Lease Accounting Software – Top Features for 2020

FASB ASC 842 has drastically changed the landscape of lease accounting/management software solutions…

Many solutions have historically been focused on the “management” side of leases. With the drastic changes to how leases are handled for accounting purposes due to FASB ASC 842, existing solutions scrambled to incorporate better accounting technology while other solutions were built from the ground-up with the accounting requirements being the focus.

Here are the features/requirements that you should expect to see in Lease Accounting/Management solutions in 2020 and forward…

Core Functionality ⛭

  1. Lease Type Wizard
    • When it comes to classifying a lease correctly for accounting purposes, you have 3 options…
      1. Hire/Train an internal lease expert
      2. Outsource the expertise to an accounting firm
      3. Rely on your lease accounting solution to make the right decision and set up for you. Seek this value from your solution.
  2. Lease Categories
    • “Make your own rules”. The ability to set up your categories in order to properly set up and report on leases should be available.
  3. Workflows
    • Additions, disposals, renewals, changes, etc. Want them to be approved? Solutions should provide workflow options.

Accounting 💲

  1. ASC 842
    • The “New” lease accounting standards. All solutions moving forward that have a claim to “lease accounting” should have these standards built-into the solution.
  2. ASC 840
    • The “Old” lease accounting standards. Until ASC 842 is fully in effect, you’ll want to ensure the solution can still handle and report on ASC 840.
  3. IFRS
    • Accounting requirements are significant with lease accounting/management solutions and here’s another layer. IFRS has different reporting standards for leases and there are solutions available that will have this logic built-in.

Integrations 🔗

  1. Accounting
    • The accounting calculations surrounding leases are only as accurate as the journal entry information that gets sent to the accounting solution. Solutions will continue increasing their out of the box integrations for both incoming/outgoing information.
  2. Integration Flexibility
    • With leasing solutions, there are numerous potential integrating sources (accounting, purchasing, billing, banking, etc.). Some solutions are available that provide flexibility & wizards to set up incoming/outgoing integrations.

Deployment ☁️

  1. On-Prem
    • Do your research before on if on-prem or cloud offerings make more sense for your organizations. Lease accounting/management solutions will continue offering both.
  2. Cloud
    • Do your research before on if on-prem or cloud offerings make more sense for your organizations. Lease accounting/management solutions will continue offering both.
  3. Hybrid
    • Some solutions offer a blend of both, cloud components along w/ on-prem.
  4. Use via Mobile Devices
    • Want to access your solution on the go? 

Reporting 📊

  1. Alerts
    • With leasing solutions, it’s not always about the power of the data but the “alertness” of the data. If leases are due to expire, haven’t been paid, etc., you’ll want to know this information.
  2. Ad-Hoc Reporting
    • Canned reports are meh. The power of reporting should be in your hands via ad-hoc reporting capabilities (ie.) move your data around and build your own reports).
  3. Dashboards
    • Visualizing data is key, especially for high-level users.
  4. Historical Reporting
    • Leases are typically material & don’t be surprised if/when the request comes to see leases as of X date. Seek this functionality.
  5. ASC 842
    • The new standards bring new reports that contain solely lease accounting information. If a solution touts ASC 842 compatibility, it can be assumed that this includes the report but it’s worthwhile to review these reports.

Add-On Modules ➕

  1. Lease Payment Processing
    • Instead of booking payments in another solution and reconciling your accounting/leasing solutions; solutions may provide the ability to handle payments directly in the application (pros & cons).
  2. Fixed Assets
    • Leases and fixed assets share many similarities and connections. With that, solutions may provide fixed asset modules.

Miscellaneous 📰

  1. Organization Structure
    • Solutions should provide you with the ability to set up your org chart for transactions, reporting, and/or workflow purposes.
  2. User-Defined Fields
    • Ensure your solution provides you with plenty of ability to capture any information that your business requires.
  3. Multi-Currency
    • Mo currencies mo problems. Some solutions handle multiple currencies perfectly & more solutions are likely to follow suit in providing this functionality.

Remember that missed requirements/features are the highest contributing factor (~71%) to software implementation failures*. Be thorough with your requirements (in more detail than just checking the box that the feature exists), work closely with the solution vendors to ensure there is a fit, and ensure you have the best solution that fits your business.

What requirements/features do you expect to see in your 2020 Lease Accounting/Management software solution?

*Source: What Leads to Software Implementation Successes/Failures | Solugence Market Research Results 2019

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