One of the biggest leasing issues facing businesses today is inaccurate or missing lease data for initial ASC 842/IFRS 16 compliance and ongoing data maintenance. As businesses continue to focus on their future success post-pandemic, many are struggling with lease data challenges due to the sudden shift to all-remote work models, increased employee turnover, limited in-house expertise and outdated in-house processes.
However, businesses can get on the right track toward achieving and maintaining long-term, sustainable lease accounting compliance by evaluating current leasing processes to determine which to keep in-house and which to consider for co-sourcing or outsourcing. With the correct application of automation and expertise, businesses can drive cost savings as well as optimization.
Breaking down insource, outsource and co-source models
The back office has changed significantly over the last two decades by focusing on efficiency and cost reduction.
- Insource: A traditional model where business practices are performed, assigned and managed within the operational infrastructure of the organization.
- Outsource: A model that leverages a third party (outside of the organization) to undertake specific tasks or processes, usually with a high level of autonomy.
- Co-source: A relatively new model, co-sourcing is where business practices are performed internally as well as by a third-party specialist, providing the business with control and transparency on assigned functions.
Evaluating your leasing process to determine the right model
Value of automating the leasing lifecycle
Once a business evaluates its lease capabilities and decides on a business model, the next key step is to deploy an automated platform. Automating the lease lifecycle with the right software will help solve initial data challenges, but businesses still need to build a long-term plan for ongoing lease management.
Due to this, many companies are exploring the use of Global Lease Services (GLS), which leverage external resources and managed service providers to take advantage of non-core expertise or focus local resources on more strategic activities. Freeing up internal resources so businesses can focus on core competencies and other strategic projects, Global Lease Services enable businesses to stay audit ready while maintaining business continuity. With the ability to scale up or down, businesses can tap into experts to help them transform outdated processes as well as drive long-term cost savings and lease management success.
For more detail, listen to this webinar replay: https://explore.leaseaccelerator.com/webinar-lease-management-and-accounting-in-source-outsource-or-co-source/
Capturing and tracking lease accounting data is one of the biggest hurdles organizations face in managing the lease lifecycle.
If you’re in a private company or government organization, you get an extra year to prepare for lease management compliance with ASC 842 and GASB 87.
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