Across industries, sectors and organizations of different sizes, the COVID-19 outbreak has touched virtually every business in some way. Between stay-at-home orders, emergency closures, and supply chain disruptions, companies are coping with a lot of operational and financial challenges posed by the crisis.
In the middle of all this uncertainty, the deadlines for compliance with the latest lease accounting standards have once again been extended. That means:
- Private companies have an additional year to adopt new lease accounting standards in their financial statements.
- Public not-for-profit companies that have not yet issued financial statements also get an extension.
- Government entities that comply with GASB 87 postponed the effective date and subsequent reporting deadlines for 18 months.
That’s good news for businesses that have yet to fully implement the new lease accounting standards or are still in the process of updating their accounting practices. But just because there has been a reprieve does not mean you should delay implementing a lease accounting software. Furthermore, implementing a tool to track your leases can be incredibly helpful.
Stay Ahead of Compliance with Lease Accounting Software
Like we’ve been saying, getting ready for compliance with the new lease accounting standards is a time-consuming and intensive process. That’s because the reliability of your financial reporting depends on doing a thorough lease inventory and accurately consolidating all your lease data.
Our advice is to continue moving forward as quickly and efficiently as possible on these compliance efforts. That includes implementing lease accounting software to help you organize and report on your lease data in support of the new standards.
Having access to accurate lease data is also crucial to business and accounting decisions related to the pandemic.
That means lease accounting software will not only help you meet the compliance deadline down the road. It will also enable you to search for and manage critical lease information right now — and even find ways to save money in circumstances related to COVID-19.
Leverage the System to Save Time and Money
Now more than ever, companies need to understand their lease obligations and rights so they can manage costs and find areas where they might have some flexibility. (Read more in our blog COVID-19 and Lease Accounting: Understanding Your Lease Obligations and Costs.)
A lease accounting and management solution such as Visual Lease can help your company save time and money by providing greater control over your leases. It provides the tools to search for and view important information needed to stay on top of your lease requirements in three crucial areas:
Better Manage Your Financial Responsibilities
Visual Lease tracks the relevant language of all your leases, to help you determine what rights and options you have regarding rent and other payments. For example:
- What are your monthly payments obligations across all your leases?
- Are you paying for assets that the business no longer uses or needs?
- Do the leases include a grace period before any late fees apply?
- Do any leases allow you to defer payment and if so, for how long?
- Is the company overpaying for services that it is not receiving during a business closure?
Having this and other lease information readily available can help you better manage costs and cash flow. It can also save valuable time when you are looking for lease clauses and other helpful information you need to effectively negotiate with landlords (or with tenants, if you are a landlord).
Understand Your Legal Responsibilities
Are there any lease clauses that protect your business from potential casualty, force majeure, or even bankruptcy?
Without a lease accounting and management solution, you would have to look for that type of information by manually reviewing all of your leases. But with a solution such as Visual Lease, you can easily search for pertinent clauses to help determine what the business’s legal rights and responsibilities are.
Keep Track of Lease Options and Notices
You can also use Visual Lease to find options that will help you improve liquidity and reduce expenses during a business closure or slowdown. For example, you can search leases to find out what options you may have for downsizing or relocating a space — or for rent abatements or lease renewals, impairments, or terminations.
You can even set up the lease management solution to automatically alert you to important events, such as:
- Options that must be exercised by a certain date
- Notifications that must be sent about upcoming lease options
The alerts will continue to be important as companies reassess how they do business, the resources they need, and the options they will exercise moving forward in what may be a very different, post-COVID environment.
Lease Accounting Software: Beyond Compliance
How leases address defaults, terminations, options, rent abatements, and other issues can have a big impact on the decisions that a business must make, under all sorts of circumstances.
Having lease accounting technology that puts these and other lease details at your fingertips will not only prepare you for lease accounting compliance — it will also empower the business to make more informed and timely decisions, both during the COVID-19 pandemic and in the days, weeks, and months to follow.
In addition, lease accounting software provides the tools a business will need to calculate and report on lease modifications, deferrals, and other changes post-COVID.