Most companies aren’t prepared for the upcoming lease accounting changes even though the implementation deadline, 1st January 2019, is fast approaching.
Virtually every large organisation makes use of rentals or leasing and will, therefore, be affected by the new standard. Is your company ready to meet the proposed leasing regulatory standards?
If not, you’re not alone: according to recent surveys by Delitte & Touche LLP, more than 30 percent of respondents said their current software is inadequate and that upgrades or new software will be necessary to maintain compliance. A large number of respondents also indicated that their biggest implementation challenge will be collecting data on all leases into a centralised inventory. Regardless of the coming changes, this important transitory phase can be greatly simplified with the right software solutions for your business.
With a plethora of information available on lease accounting software solutions, it can be hard to find one that fits your business, especially when you’re not sure what to look for. However, the reward for choosing the right solution makes the time spent well worth it; with the right lease accounting solution, you will spend less time managing your lease portfolio, meet the compliance standards of IFRS 16 and drive down costs. And with less than a year left before the new standard’s implementation deadline, right now is the perfect time to get ahead of the competition and find the ideal solution for your needs. Here are a few things to consider when choosing lease accounting software:
On-site Vs. Cloud
A cloud-based solution offers great flexibility, as companies can easily access it from a web portal, as opposed to installing and managing software on your computers or servers. Cloud-based services allow you the freedom to access your account anytime, anywhere and from any device with an internet connection. Cloud-based systems also make it easier to transfer lease documents, data and contracts between end users, so users can spend less time performing monotonous and time-consuming data entry and more time focusing on their core business.
Solutions Implementation Time
With only a year remaining until the standard comes into effect, you won't want a solution that takes months to get up and running – rather look for one that is quick to implement. The looming deadline might mean that cloud-based solutions are far more preferable to on-site solutions, as registering for cloud-based services is far quicker than installing bulky server infrastructure and setting up individual machines on the network. In general, the implementation process for on-site solutions (for example, the need to install particular software in companies with hundreds of PCs) can take significantly longer than the relatively painless move to the cloud.
It will also be easier for your staff to hit the ground running with a solution that requires minimal training. In this regard, you should search for solutions that allow for effective lease accounting and lease administration in a user-friendly, easy-to-use visual format. In some cases, lease accounting solutions also have a dedicated account team to help you with any issues you might have, reducing the need for intensive and costly staff training.
It Should Allow For Reporting Under Various Standards
Effective lease accounting software should allow you to run multiple lease accounting reports for all the different accounting standards (IAS 17, IFRS 16 and FASB ASC 842). Whichever lease account solution you pick, it’s important to find one that allows the flexibility of adaptive reporting, while empowering you to measure and track your critical performance metrics, as well as how these metrics shift under each standard.
It Should Be Able To Produce The Key Reporting Outputs Required For Compliance
Accounting calculations can be complex and time-consuming. No one has time for this when rushing to meet compliance deadlines. Certain solutions generate these calculations for you, so you can accurately produce mandatory reports, such as the balance sheets, depreciation schedules, income statements and cash flows that are necessary for full compliance. This kind of solution will also help you meet your company’s internal reporting requirements and more easily keep track of critical accounts information.
It Should Adapt To Your Business
The solution should be able to seamlessly interface with your company’s chosen ERP systems and underlying accounting solutions such as SAP and Oracle. The flexibility to address your specific business is a key requirement. Without a smooth transition to the new required processes and controls by accounting and finance departments, implementing the necessary changes to meet new standards could be more difficult or delayed than it needs to be.
Many large corporations rely on a plethora of pre-existing enterprise solutions that are integral to the overall management of core business processes. Such solutions will often provide an integrated and updated view of core business functions such as accounting, procurement, fleet and property management etc.
When assessing the viability of lease accounting software, businesses should seek a solution that facilitates a straightforward interface with any existing system via a simple API (application programming interface). Such an interface creates a clearly defined method of communication between various enterprise solutions.
It Should Accommodate Your Group Structure
If you have a multiple group business, look for accounting software that supports numerous small groups under one account. A good accounting solution will also allow you not only to invite other users to the system but to also control their access. For example, certain people – such as your group reporting accountant or group treasurer – may require full access, while other employees can get limited access to keep track of their relevant information and perform the basic tasks they are required to within the system.
Without an internal leasing process, locating the documents containing vital lease data will be a complicated and time-consuming task. As such, the right software is absolutely crucial for IFRS 16 compliance. A year might seem like a long time, but you should not underestimate the work necessary to prepare for the coming changes, meet the requirements of IFRS 16 and remain compliant with IASB standards. Innervision’s lease accounting solution LOIS has easy-to-use IFRS reporting tools and allows you to easily collate and export all the data needed to comply with the new lease accounting standard. It might be just what you need.
Want to discoverer more? View the latest brochure for Innervision’s robust and agile lease accounting software LOIS. The brochure provides a basic overview of the new lease accounting standards, identifies the main challenges, as well as detailing some of the solutions fundamental features and important reporting capabilities. To access your copy, follow the link below: