Vice President of Product at Visual Lease.
The past two years have shuffled business priorities and workflows, which has left many companies catching up on their transition to the new lease accounting standards (ASC 842, GASB 87, IFRS 16 and, soon, GASB 96).
For instance, all private companies were required to comply with ASC 842 by mid-December 2021. However, as of July 2021—with little time left to do so and audit fees on the rise—we found that a whopping 75% of those companies had not yet complied and 5% hadn’t even started the process.
Because of the complexity these standards have added to the lease accounting process, we expect we’ll continue to see businesses across all sectors invest in the technology that is required to properly track, manage and run financial reports on their leases.
As busy executives seek help with managing their lease portfolios, selecting the right provider is critical, but they also have to work to get continued value out of their investment. By following these steps, companies can ensure they’re getting the most out of their lease accounting software.
1. Track your current manual processes. Before implementing your new technology, take note of how long your team spends on certain activities, including reporting. Is reconciling right-of-use assets or lease liability accounts costing you hours? Days? What about abstracting your lease data? It’s critical to account for all steps in the process.
By taking a step back to document how you’re spending your time, you can create benchmarks to determine how the software is helping your team create efficiencies moving forward.
2. Keep in contact. Get to know your sales contact and inquire about support during and after implementation. Will you have ongoing support? Is there someone you can schedule a regular check-in with?
By taking the time to share your biggest challenges with a main point of contact, you can provide their team with the information they need to anticipate and meet your every need. As a result, they may be able to point you in the direction of software features you weren’t aware of but can help save you time.
3. Resource appropriately. Just because you’ve streamlined your lease accounting process doesn’t mean it won’t require supervision or human interaction.
Once some time is freed up through new efficiencies, it’s important to consider which parts of the lease accounting process warrant more attention. For example, combing through the detail of each contract is certainly time-consuming but is essential in ensuring accurate calculations. While some lease accounting software providers claim to automate the abstraction process with AI and other technologies, there’s risk in depending on that. Unfortunately, these technologies are not 100% accurate—and precision is required for accounting. Tap into your vendor’s partner network to connect with third parties who might specialize in abstraction.
Setting these roles and identifying new workflows can make your company a well-oiled machine when it comes to lease accounting.
4. Optimize your tech stack. If you were using multiple tools as patchwork assistance for your accounting needs, your new software should streamline data flows across systems and consolidate your tech stack and operations to make your life easier.
Once you’ve gotten a grasp on all the capabilities within your new software, look to cancel alternative products and agreements, where possible, to save money. For example, if you’ve been using Excel to track your leases, you can ditch the spreadsheets and rely on having one master system for your leases. Similarly, if your lease accounting software provides you with a full view of your portfolio data, you could leverage that information within your financial planning and analysis process, potentially eliminating the need for other data visualization tools.
In today’s world of changing business demands, companies are interested in finding efficiencies that can make an impact on their bottom line, so they need to make sure they’re getting the most out of their lease accounting software. With the clock ticking as companies scramble to transition to and maintain the new lease accounting standards, ensuring that you’re maximizing your software can maintain ongoing compliance and alleviate the burden on administrative teams.