Features of Lease Accounting Software
You may be wondering – what exactly are the key capabilities of a lease accounting software application? Some features are obvious. For example, the software needs to be able to perform the proper accounting under the new lease accounting standards (FASB ASC 842). Most critical to supporting the standards will be the need to generate the necessary journal entries required to report your leases as assets and liabilities on your balance sheet. To arrive at the journal entries, you will need an accounting engine and a database that can store the key terms and conditions for each of your leases – base and variable rent; start and end dates; end of term options. But beyond these basic features, what else should you look for in a lease accounting software application?
Features of Lease Administration Software
What are the key features of a Lease Administration software application? The answer is that it depends what type of Lease Administration software you are referring to. Equipment Lease Administration software offers features such as Lease versus Buy Analysis; Competitive Bidding and End of Term Management. Real Estate Lease Administration software applications feature Invoice-to-Pay Automation; Critical Date Management and Spend Analysis. There are also many common features between Real Estate and Equipment Lease Administration Software applications.
Lease Accounting versus Lease Administration Software
To comply with the new lease accounting standards most companies will need both Lease Administration Software and Lease Accounting Software. Few companies, if any, have an enterprise-quality lease accounting application in place. But many companies have some, if not all, of the lease administration software they require. For example, most companies have a lease administration application in place for real estate, but few have systems installed to track IT, fleet or other types of equipment leases.
Equipment Lease Accounting and Administration Software Evaluation Guide
Use this Guide to understand:
- Global Lease Accounting Engine and Lease Accounting Sub-Ledger
- Compliance with ASC 842 and IFRS 16 Financial Disclosures
- Responsibility and Management Accounting
- Equipment Competitive Sourcing and End-of-Term Management
- Real Estate Lease Administration and Spend Analysis
Detailed Software Requirements:
- Lease Data Abstraction Technology
- Cloud and Behind-the-Firewall Deployment Options
- Information Security
- General Ledger Integration and APIs
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More on Lease Accounting Software Selection
Evaluating Your Current Software Systems and Defining a Strategy
Evaluating Your Current Lease Accounting and Lease Administration Software
Before you can effectively evaluate new leasing software applications, it is important to understand the systems being used to administer and account for leases today. Most companies do not have a centralized lease accounting application. Spreadsheets have become the default application. And few companies, if any, have a single enterprise-wide lease administration system that is used across the enterprise for real estate, IT, fleet and equipment leases.
Single-Vendor versus Best-of-Breed Approach
You need both a lease accounting and a lease administration application to effectively comply with the new lease accounting standards. But should you use one vendor for both lease accounting and lease administration or should you take a best of breed approach? Having these two applications tightly integrated ensures that the accounting team is always aware of any new leases; modifications to existing leases; and end-of-term plans for expiring leases.