Complying with the new lease accounting standards has been an uphill task for companies in the first year. Implementation demands the adoption of new processes and systems, assistance from consultants, and staff education. However, these approaches will not be enough in the long run. You must gain control over lease data, lease accounting, and lease management; this is possible only through the best lease management software.
Every month, repeated evaluation and assessment of leases is now essential due to technical changes under new standards, the need to conform to the new rules, and to solve complexities at ease. As operating leases are coming to the balance sheets, many companies are still using a manual process and excel sheets for journal entries required for the close. Instead, you must use easy to use and powerful lease management software which can help compliance with new standards and calculations as well as record to report process.
Here are a few of the challenges companies will face in lease management and how software solution like Yardi Corom Transaction Management is a critical component for your success. The lease accounting software combined with lease management software will maximize productivity.
Lease Data Updation
New data in the form of geographical location, asset types, and specific data like foreign exchange rates, tax rates, cost centers have to be added in the lease accounting system regularly. In a given period, various factors like general ledger accounts and profit centers will change requiring updation and account maintenance. The identification of such changes is a challenge.
Accuracy of Lease Portfolios
It is a common trend that lease portfolios change drastically every year. There are new leases, lease extensions, lease terminations, payment modification, lease renewal, and several other factors that need to be considered at different levels. Thus, the accuracy of lease portfolios is extremely important.
Additionally, in case of a close process, re-evaluation and verification must be carried out to check the accuracy of lease accounting. This will include high-risk components like input/output from the system, estimates, assumptions, reconciliations, etc.
Once the lease portfolios are verified as complete and accurate, the journal entries need to be fed into the general ledger. In this process, companies must leverage software solutions that enable the creation of journal entries and book payments and income. This approach will help in lease accounting as well as in lease management.
Under the new lease standards, there are complex quantitative and qualitative disclosures that require different kinds of reporting. For example, business unit reporting, statutory reporting, etc. On the other hand, qualitative disclosures do not change often. Therefore, companies need to ensure that lease agreements and modifications are appropriately included in the event procedure.
In the first year of adopting new lease standards, many companies have successfully marched on with transition while others are still reluctant to embrace new solutions like lease management software. Yardi Corom Lease Management will help companies to find critical event dates, manage contacts and documents at one palace, generate payables and process payments, create journal entries, and automate financial reports. Custom reporting is also possible. For more details, visit www.yardicorom.com.