In the rapidly evolving landscape of financial management, lease accounting has gained significant attention due to the implementation of new standards such as ASC 842, IFRS 16 and GASB 87. These standards require meticulous tracking and reporting of lease liabilities and assets, making lease accounting software an indispensable tool for Chief Financial Officers (CFOs). Selecting the right lease accounting software is a crucial decision that can greatly impact an organization’s compliance, efficiency and financial reporting accuracy. Here’s a comprehensive guide to help CFOs navigate this critical selection process.

Understanding the Need for Lease Accounting Software

The new lease accounting standards have transformed how leases are recorded on balance sheets, requiring detailed disclosures and precise calculations. Traditional spreadsheet-based methods often fall short in handling the complexity and volume of data, leading to errors and inefficiencies. Lease accounting software automates these processes, ensuring compliance, accuracy and streamlined operations. This software not only aids in financial reporting but also provides valuable insights into lease portfolios, enabling better decision-making.

Key Features to Consider

Compliance and Standards Support
The foremost criterion is the software’s ability to support multiple accounting standards, including ASC 842, IFRS 16 and GASB 87. Ensure the software is regularly updated to comply with evolving regulations.

Data Integration
The software should seamlessly integrate with existing ERP, financial and asset management systems. This integration ensures data consistency and reduces manual data entry, minimizing the risk of errors.

Scalability
As businesses grow, their lease portfolios become more complex. Choose software that can scale with your organization’s needs, accommodating an increasing number of leases and users.

User-Friendly Interface
A user-friendly interface enhances productivity by simplifying navigation and reducing the learning curve for users. Look for software that offers intuitive dashboards and customizable reports.

Automation and Workflow Management
Automation of lease data extraction, calculations and reporting is crucial for efficiency. Workflow management features, such as approval processes and notifications, further streamline operations.

Audit Trail and Security
Ensure the software provides a robust audit trail, documenting all changes and transactions. Strong security measures, including data encryption and user access controls, are essential to protect sensitive information.

Evaluating Vendors

When evaluating potential vendors, consider the following steps:

Needs Assessment
Conduct a thorough assessment of your organization’s lease accounting needs. Identify the volume of leases, complexity and specific reporting requirements.

Vendor Reputation
Research vendor reputation through reviews, case studies and industry reports. Engage with peers and professional networks to gather feedback on their experiences.

Demonstrations and Trials
Request demonstrations and trial periods to evaluate the software’s functionality and compatibility with your existing systems. Engage end-users in this process to gather practical insights.

Customer Support
Assess the vendor’s customer support services. Reliable support is crucial for addressing issues promptly and ensuring smooth implementation and operation.

Cost-Benefit Analysis

Conduct a cost-benefit analysis considering the software’s features, implementation costs and long-term value. While cost is an important factor, prioritize software that delivers robust functionality and compliance.

Implementation and Training

Once you have selected the appropriate software, focus on a structured implementation plan. Engage cross-functional teams, including IT, finance and operations, to ensure a smooth transition. Comprehensive training for users is essential to maximize the software’s potential and ensure compliance.

Conclusion

Selecting the right lease accounting software, like the one provided by Yardi Corom, is a strategic decision that requires careful consideration of features, vendor reputation and organizational needs. By prioritizing compliance, integration, scalability and user-friendliness, CFOs can ensure their organization is well-equipped to manage lease accounting efficiently and accurately. This not only enhances financial reporting but also supports informed decision-making, ultimately contributing to the organization’s success.

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.