Lease accounting is an essential aspect of financial management for businesses that use leased assets.
With the Financial Accounting Standards Board’s (FASB) new lease accounting standard ASC 842, many companies are transitioning from manual lease accounting to software-based solutions.
This new standard requires companies to record all lease obligations on their balance sheets, including previously off-balance operating leases.
Businesses of all sizes, from small start-ups to large corporations, use lease accounting software to manage their lease agreements. If you’re a business owner or financial manager, you’ll know the complexities of managing your company’s leases.
But with the latest lease accounting software, this task can be streamlined and made far more accurate.
Accounting and finance teams typically use this software to track and manage leases, automate lease payments, and generate financial reports. Additionally, other departments, such as procurement or legal, can use the software to manage lease agreements and collaborate with the finance team. Some benefits of lease accounting software and how it can revolutionize the way you do business are described below:
1. Improved accuracy in lease accounting
One of the primary benefits of lease accounting software is the significant improvement in accuracy that it provides. With lease accounting software, the chances of human error are significantly reduced as the software automates the calculations required for lease accounting.
This ensures that all financial reports are accurate and reliable and reduces the risk of audit failures and penalties.
2. Compliance with ASC 842
Lease accounting software ensures businesses comply with ASC 842 – the new lease accounting standard. This standard requires companies to record all lease obligations on their balance sheets, including previously off-balance sheet operating leases.
The ASC 842 effective date was delayed due to the COVID-19 pandemic, but companies must still ensure they comply with the deadline. With lease accounting software, businesses can ensure they are compliant with the standard and avoid the risk of penalties or fines for non-compliance.
3. Saves time in lease accounting
Another critical benefit of lease accounting software is the time-saving it provides. As we all know, time is money, and with this software, you can save a significant amount of time that would otherwise be spent manually calculating and recording lease data.
The software automates lease calculations and data entry, freeing your staff to focus on other essential tasks.
4. Better lease management
Managing your company’s leases can be challenging, but lease accounting software simplifies this process. The software provides a centralized platform to store your lease data, allowing you to track and monitor all your leases’ progress easily.
This helps ensure that all leases are managed effectively while allowing you to stay on top of any upcoming deadlines.
5. Detailed and Accurate financial reporting
Accurate financial reporting is essential for any business, and lease accounting software makes this process easier. With the software’s ability for automated calculations and centralized data processing capabilities, you can produce more detailed and accurate financial reports.
This provides a clear picture of your company’s financial health, allowing you to make better decisions for the future.
6. Increased compliance with lower Risks
Compliance with accounting standards is essential for any business, and the penalties for non-compliance can be severe. Lease accounting software helps to ensure that your company is fully compliant with all accounting standards, reducing the risk of penalties and fines.
The software automates the calculations required for compliance, ensuring that all data is accurate and up-to-date.
7. Improved decision-making
Good decision-making is essential for any business, and lease accounting software can help you to make better, more informed decisions.
With the software’s accurate financial reporting and centralized lease data, you can make better, more informed decisions about your company’s future. These decisions can help you identify growth opportunities and use your company’s resources.
8. 24/7 Accessibility
Centralized lease data is an essential aspect of lease accounting software. The software allows you to access this data anytime, anywhere, ensuring you always have the information you need.
With all your lease data stored in one place, it’s far easier to manage and monitor your leases.
9. Significant Cost savings
Another significant benefit of lease accounting software is the cost savings it can provide. By automating many of the calculations required for lease accounting, the software can save your business a significant amount of time and money.
This allows you to focus on other essential aspects of your business and can help to improve your bottom line.
Lease accounting software is designed to be scalable, allowing it to grow with your business. The software can quickly adapt to your changing needs as your company expands and takes on more leases.
This ensures that your lease accounting processes are always streamlined and efficient, regardless of the size of your company.
11. Competitive advantage
Using lease accounting software can give your company a competitive advantage. By automating your lease accounting processes, you’ll be able to operate more efficiently than your competitors. This can give you an edge in the market, allowing you to focus on growth and expansion.
12. Transparency in lease accounting
Lease accounting software provides transparency in the lease accounting process. The software ensures that all lease data is accurately recorded and easily accessible, reducing the risk of fraudulent activity.
This transparency also enables you to build trust with your stakeholders and clients, making your business more attractive to investors.
13. Real-time insights
Lease accounting software provides real-time insights into your lease portfolio. You can easily track important lease information, such as expiration dates and payment schedules.
This enables you to make informed decisions quickly and efficiently, ensuring you never miss important deadlines.
14. Better collaboration
Lease accounting software enables better collaboration among your team members. The software provides a centralized platform where your team can share lease information and communicate with each other.
This enhances teamwork, making collaborating on projects and achieving your goals easier.
15. Reduced risk
Lease accounting software reduces the risk of errors and omissions in your lease accounting process. The software automates many of the calculations required for lease accounting, reducing the risk of human error.
Additionally, the software ensures that you always comply with accounting standards, reducing the risk of penalties and fines.
16. Improved customer service
Lease accounting software can also improve customer service. With the software’s centralized lease data, you can quickly respond to customer inquiries and provide accurate information about their leases.
This enhances customer satisfaction, improving your reputation and making it easier to attract and retain customers.
Lease accounting software offers a wide range of benefits for businesses of all sizes. It can help you to make better decisions, stay compliant with accounting standards, and even give you a competitive advantage in the market. If you’re looking for a way to streamline your lease accounting processes and take your business to the next level, lease