With recent changes to FASB, IFRS and GASB regulations, organizations have increasingly focused on the lease accounting side of their business. This makes sense, of course, as a failure to attain compliance can lead to penalties and cause organizational chaos down the road.
However, more and more organizations are forgetting the lease management side of their business, or they’re searching for solutions that focus solely on lease accounting and not lease management. This is ultimately short-sighted. By focusing strictly on lease accounting when searching for a software solution, organizations lose sight of the opportunities offered by managing their entire lease portfolio with one solutions, namely, operational efficiencies and costs 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 goal 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.
Why You Need Lease Management Tools
Too often, organizations find themselves reliant on old or outdated tools for lease management. The most common of these is, of course, spreadsheets. An overreliance on Microsoft Excel and other spreadsheet platforms will limit the lease management capabilities of any organization.
The primary reason? Scaling. As organizations grow, so will the need for a solution that can grow alongside it and handle expanded lease requirements and stipulations. Owning a solution that can scale with the organization is critical to success, and ultimately, compliance.
However, selecting just any software solution can be dangerous as well. With the implementation of ASC 842, IFRS 16 and GASB 87 standards, thousands of companies globally now require a solution with expanded depth and a comprehensive reporting method.
A myriad of different software solution vendors have appeared as a quick fix to meet this need, offering varying degrees of low-cost functionality. With a pressing need for an accounting solution, accounting departments have often ended up purchasing lease solutions that didn't include lease management – sequentially limiting its capability.
Lease Management in the Age of COVID-19
During the COVID-19 pandemic, having a handle on your lease data is more critical than ever. Retail organizations have discovered this firsthand, with many moving locations to better accommodate co-tenancy and their customers' desire for more options when it comes to shopping, such as buy online then pick up in-store.
Organizations should be looking to negotiate more flexible lease terms, allowing them to shorten lease terms and stipulations.
The reason why?
Time and again, retail organizations are placed in difficult situations regarding their leases primarily because of how strict lease terms are – often either tied up in over-long lease terms or facing severe penalties when trying to negotiate.
With the right lease management solution, organizations can get ahead of these problems before they occur. A comprehensive solution will enable project managers and lease administrators to have a broader understanding of their lease terms and restrictions before they sign the bottom line. Having a clear handle on both current and future leases puts companies in the best position to negotiate and in the best place to succeed.
A Solution that Does Both
Now that the dust has settled on the latest lease accounting standards, companies have realized that they need a solution that offers a full suite of lease management capabilities.
Accruent's Lx Contracts offers both lease administration and lease accounting, helping organizations manage complex real estate and equipment lease scenarios, mitigate risk, and achieve FASB and IASB compliance.
Our Lx Contracts solution scales with the business, providing organizations a solution that grows alongside them. From real estate portfolios to equipment and operational leases, Lx Contracts gives organizations a solution that spans the gaps between departments and allows for a streamlined, easily attainable compliance process. Having both real estate and accounting on one solution – under one metaphorical roof – brings teams together and makes processes that were once challenging, simple.
With LX Contacts, lease data is readily available and referenceable for any user at any time.
Preparing for the Future
By pivoting to a comprehensive, sophisticated solution that focuses on lease accounting and lease management, organizations will be setting themselves up for both the short and the long term. Gaining lease visibility across your portfolio will positively impact current and future financial decisions.
Accruent’s Lx Contracts manages managing leases simple and sets up companies for a future beyond the upcoming accounting standards.