There’s more than enough work involved in becoming compliant with IFRS 16 and the lease accounting changes which come into play in January 2019.
And that’s without considering the need for retrospective comparative reporting up to a year in advance of the official implementation deadline for IFRS users and 2 years in advance for companies complying with FASB ASC 842, meaning that, in reality, the deadline for compliance is actually much sooner.
Amongst the vast amount of changes which are brought in under the lease accounting changes are the redefining of what constitutes a lease and the fact that operating leases will be brought on balance sheet. And, furthermore, there are changes to lessor accounting practices, qualifications like small value ticket exemptions to consider and reorganising a company’s internal processes in order to manage the whole project.
The fact that IASB and FASB boards treat the changes differently is another complicating factor.
All of this needs to be completed in an ever-shrinking window of time, meaning that more and more companies are looking for solutions. Dashboard level analysis, thanks to a piece of automated software, is the most popular option.
What Challenges Does Using Dashboards and Software Help You To Tackle?
For many businesses, lease data is spread and confused. Spread across several sites or across different persons of responsibility. The small task of consolidating all of this data could be problematic in itself, never mind analysing it in order to become compliant. The lease portfolio will also need to be constantly managed and monitored in order to maintain compliance, throughout 2018 and beyond.
A software solution which houses all this data centrally, via cloud storage, is the easiest way of streamlining this process.
Moving on, the vast majority of businesses are still unprepared for the upcoming changes to how they will have to go about their lease management. And this is despite the fact that Deloitte found only 15% of finance and accounting professionals said they believed the transition to compliance would be easy to implement.
So, professionals know it’s going to be tricky, but, until now, not much has been done about it.
That’s another reason that a dashboard of data and analysis will help because it speeds up the process of producing and analysing which of a company’s leases are compliant with the new standards. The legwork is involved in populating the software, rather than collecting it and then analysing it from lease to lease.
The speeding up of the process is going to be a big appeal for the many businesses who cannot see any ROI for investing resources in becoming compliant. But it has to be completed. The best alternative is to make the process as smooth and cost efficient as possible.
What Kind Of Issues Can Dashboards Help Analyse?
Migrate and Centralise
Given that the leading software solutions operate on a cloud basis, several points of responsibility within the business can upload their lease data into a centralised place. This is great for remote staff and those companies who work across different sites and locations.
When the data has been migrated onto the software, at least this is the case with LOIS, it is stored securely and safely, can be easily added to when new lease agreements come on board and is ready for the software to perform its analysis.
Dashboards can help to keep your lease requirements and prospective agreements highly organised. This helps with keeping your options well placed and ready for further interrogation or bringing to agreement.
Behind the scenes, the software has taken what the user requires from a lease and put the request out to tender to trusted lease suppliers. The pricing and options can be completed and submitted before being presented in an easy to follow format to the user. Rather than the user organising the return of various quotes and dealing with negotiations, intelligent software performs this task on the user’s behalf.
Managing Ongoing Leases
With the majority of companies running a portfolio of lease agreements at the same time, it’s inevitable that some of those agreements will run at some level of inefficiency. This could be due to an employee not being able to traverse the market of leasing agents for a more competitive agreement or a company simply letting an unfavourable auto-renewal be activated.
A dashboard within the right software can flag such instances to the user and notify them of where to divert their attention and which lease agreements to focus on improving.
Whilst software that houses all this data and prompts you when action is needed is good, what makes a software solution great is that it analyses the data in order to formulate reports too. From financial reports in year-end accounts to snapshot overviews accessed at any time, software such as LOIS can give you accurate and automated reports.
The dashboard reports can also be dissected further, with the data behind them ready to be broken down, should the user need to. Monthly reports, outstanding liabilities, expiring leases, asset reports… all of them can be formed within seconds and exported into universal formats such as Excel spreadsheets.
This, most crucially, also applies for showing which lease agreements are (or are not) achieving compliance with the latest lease management and accounting standards.
Personalised Dashboards & Multiple User Accounts
Because the best software is centralised and online, users at a company can each access the data with their own login.
This is boosted further by users being able to use the software to form reports based on any specific kind of data within the lease information. For example, anything from cost centre codes to asset numbers is itemised within the database of each lease, which enables LOIS to generate reports based on any specific field of information. And, of course, present it quickly and clearly.
But, beyond all of this, a dashboard software system is taking the work out of data analysis and presenting the results in a clear, easy to understand format. Yet, also still housing all the intricate data should a user need to dive in for more in-depth analysis.
These overviews can quickly show a company the health of their lease portfolio at any time they desire. Which is important for a company getting to grips with their lease management processes and not only attaining IFRS16 compliance but maintaining it.
How Lease Management Software Can Help
To help lessees discover how cost and time savings can be delivered with the assistance of lease management software. Innervision has created a free guide to 'digitising lease management' - the publication touches on the potential problems lessees face when managing lease portfolios, how software can help solve these issues and what important features to look out for. To access the guide, just follow the link below.