In today’s fast-paced business environment, efficiency is key to maintaining a competitive edge. One area that often consumes significant resources is lease accounting. Managing leases manually or with outdated systems can lead to errors, compliance issues and wasted time. Streamlining lease accounting not only improves accuracy and compliance but also offers substantial time and cost savings. Here’s how optimizing your lease accounting process can benefit your organization.

The Importance of Efficient Lease Accounting

Lease accounting involves tracking, managing and reporting all lease-related financial information. This process is critical for maintaining compliance with standards like ASC 842 and IFRS 16, which require detailed reporting on lease liabilities and assets. Inefficient lease accounting can result in inaccurate financial statements, increased audit scrutiny and potential penalties for non-compliance.

Key Benefits of Streamlined Lease Accounting

Improved Accuracy and Compliance
Manual lease accounting is prone to errors, especially with complex lease portfolios. Mistakes in data entry or calculations can lead to incorrect financial reporting, potentially resulting in costly penalties. Streamlining lease accounting through automation ensures accurate data entry, consistent calculations and adherence to accounting standards. Automated systems can also provide real-time updates on regulatory changes, ensuring continuous compliance.

Time Savings
Manual lease accounting is time-consuming, requiring extensive data collection, entry and reconciliation. By automating these processes, companies can significantly reduce the time spent on routine tasks. Lease accounting software can handle data entry, calculations and report generation, freeing up your finance team to focus on more strategic activities. This increased efficiency can lead to faster close processes and more timely financial reporting.

Cost Efficiency
Streamlining lease accounting can lead to substantial cost savings. Reduced manual labor translates to lower administrative costs. Additionally, accurate and efficient lease accounting minimizes the risk of financial errors that can result in fines or increased audit fees. The cost of investing in lease accounting software is often offset by the savings realized from improved efficiency and accuracy.

Enhanced Visibility and Control
Automated lease accounting systems provide a centralized platform for managing all lease-related information. This enhances visibility into lease portfolios, allowing for better tracking of lease terms, renewals and obligations. Enhanced visibility facilitates more informed decision-making, enabling companies to optimize their lease agreements and negotiate better terms. Improved control over lease data also supports more accurate budgeting and forecasting.

Scalability
As companies grow, managing an increasing number of leases can become overwhelming. Streamlined lease accounting systems are scalable, allowing businesses to easily handle expanding lease portfolios without a proportional increase in administrative burden. This scalability ensures that lease accounting processes remain efficient and effective as the organization evolves.

How to Streamline Lease Accounting

Implement Lease Accounting Software
Investing in specialized lease accounting software is the most effective way to streamline the process. These platforms are designed to automate data entry, calculations and reporting, ensuring compliance with accounting standards. They also offer integration with existing ERP and financial systems, enhancing overall efficiency.

Standardize Processes
Standardizing lease accounting processes across the organization ensures consistency and reduces the likelihood of errors. Establish clear protocols for data entry, review and reporting, and ensure all relevant staff are trained on these procedures.

Regular Audits and Reviews
Conduct regular audits and reviews of lease accounting processes to identify areas for improvement. Regularly update software and processes to align with current best practices and regulatory requirements.

Conclusion

Streamlining lease accounting is a strategic move that offers significant time and cost savings. By improving accuracy, enhancing compliance and reducing manual labor, automated lease accounting systems enable companies to manage their lease portfolios more efficiently. The benefits extend beyond cost savings, providing enhanced visibility, better control and scalability to support business growth. Investing in lease accounting software, like the one provided by Yardi Corom, and standardizing processes are essential steps towards achieving these efficiencies and ensuring long-term financial health.

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.