When it comes to leasing there are many instances in which data is collected and used to make informed decisions. Data-driven decision making has always been a crucial factor in effectively managing your assets, so we explore the benefits of data-driven leasing and how it can drive business success.
Faster and smarter decisions
Lease managers constantly have to make decisions on how they should maintain and develop their business’ leasing portfolio. Too often, these decision-makers are not provided with the appropriate information or tools to allow them to make an informed judgement about how to manage their asset base. This is made more difficult when decisions are required within a tight timeframe, and with the additional requirements of IFRS 16 to consider.
So, what data should be captured to speed up this process? Effectively tracking the dates at which notice needs to be provided is the first step and is essential for managing a business’ lease portfolio. Lease administrators should set up automated reminders for these critical dates, to ensure that their business has sufficient time to hold internal conversations around exercising option periods. Plus, lease administrators should ensure that they calculate the rent/m² for each lease, to determine if the amount that they are being charged is consistent with market rates for the region that they are located. It’s also important to pay close attention to the way rent reviews are conducted; the benefits of a lower initial lease cost can be quickly eroded if the rent will be subject to fixed escalations which are likely to outpace market movements.
If you are using software to track your lease portfolio, it must effectively handle geospatial information. This means ensuring that your leasing software can show each of your properties on a map to determine the impact that moving locations will have on business operations. Seeing a visual representation of your portfolio allows property managers to easily identify the strengths or weaknesses of the leases they administer. Whether that be the ease at which employees can access an office site; the increased foot traffic offered from a property on a central road; or the greater coverage provided by a property outside of a major urban centre.
Greater transparency
Informed, data driven decision making requires more than just tracking critical data points. Ensuring that this data is visible, accurate and accessible across your organisation is vital when implementing an effective process for making these decisions. Businesses that track these details using software like Microsoft Excel will often run into issues across day-to-day decision-making on account of it being too easy for information to become siloed or out-of-date.
To avoid these concerns, you can implement a cloud-based solution for storing this data that provides access across your team to the most up-to-date version of your agreements. This solution needs to be customisable to your organisation’s specific needs – the largest benefit that businesses receive from managing their portfolio through a cloud-based solution is the ability to see the data that is of greatest relevance to your team.
Optimise spend and outperform the competition
Data driven decision making regarding leases portfolio has two critical advantages: it helps to optimise their business expenditure and allows managers to get the best out of their portfolio. This doesn’t always mean cutting costs and it doesn’t always result in changes to an existing lease portfolio. Carefully tracking information about a lease portfolio allows managers to effectively communicate the value of their activities and show why their actions are advancing business interests. It may show the strength of the existing portfolio of assets that a business has access to and indicate that maintaining these agreements will best serve the business strategy. In other instances, this data can provide guidance to lease managers that they should renegotiate their existing agreements or that they may find greater value by looking elsewhere.
Tracking a wide range of data points regarding your lease portfolio is critical to making informed decisions about the assets which you lease. When tracking this, look to capture critical event information, particularly around option periods, alongside geospatial data, including the area of properties. When storing this information, ensure it is recorded using a cloud-based solution, to guarantee that all team members will have access to the most up-to-date version of this data.
Taking these steps will ensure that businesses get the greatest value from their lease portfolio. This information will also help in meeting compliance obligations – particularly in relation to IFRS 16 (AASB 16).
If you want to learn more about the impacts of data-tracking on your business’ accounting requirements, take a look at Nomos One’s free white paper, available here.
