What To Look For In Lease Accounting Software
After understanding the enormous amount of work which is in store in order to become compliant with the upcoming lease accounting changes, more and more companies are clamouring to source the most effective piece of lease accounting software.
But many are unsure what to look for.
It’s important that companies choose a software solution that improves efficiency in managing their lease portfolios. And choose one which can also provide a centralised database of information, in order to allow easy analysis and interrogation of the lease costs and terms and conditions.
Lease accounting software should mean you and your staff have to spend less time managing your lease portfolio and becoming compliant with IFRS 16 or ASC 842. It should help you become compliant and stay compliant, whilst also help in driving down costs.
And it also needs to be secure. Whilst providing easy access to critical lease information and report data.
Here’s a deeper look at each of these in turn and what the benefits of each feature are.
As said, it’s important that any lease accounting software that you choose for your business serves to make your process more efficient.
The most efficient software will allow you to upload and view all of your lease portfolio documents digitally, meaning that sourcing and locating relevant paperwork is quicker and easier than if it was stored physically.
This also allows fast and efficient filtering of data in order to isolate certain aspects of your lease portfolio information. This makes the finding of specific facts, dates and other information near-effortless.
It’s also critical for forecasting and evaluating what impact the new lease accounting standards will have on your business's financial statements and critical performance metrics and measures. With a complete view of your entire portfolio and lease data consolidated on one unified platform, modelling and analysing the impact of the new guidelines and conducting What If scenarios is simplified.
“This makes the finding of specific facts, dates and other information near-effortless.”
The correct software option will also remove the issue of misfiling or inputting erroneous data into a spreadsheet manually. The management and storage of your lease portfolio database of information will also be accessible from various points, at any time.
That is because you will have chosen a solution which stores all of your lease information in a centralised data point. All that is needed to access it is an account and password. This helps to make the management of a lease portfolio from more than one location as smooth and efficient as possible.
For example, head and satellite offices can manage the company leases remotely from each other because employees in each location are always working on updating the same central database. This minimises errors due to lost updates created by having multiple documents like Excel spreadsheets and negates the need to duplicate completing work, which can often happen if two parties are working on the same document separately before updating the master spreadsheet.
With the governing bodies changing the definition of what constitutes a lease, as well as what may and may not be exempt from appearing on balance sheet, a full and constant review of your lease portfolio will be necessary.
A purpose-designed lease management software solution will assist with this. Making sense of your portfolio in terms of what constitutes a lease and modelling the impact of the standard, whether it’s in the best interests of the organisation to apply the optional lease exemptions and conducting the required lease accounting reports, needed for full accounting complete compliance.
This process can be simplified with the assistance of the automated reporting tools of efficient lease management software.
This closer management of lease portfolios will help businesses to also achieve improved cost savings. In addition to the removal of the risk of increased costs and charges due to mismanagement, a full and proper lease accounting software provider can help you achieve cost savings when tendering for new lease agreements.
This is because you will hold a much more informed position of the leasing market within your industry and know the full potential exposure of your lease portfolio - in just one view. Potential overspend and potential saving opportunities will be clearly visible.
If you were to use LOIS – Lease Accounting (“LOIS”), Innervision’s lease accounting software, you would also be able to lean on the advice of our leasing experts who can suggest the most cost effective solutions emerging from a review of your portfolio. This will be based on their years of experience and shared knowledge of the wider leasing industry.
This puts the power in the hands of the lessee. And the time saved on management analysis will also allow immeasurable cost savings as employee time can be focussed elsewhere.
It’s vital that your lease management software is safe and secure and your lease portfolio information is likewise safe and secure Safe and secure from both external influencers and also accidental loss. Your software should provide secure and backed-up cloud storage. It should also allow internal controls so that your users only see the data relevant to them, but those who need to see the full picture can do so.
Support, Training & Implementation
When looking to deploy a lease accounting solution to help manage your transition to the new standards, it’s vital that you choose a provider that offers the required level of support and training whenever it’s needed. Having a full understanding of all the key accounting functionality a solution incorporates and how to use these tools is essential – all these valuable features are meaningless unless those using the application know how to leverage their potential. Before you commit to a provider, ensure you’ve researched what training and customer support is provided and if this comes at an additional cost.
The same could be said of the implementation and set up of lease accounting software. When identifying a suitable provider, it’s important to evaluate the implementation and set up process and any additional charges that may exist or arise. Determining how long it will take, if the system can be configured and profiled to your specific requirements, as well as how the system will interface with existing ERP systems and General Ledgers is vital. The best lease accounting solutions will be capable of easily integrating with your existing applications so you’re able to be up and running as quickly as possible. The best solutions will not require you to test, verify and have the solution on your server but will be a web-based SaaS solution.
Knowledge & Reporting
A centralised system afforded by using a dedicated piece of lease management software will provide a full and proper audit trail. Retrospective reports will be needed in order to show compliance with IFRS 16, but the ability to present historic data will also help companies who undergo a change in personnel or responsibility for managing the company’s lease portfolio.
Personalised reports can be created based on various different factors within your lease agreements, which will allow the board, directors and stakeholders to make a full and proper assessment of the business’s finances. But compiling these reports is made super easy thanks to the integrated tools of dedicated lease management software.
Amortisation schedules, journal entries and lease accounting summaries, are just three examples of the types of reports critical for compliance that are easily executed by a lease accounting solution.
Read More About LOIS
If you like the sound of this all encompassing and highly efficient piece of software, explore our lease accounting software here.
Alternatively, if you're interested in finding out more about the lease accounting standards and how best to prepare for transitioning to either IFRS 16 or FASB ASC 842, Innervision has produced a handy 7 Step Guide To Lease Accounting Compliance. Download it below.