Estimating the Implementation Timeframe
How long will it take to comply with the new accounting standards? Estimates vary from 6-12 months to 12-24 months. The real answer is that you won’t know until you get started and get knee-deep into the analysis. In our experience, the project implementation time frame will be influenced by the current state of your lease accounting, the complexity of your equipment leasing program, and the availability of key stakeholders to participate in the project.
Creating a Project Plan
As with many major projects, the more investment you make upfront to properly scope, cost, and plan for the project, the lower the risk of a delay or budget overrun. A critical first-step in implementing the new lease accounting standards is defining a project plan. You will need to identify the major phases of the project – assessing the current leasing program, selecting a software vendor, collecting leasing data, applying the accounting policies, and transitioning to the new standard. You will also need to identify the key milestones, approximate timeframes, and task owners. Get a head-start by downloading our customizable project plan template.
Developing a Budget
A key factor in the success of your lease accounting initiative will be dependent upon properly budgeting for the incremental resources and costs needed to successfully complete the project. Most companies will need to purchase a specialized lease accounting software application. And they will need to get help from outside consultants to implement the software – especially with collecting and populating all the necessary leasing data. However, lease accounting budget planning will be challenging as there are few, if any, external benchmarks available to use as a foundation for your estimates. No large companies have implemented the lease accounting standards yet.
Beyond Compliance – Optimize to Save 10% on Your Leasing Program
The Silver Lining of the New Lease Accounting Standards
Making a Business Case for Investment in Lease Administration
Accelerate Your Lease Accounting Budget Planning Cycle by Demonstrating an ROI from the Project
Savings from Equipment Lease Management
At most companies the leasing processes for IT, fleet, and equipment leases have been neglected with little investment in processes or systems to manage these assets. As a result, many companies have highly inefficient equipment leasing programs that are creating unnecessary costs and performance drags on the organization. The good news is that you may realize seven-figure cost savings in the next 12 to 18 months by implementing best practices for equipment lease administration.
Savings from Real Estate Lease Administration
At many companies the real estate leasing process has not yet been fully optimized. Subleases are poorly managed, over-billing by landlords goes unchecked, and critical contract dates to expand or renew at discounted rates are missed. Case studies have demonstrated that companies that apply best practices to real estate lease administration can realize savings of 2-4% of their real estate portfolio.
Savings from Lease Accounting
With the implementation deadlines for the new lease accounting standards approaching in the coming years, many controllers and accounting organizations are considering lease accounting software. At some companies, the business justification for investing in a specialized software application is straightforward. Developing the systems, processes, and controls to support major accounting changes is viewed simply as a “cost of doing business.” However, at a number of other companies we have spoken to, there may be a need to provide a more detailed business case to support the investment..
Learn more about the 6 Opportunities for Cost Savings in Your Lease Accounting Process.
How to Get Started with Your Lease Accounting Project
What to Do in the First 90 Days
Download our How to Get Started eBook to Learn:
- Who to Put on Your Project Team
- How to Assess Your Current Processes, Systems, and Controls
- What to Include in Your Budget Estimates
- How to Identify an Executive Sponsor
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Understanding the ROI from Better Equipment Lease Administration
Reducing Evergreen Fees
Equipment leases are multi-year contracts with a very important financial decision at the end of the term. At the end of a lease, lessees must decide if they want to renew, buyout, and/or return the leased equipment. On one lease, you may have a partial renewal, partial buyout, and partial return. Your choice at the end of term all depends on the circumstances and the needs of your users. Most companies lease with the intention of returning the equipment at the end of the initial term.
Savings from Competitive Bidding on Equipment Finance
Most companies with procurement organizations source their capital equipment fairly well, but most also fail to engage strategic sourcing professionals and their best practices on the financing (or lease) portion of the transaction. Financing is a completely distinct procurement – or should be. Unbundling these two “buys” is a classic strategy that is too often overlooked. The lessor supply market can, and should, be brought to bear by your sourcing and procurement professionals.