balance sheets.
The right solution makes it easy for your organization to:
- Meet the new financial reporting requirements under ASC 842 & IFRS 16
- Accurately classify your leases as operating or finance using the FASB ASC 842 test
- Generate accounting schedules from a solution that is independent 3rd party accounting firm verified
A lease administration and accounting solution with compressive functionality is critical to managing leases and growing your business.
A focus on driving business with comprehensive functionality allows you to:
- Quickly calculate your lease and expense obligations
- Track, manage and increase visibility into your entire real estate and equipment lease portfolio
- Mitigate risk and improve efficiency through automation, processes and workflows
- Support global business at scale with multilingual and multi-currency features
Data tracking is an essential piece to a modern leasing solution. With a centralized database, organizations will gain deeper insights into the various aspects of lease management.
This will enable users to:
- Manage lease payments quickly and effectively
- Prepare abstracts and view stacking plans
- Analyze lease-level financial information
- View the timeline of lease agreements from beginning to end
Key Features to Look for In Lease Administration and Accounting Software
Ease of Use
Ease of use is a critical component of any software solution, especially handling large and complex things like lease portfolios.
Look for a solution that has:
- Clickable lease abstracts
- Configurable dashboards
- Mobile access on smartphones & tablets
- Full internationalization
Fully Integrated Software
One of the most challenging aspects of the modern workplace is handling multiple solutions that control different things. Too often, organizations find themselves siloed by software, with individual departments working with unique solutions. When certain documents have to pass through various solutions and departments, this can lead to items getting lost in translation.
By choosing a fully integrated solution, organizations can clean up the flow of information. Gone are the days of telephone -- with the right solution in place, data can be found and pass on more effectively and efficiently.
For organizations that work in more than one nation, multi-currency and multi-lingual capabilities are essential to their overall success.
While this may sound obvious, many software solutions do not have these capabilities, limiting themselves to one language. For any large or growing organization whose lease portfolios extend overseas, this will prove to be an immediate hindrance.
By choosing a solution with multi-currency and multi-lingual capabilities, organizations can find a solution that can grow and expand alongside them.
One of the most challenging aspects of moving to a new solution is often the system's configuration. Change itself can be difficult, especially if an organization is used to a particular way of running and managing its leases.
A modern lease administration and accounting solution enables system and data configuration within a centralized database. Allowing organizations to set up and format the solution as they see fit can bring a sense of familiarity and enable system users to hit the ground running.
Custom Configurations should include:
- Personalized dashboard views
- User-defined fields
- Customizable data reporting and tracking
- Editable standards
Choosing the Right Solution
When choosing the right lease administration and accounting solution, it is important to do your due diligence and consider the following before making a purchase decision:
There are many solutions available out there that claim to handle lease administration and accounting, but how many of them are able to prove it? For organizations looking to purchase a software solution, understanding the vendor and their history is critical -- especially true for first-time buyers.
- How often have they implemented their solutions?
- How long does the typical implementation take?
- Have they had implementation issues in the past?
Knowing the implementation history of a vendor can help you from purchasing the wrong software and can lead you to the right one.
Lease management is an oft-forgotten aspect of any business, with many organizations searching for solutions that focus solely on lease accounting and not lease management. By focusing strictly on lease accounting when searching for a software solution, organizations can lose sight of the opportunities offered by managing their entire lease portfolio with one solution: operational efficiencies and cost savings.
Investing in lease accounting and lease management in a single solution allows organizations to set goals for accounting compliance while also enabling them to manage their leases at both a macro and micro level. The plan for any company should be a two-pronged solution designed to help you attain compliance and gain a better understanding of our entire lease portfolio.
Ensure that any software solution purchased is compliant with FASB and IASB lease accounting standards.
This is critical since the accounting standards have changed for private and public companies, making financial reporting and asset management more challenging. With deadlines constantly shifting, it is easy to fall behind.
With new accounting standards seemingly around each corner, it is crucial to confirm that the vendor has a solution that can generate FASB ASC 842 and IFRS 16 compliant reports. The leasing solution itself is third-party verified. Organizations should work to ensure that their accounting teams will approve the generated compliance reports.
Accessing and analyzing lease data can provide organizations with the insights needed to make timely and accurate decisions. When choosing a solution, it is essential to ensure that you are able to pull reports on all fields within the leasing software -- whether out-of-the-box or user-defined.
Test/Train Environment with Your Production Environment
One of the final things to ensure when selecting a solution is if the vendor offers a test/train environment -- in addition to the production environment -- to test new functionality and perform scenario planning before deploying. It is also essential to confirm that there are no additional charges associated with the test environment.
Organizations must consider the impact the lease administration software will have on their business, including the relevance of the following questions:
- How important is it to running your business?
- What is the cost of making the wrong choice?
- If you miss deadlines, are there negative consequences?
You do not want to leave your company at risk if timelines slip during implementation or if the product is not continuously invested in.
Do You Need a Lease Administration and Accounting Solution?
Lease administration and accounting is an increasingly challenging factor of any business, small or large. With compliance standards shifting and changing, it is no small wonder that many organizations are at their wit's end just trying to keep up.
A best-in-class lease administration and accounting software solution is designed to store, manage, access and track lease information across single or multiple organizational units and asset types.
Accruent's Lucernex is a best-in-class, cloud-based software platform for real estate and equipment leases. With Lucernex, organizations can automate their lease administration and accounting for real estate and equipment, creating a data repository and a single source of truth.