Introducing and adopting new lease accounting standards have significantly changed how companies account for and report their leases. For many companies, implementing these new standards has been a major undertaking requiring processes, systems, and staffing changes. Lease accounting software has emerged as an important tool to help companies comply with the new standards efficiently and effectively.
Let’s examine the key benefits that lease accounting software offers:
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Centralized Lease Database
A centralized lease database is one of the biggest advantages of lease management software. It provides a single source for all lease data in one place. All the details related to leases, such as terms and conditions, rental rates, escalations, options, documents, contacts, properties, locations, financial data, and more can be stored and accessed from the database. It eliminates the need for multiple disconnected spreadsheets, paper files, or systems to manage leases.
Robust search and filtering capabilities make it easy to quickly find any lease or related data across the entire portfolio. You can search for leases by property, location, tenant, lease end date, value, or any criteria. Filters allow analyzing leases by type, status, department, asset class, or cost center—the ability to instantly access accurate lease information results in considerable time savings and improved productivity.
Compliance with Lease Accounting Standards
Modern lease accounting requirements and standards like ASC 842, IFRS 16, GASB 87, and others are complied with using lease management systems. The software automatically categorizes leases as operating or financing leases using specific lease information. It accurately records and computes right-of-use assets and associated lease liabilities in accordance with the rules.
The system offers pre-configured reports and dashboards for lease accounting and financial statement reporting. This ground-breaking function of the lease management software removes the complexity of lease accounting and guarantees complete adherence to the necessary standards. Integrated lease accounting features help organizations avoid non-compliance fines and audit problems.
Workflow Automation
Lease management software solutions offer sophisticated workflow automation. Renewals, payments, terminations, documentation, and other key lease events or deadlines can be scheduled automatically. Notifications via email and in-system ensure no renewal or payment is missed, preventing disruptions.
Lease contracts, modifications, and other documents can be sent to the appropriate parties for assessment via approval procedures. In the event of delays, reminders can be sent automatically. It stops any lease from being signed without the necessary permissions. The workflow engine reduces the need for manual processes and, through automation, ensures adherence to business procedures, leading to significant time savings and increased operational effectiveness.
Embedded Analytics
Powerful embedded analytics capabilities provide rich insights into your lease portfolio. Key metrics like lease costs, vacancies, expirations, operating expenses, and more can be tracked over various dimensions and hierarchies. You can analyze performance by locations, departments, properties, asset types, cost centers, etc. Data visualizations make it easy to spot trends and share findings with stakeholders.
Drill-down capabilities allow diving deeper into the data for granular analysis. Forecasting tools help predict future costs and liabilities. All this enables data-driven decision-making to optimize your real estate portfolio, reduce costs, and manage risks. The analytical power eliminates the need for complex data crunching in spreadsheets.
Accessibility
As a cloud-based software, lease management solutions can be accessed anytime via web and mobile apps. This accessibility provides platform independence without needing specific hardware or operating systems. All employees can access lease data, run reports, collaborate with team members, and make better decisions from anywhere.
There’s no need for complex software installations, maintenance, or upgrades with the SaaS model. This results in improved productivity and real-time decision-making. Secure access controls and encryption protect company data while facilitating access to authorized users.
Integrations
Leading lease management solutions integrate your existing ERP, accounting, property management, facility management, and other business systems. This integration provides a holistic view by connecting lease data with financials, assets, maintenance, compliance, and other operational data systems.
Two-way syncing ensures all systems have updated lease information in real time. Powerful APIs allow the development of custom integrations to extend the software. Integrations eliminate data silos and manual rework and provide enterprise-wide visibility into leases.
Emissions Tracking and Reduction
For contemporary businesses, sustainability and environmentally friendly practices have become crucial. Software for lease management offers the one-of-a-kind capacity to track and reduce emissions at the asset level. The software may monitor emissions information for specific leased assets like structures, machinery, automobiles, etc., including energy use and carbon output.
The software combines emissions data with financial lease data. It makes it possible to promote sustainability goals while making wise judgments about lease renewals, terminations, purchases, and other leasing operations. With stakeholders considering environmental effects, emissions control features in lease software offer a crucial competitive advantage.
End-of-Term Management
Proactive end-of-term management is a key feature in lease management software. The system tracks upcoming lease expirations and sends advance notifications for renewals, returns, purchases, or terminations. Automated workflows ensure all end-of-term events like asset return, transfer of ownership, inspections, maintenance, and document signing are completed on time. It prevents missed deadlines that can result in penalties.
The software also initiates the asset disposal process and updates accounting systems seamlessly. This coordinated end-of-term management minimizes disruptions to business operations during asset transitions. Proactive planning optimizes costs by avoiding unplanned lease extensions or asset disposals.
Scalability
The centralized lease database and process automation in lease management software make it highly scalable. As your organization grows, leases across locations, assets, and business units can increase dramatically. The software can easily scale to accommodate thousands of leases and users without compromising performance.
Automation of data collecting allows for the fast and efficient setup of new leases. Access controls enable the secure management and onboarding of additional users. Configuration tools enable non-programming changes to business operations and reporting requirements. With no proportional rise in administrative costs, expanding businesses can scale their lease management quickly.
Conclusion
Lease management software delivers unmatched visibility, control, productivity, compliance, and risk reduction for your lease portfolio. The centralized database, process automation, and embedded analytics enable efficient lease administration across the entire lifecycle. For any organization with a sizable lease portfolio, lease management software is an essential investment rather than an optional nice-to-have. The benefits in terms of cost and time savings, risk reduction, and portfolio optimization far outweigh the costs, making it a highly prudent investment.
Muhammad Irfan Bajwa is an emerging business enthusiast and passionate blogger and writer on a versatile level.