5 Things to Look for in Lease Accounting Software in Light of New Regulations
Originally posted on SAP Analytics. Reposted with permission.
As part of our ongoing accounting and financial close series, today we’ll be covering Lease Administration
Most companies use leases in some part of their operations or business activities. At the moment, operating leases are reported off balance sheet and disclosed in the notes of the financial statements. Today’s current lease accounting regulations have been stable for years, but that is about to change. Organizations worldwide will need to start complying with new regulations for lease accounting that are being proposed by the FASB and the IASB.
With the new regulations, organizations will be required to capitalize many of these operating leases and record them in their balance sheets as assets and obligations. With these major changes to the accounting standards, the burning question is, “Is your organization ready to meet the proposed leasing regulatory standards?”
To ensure they have the information ready and organized to meet and comply, organizations need to start considering how technology can help them prepare. So, what should they look for in software to ensure they meet the new regulations and also benefit from additional costs savings, realized with improved lease administration processes?
The right solution that goes beyond just the regulatory compliance should provide to you and your organization the following characteristics:
1. Unified database for all lease operations
Organizations should aim to build a comprehensive lease portfolio by centralizing lease data in a single repository. This approach provides excellent access, visibility, and traceability regarding critical issues, such as lease composition, key lifecycle dates, the value of leased assets, and responsible organizational units.
2. Collaboration during the process of data collection
The right technology should offer the entire organization (not jut a single user) the abilities to track changes and understand who made those. Collaboration tools are essential to empower all stakeholders to easily validate contracts for leased assets and better understand all the associated legal, financial, and business implications.
3. Strategic insight for sound decision-making
Executives need to be able to analyze the financial implications on the business of current and proposed lease accounting regulations, in order to make more informed decisions. Therefore, it’s important to use a tool that can provide rich analytics and visibility into the portfolio composition by different dimensions and provide “what-if” scenario analysis to identify opportunities to efficiently manage leases.
4. User-friendly interface with minimum training required
The new accounting regulations are approaching fast and many compliance processes are very time consuming. With this in mind, your accounting team needs to be able to hit the ground running with a solution that requires a minimum of training. It’s very important to look for a solution that allows for efficient management of lease administration in a user-friendly, visual format that is easy to learn and use.
5. A solution that adapts to your business
Integration with your current systems and flexibility to address your specific business are key technical requirements for the right solution. The solution should also enable a smooth transition to the new required processes and controls by the accounting and finance departments.
Make sure to attend the session, “Is your organization ready to meet the proposed leasing regulatory standards?” on March 17 at Financials2015 and stop by the Nakisa booth #325 to evaluate your compliance readiness.
For more information on how SAP can help, download the whitepaper, “Getting smart about revenue recognition and lease accounting.”
Integrated accounting software is the way to financial success. Every business owner needs this for their company and each type of industry has a unique set in which it fits, whether you're an entrepreneur or working on major projects with multiple contractors; having the right tools at your fingertips can make all the difference between being successful from day one!