Land, distribution facilities, real estate, & equipment
Portfolio
Portfolio value
Produce distribution
and farming
Industry
“My implementation engineer was AMAZING. He was technical, available, knew lease accounting, understood the math on the back end, and knew the system inside and out.”
Melinda Donkor
Director, Financial Reporting at Mission Produce
Situation
Mission Produce, a California-based global leader in the avocado industry with 3,900 employees worldwide, and partners across 25 countries in Mexico, South America, and South Africa, was frustrated with their current lease accounting solution. After experiencing issues with FX reporting, lack of period-closing and workflow, limitations with general ledger mapping, and certain modifications and calculations, they sought another solution that better fit their needs. In addition, maintaining IFRS and GAAP compliance was a priority.
Solution
Mission Produce selected LeaseAccelerator, most notably for the platform’s ability to manage FX reporting. With a centralized leasing process already in place, LeaseAccelerator was well prepared when inventorying leases during the seven-month implementation. While implementing all the data did have its challenges, the LeaseAccelerator engineering team was extremely helpful.
Impact
Mission Produce currently uses LeaseAccelerator for ledger exports and trial reports, managing their $90M lease portfolio in the system. They are comfortable with the system calculations and SOC1 reports, so offline manual calculations are no longer necessary. They have also eliminated manual work related to FX for month-end close activities.
Reduced cost of equipment leases
Now, competing lease transactions is a companywide standard practice. Through the automated RFP process, over 73 competitive sourcing events have been completed in 26 countries. The new competitive model yields with an average cost of savings 8% per lease.Better lease portfolio management
Since the new equipment lease management strategy was implemented, performance has improved consistently each year. Negotiated savings have been converted to realized savings, driving bottom-line performance. Evergreen payments as a percentage of total annual payments (excluding termination fees) dropped from 18% at program inception to an average of 8.5% in subsequent years. The “unplanned/unintended” portion of spend dropped by more than half.Established policies and controls
Specific policies and controls were put in place throughout the lease lifecycle. This resulted in better operational and financial controls.Ready for new lease accounting standard
The software makes the appropriate calculations for the current standard and the new standard, enabling Cummins to generate multiple sets of books and parallel reporting. Additionally, the company can use the tool on a daily basis to maintain the accuracy and completeness.Competitive edge
Better lease management provides Cummins with an edge over its peers in the Industrial Manufacturing sector. Cummins is in the process of acquiring its North American distributors. LeaseAccelerator has made the merger integration process smoother, loading the distributor lease portfolios into the application and then converting the units into the global leasing process.Increased visibility
All stakeholders have visibility into the lease portfolio and the leasing lifecycle. The visibility was achieved using the Lease vs. Buy process, automated notifications, and online reporting tools.Goals, metrics, and best practices
Cummins achieved the CFO’s goal of fixing the process as well as the Treasurer’s goal of cost savings The company now has well-defined processes and controls. There is still opportunity to further reduce costs at the end-of-term. However, Cummins equipment lease management processes are now based on best practices.“My implementation engineer was AMAZING. He was technical, available, knew lease accounting, understood the math on the back end, and knew the system inside and out.”
Melinda Donkor
Director, Financial Reporting at Mission Produce
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