Trying to choose the best lease accounting software for your organization? It’s not enough to compare features and capabilities when making that decision.
When vetting lease accounting software solutions, don’t forget to analyze the value you stand to get for the cost.
What value can you get from the best lease accounting software?
As accounting teams race to meet the deadline for IFRS and FASB changes, it’s tempting to forego due diligence when evaluating tools. After all, just about every lease accounting tool can perform calculations on your lease data and send journal entries to your GL. That’s the immediate necessity and that approach can get you to compliance.
However, remember that the entire lease accounting compliance effort (not just the software) will likely cost your company millions. When you choose the best lease accounting software, you’ll get so much more for your money than just compliance with the new FASB and IFRS standards.
Keep reading to learn about capabilities that provide value by:
- Saving time & effort for your teams that work with leases.
- Reducing costs by mitigating lease risks and preventing payment errors.
- Helping you make more cost-effective lease decisions.
IMPORTANT: Don’t assume that the best lease accounting software is the most expensive! Prices vary widely and don’t necessarily match the ROI you can expect.
Improve efficiency and productivity
You may think that user experience is NOT important for lease accounting software. Here’s why you should think again.
Time is money. That’s why improving employee productivity is a KPI for just about every organization on the planet. If your lease accounting tool is cumbersome and complicated to use, that slows people down and hinders their work.
The best lease accounting software uses smart system design to eliminate manual processes, and makes it easy to accomplish tasks quickly. For example:
- Can you enter data once and use it throughout the system (rather than entering the same thing in multiple places)?
- Can you perform mass updates to different groups of assets, such as based on entity, country, brand, or asset class?
- Can you configure alerts based on asset profile, or based on user groups?
- Can you update master data in the administrative settings (such as GL codes), rather than paying for a vendor CR each time?
Tip: Think about whose time is worth the most. Chances are that’s your financial leadership. The best lease accounting software includes features that make it easy for your CFO and Controller to get the lease information they need quickly.
Eliminate expensive mistakes
The fact is, there’s more financial risk associated with managing your leased portfolio than with producing the lease accounting.
So, if you’re not getting integrated lease management capabilities along with your lease accounting tool, you’re missing an important opportunity to reduce costs. When you’re shopping for lease accounting software, it’s essential to include a lease administration software comparison as well.
Here are just a couple of examples of the value you get from lease administration capabilities.
Lease options. For real estate leases, renewal options are critical. If you miss the chance to renew at favorable terms, you could be on the hook for millions… for a period of several years. When important lease dates approach, the best lease accounting software will alert those who need to take action.
Validating payments. When accounting is not integrated with lease administration, leases expire and the payments keep going out. Or, variable payments are miscalculated. Or, lease options change and the payments don’t. All of these mistakes add up to more money than you might imagine. The best lease accounting software validates all payments according to the current lease terms in the system, and sends that information to AP to prevent overpayments.
The best lease accounting software is a comprehensive lease management platform that helps you take control of your leased portfolio and ALL associated costs.
Make better leasing decisions
With virtually all leases are being brought onto the balance sheet, organizations (and their audit partners) are taking a much closer look at leasing decisions.
Can the lease accounting tool you’re considering help you make the most cost-effective choices?
For that, you need a central repository of ALL your lease data.
That’s why the best lease accounting software aggregates data for real estate, equipment, vehicles, land, and anything else your organization leases. It also collects information used in the day-to-day administration of your leases, not just the payment amounts and dates.
For data to inform your decision-making, you also need powerful and flexible reporting and business intelligence tools. Look for the ability to roll up, drill down into the details, and produce ad-hoc reports that slice and dice your data exactly how you need it.
Lease accounting tip: The ability to see side-by-side calculations for a lease according to the different standards (FASB ASC 840 vs ASC 842, for example) can be a valuable tool for decision making. Only the best lease accounting software offers this feature along with the ability to do hypothetical calculations.
How quickly can you realize the value?
Once you understand the value you can expect to get from the best lease accounting software, the next question is, when can you expect to get that value? Some systems take much longer to implement and produce ROI than others.
If you’ve implemented an IWMS, you know what we mean. It can take years to get the full leasing platform in place and operational. You can bolt on a lease accounting tool that just does the calculations more quickly, but then you’ll be missing out on the lease management value mentioned earlier.
The best lease accounting software provides a complete, end-to-end solution with fast implementation: 30 days or less for software implementation and data migration.
Get ready for the next step with this helpful guide: How to Implement Lease Accounting Technology: Steps to Ensure a Smooth Transition to ASC 842/IFRS 16
What’s the true cost?
Now that you understand how to compare value, it’s much easier to do a cost/benefit analysis of lease accounting solutions. However, there’s one more important point to consider: how are you calculating cost?
Remember that cost includes more than the price of the software. Don’t forget to factor in additional costs such as:
Technology implementation: Does the vendor outsource software implementation and systems integration? How much extra will you have to pay for that if you need to hire consultants?
Lease abstraction: Getting lease data out of old systems and paper documents can be the most costly and time-consuming part of the FASB and IFRS compliance process. The best lease accounting software providers offer this service. If your software vendor doesn’t and you’re forced to use consultants, you may pay extra to migrate abstracted data into your new system.
Customizations: Have you ever bought software that worked just as you wanted right out of the box? Every organization needs customizations to adapt software to their terminology, processes and structure. Will you have to pay consultants to do that, too? Or it is easy to customize the software yourself?
Now you’ve got a much more complete picture for comparing lease accounting tools. When you look at the true cost of software along with the value you can expect to get in return, choosing the best lease accounting software becomes a whole lot easier!