In the rapidly changing world of business, managing leases has become increasingly complex. With new lease accounting standards such as ASC 842, IFRS 16 and GASB 87, companies face stringent requirements for tracking and reporting their lease obligations. Manual lease management or outdated systems can expose organizations to significant risks, including non-compliance, financial inaccuracies and operational inefficiencies. This is where lease management software steps in, offering a robust solution to minimize risk and improve compliance. Here’s how this technology keeps your business protected.

Ensuring Compliance with Lease Accounting Standards

The introduction of new lease accounting standards has brought about substantial changes in how companies must account for leases on their balance sheets. These regulations require businesses to recognize lease assets and liabilities, which can be a complex and error-prone process if handled manually.

Lease management software automates the process of tracking and reporting lease data, ensuring compliance with the latest accounting standards. It streamlines the calculation of right-of-use assets, lease liabilities, amortization schedules and interest expenses, reducing the risk of human error. Additionally, the software is regularly updated to reflect changes in regulatory requirements, helping your business stay compliant without the need for constant manual adjustments.

By ensuring accurate and timely financial reporting, lease management software not only helps avoid penalties and fines but also enhances your company’s credibility with stakeholders and auditors.

Reducing Financial Risk through Accurate Data Management

Managing leases manually or with basic tools like spreadsheets can lead to costly mistakes. Errors in data entry, missed deadlines or incorrect calculations can result in financial misstatements, overpayments or underpayments. These mistakes can have serious consequences, including financial losses, legal disputes and damage to your company’s reputation.

Lease management software provides a centralized platform for storing and managing all lease-related data. It offers features like automated alerts for upcoming lease renewals or terminations, ensuring that critical dates are never missed. Additionally, the software provides detailed audit trails, tracking every change made to lease agreements and financial data. This level of transparency and accuracy reduces the likelihood of errors and helps mitigate financial risks associated with lease management.

Streamlining Lease Administration and Enhancing Efficiency

Operational inefficiencies can be a significant source of risk in lease management. For businesses with large portfolios, managing leases manually can be time-consuming and resource-intensive. Overlooking critical terms in lease agreements, such as escalation clauses or renewal options, can lead to missed opportunities for cost savings or even legal disputes.

Lease management software streamlines lease administration by automating routine tasks, such as tracking lease payments, generating financial reports and managing critical dates. By simplifying these processes, the software allows your team to focus on more strategic activities, such as negotiating better lease terms or optimizing your lease portfolio.

The software also offers robust reporting and analytics features, providing insights into your lease portfolio’s performance. This data-driven approach enables better decision-making and helps identify opportunities to reduce costs, renegotiate leases or divest underperforming assets.

Enhancing Legal and Regulatory Compliance

Leases often come with complex legal obligations that, if not managed properly, can lead to compliance issues. For example, environmental regulations, health and safety standards and local zoning laws may all impact your lease agreements. Failing to comply with these legal requirements can result in penalties, litigation and reputational damage.

Lease management software helps mitigate legal risks by providing tools to track and manage compliance-related obligations. The software can store and monitor key documents, such as certificates of insurance, environmental reports and safety inspections, ensuring that all legal requirements are met. Automated alerts can also notify you of upcoming compliance deadlines, reducing the risk of oversight.

Improving Audit Readiness

Audits can be stressful and time-consuming, especially if your lease data is scattered across multiple systems or stored in paper files. Lease management software simplifies the audit process by providing a centralized, organized and easily accessible repository of all lease-related information. This not only speeds up the audit process but also demonstrates to auditors that your company has robust controls in place.

In addition, the detailed reporting and audit trails offered by lease management software make it easier to provide auditors with the necessary documentation, reducing the likelihood of audit findings or discrepancies.

Conclusion

Lease management software is a powerful tool that helps businesses minimize risk and improve compliance in an increasingly complex regulatory environment. By automating key processes, ensuring accurate data management and providing tools for legal and regulatory compliance, the software protects your business from financial, operational and legal risks. Whether you manage a small portfolio or a large one, investing in lease management software, like the one provided by Yardi Corom, is a proactive step toward safeguarding your company’s financial health and reputation.

Yardi Corom is a comprehensive and user-friendly accounting, lease and workplace management solution for CRE tenants. Our cloud-based software solution increases efficiency and accuracy across your entire lease portfolio: manage leases and subleases, track key lease data, centralize transactions and become FASB/GASB/IFRS compliant. To learn more, you can visit our website or schedule a meeting with our team.