As the time frame for implementing the new lease accounting standard, ASC 842, is only a few short months away, it may be beneficial to look at some of the advantages of using a lease management software tool rather than relying on more conventional methods.
Compliance with the new standard is the most important factor to consider when evaluating lease management software options, but needs are generally based on the size of a company’s lease portfolio, their current IT resources and their current recordkeeping practices. Our lease accounting team also recommends looking for features and functionality that:
- Easily generate monthly journal entries and import those journal entries into the accounting system.
- Perform all required quantitative calculations to comply with the new financial statement lease disclosure requirements.
- Prepare lease amortization schedules that include all required accounts (e.g., right of use assets, short-term and long-term lease liabilities, interest expense, amortization expense, etc.) and journal entries.
We also suggest software tools that can grow with your company, not only the expansion of your lease portfolio over time, but also the expansion of the resources who may be involved in lease management and reporting. Consider a tool that is flexible and scalable:
- Is the software focused on one industry or multiple industries?
- Can it address the needs of all asset types?
- Can you attach documents and notes to the lease record to hold all information and explanations in one place?
- Does the software work for small and/or large lease portfolios, including various complexity of terms and provisions in those leases?
- How many users are able to access the platform?
Lastly, being able to rely on the accuracy of your data and the data input process is a critical piece of choosing the right lease accounting software solution. Consider these abilities:
- Features that ensure lease data is entered correctly, such as validations and wizards.
- Tools, tips, hints, or walk-throughs for users to aid in the process of entering data and making calculations.
- Templates that allow the initial lease portfolio to be imported in bulk.
- Methods the software employs to ensure accuracy of calculations (Agreed Upon Procedures Report).
- Whether a Service Organization Controls (SOC) Report is in place.
At CSH, we work with our clients to assess and recommend lease portfolio management tools so businesses can take on implementation themselves, or they can choose to turn over lease management and standard implementation to our experienced lease accounting team. Although we do not have an exclusive contract with any singular lease management software company, we regularly recommend and use LeaseCrunch for ASC compliance and implementation.
Is your business compliant with the new lease accounting standard?
See our podcast, “Countdown to ACS 842 Readiness”