Lease management is a crucial aspect for any organisation that leases property or equipment, which involves overseeing all aspects of a lease agreement, from negotiation and execution to ongoing administration and eventual termination. Along with lease accounting, it is critical for organisational operations as it impacts financial reporting, compliance, and overall efficiency. Effective lease management and lease accounting promote financial accuracy, facilitate informed decision-making, and help mitigate potential risks.
However, many organisations still rely on manual lease administration processes involving Excel spreadsheets, SharePoint folders, and OneDrive storage, to name a few. While these tools might seem convenient at first, their use may eventually result in chasing down lease details scattered across multiple files, struggling to maintain compliance with changing regulations, and wasting valuable time on repetitive tasks, leading to frustration and inefficiency.
This is why, despite the prevalence of manual tools and a surprisingly high number of companies still clinging to outdated methods, there's a growing recognition of the need for a more streamlined and automated approach to lease management and lease accounting. This article explores the challenges and limitations of manual lease tracking processes and looks at the benefits of transitioning to dedicated lease accounting and lease management software.
Challenges & limitations of manual processes
While relying on familiar tools like Excel spreadsheets might seem convenient, manual lease management and accounting methods come with hidden costs. Businesses relying on those often face a barrage of frustrations with users finding themselves bogged down by excessive manual data entry, which is prone to errors, typos and formula mistakes that can result in misleading financial information.
The reality is that spreadsheets and file folders simply aren't designed for the complexities of modern lease accounting. Keeping up with current accounting standards and continuously meeting regulatory reporting requirements such as those outlined in IFRS 16 becomes a significant challenge, and maintaining audit trails feels like an insurmountable task.
Beyond user frustration, manual methods come with inherent risks. There are version control issues, with lease details scattered across various platforms and multiple copies of spreadsheets floating around, making it difficult to quickly locate specific lease information when needed and leading to confusion and potentially costly mistakes.
Lack of comprehensive functionality is another major drawback. Excel spreadsheets lack the features needed for crucial tasks like automated calculations, essential for ensuring accuracy and efficiency. These limitations translate into significant day-to-day challenges. Manually tracking lease details, setting reminders for key dates, and generating reports becomes time-consuming and takes valuable resources away from core tasks.
Manual lease management not only presents technical hurdles but also exacerbates organisational challenges, including the disconnect between property and asset managers and finance teams. Property and asset managers focus on lease administration and operational aspects, while accounting and finance teams prioritise financial reporting and compliance. Often, though, these departments operate in silos, leading to fragmented communication, disjointed workflows, inaccurate financial reporting and missed opportunities for cost optimisation. This disconnect can result in discrepancies in lease data, inefficient processes, and compliance risks. Bridging this gap is crucial for holistic lease management, ensuring alignment between operational activities and financial objectives while mitigating risks associated with manual processes.
A better way: IFRS 16 software solution
Dedicated lease accounting and lease management software emerges as the best solution to the challenges mentioned above. By automating lease calculations, centralising data storage, and facilitating compliance management, such software offers distinct advantages over manual methods by providing features built specifically for efficient lease management and accurate lease accounting. It is essential for modern organisations seeking to optimise efficiency, improve accuracy, and achieve compliance.
Here are a several key benefits of implementing a software solution in your business:
Automated lease calculations
Lease accounting software automates manual calculations and other tedious tasks, enhancing efficiency and accuracy and freeing up valuable time for your team to focus on other priorities.
Centralised data storage
Centralised data storage puts an end to the chaos of scattered spreadsheets, documents and emails, improving organisation. All relevant lease information is housed in a secure, central location, readily accessible for easy retrieval and analysis.
Simplified compliance with regulatory standards
With IFRS 16 software, compliance worries become a thing of the past. Built-in features and automated reports can help meet the requirements of IFRS 16 with ease, streamlining your reporting processes and giving you peace of mind.
Scalability & flexibility to accommodate evolving business needs
Software solutions are designed to adapt and grow with your organisation. Scalability and flexibility allow you to accommodate an expanding lease portfolio and navigate the ever-changing landscape of lease accounting regulations.
Transitioning with ease
Despite the obvious benefits of adopting a dedicated lease management and lease accounting solution, organisations may harbour concerns about transitioning to new software. Making the move might seem like a daunting prospect, but it doesn't have to be. Here at Nomos One, we understand potential customer concerns and have designed our software with a seamless implementation process in mind, which ensures a smooth transition for businesses of all sizes and industries.
User-friendly design
We realise that user adoption is key, so our software boasts an intuitive interface that's easy to navigate for staff with varying technical backgrounds. This minimises training time and ensures everyone on your team can quickly become comfortable using the new system.
Gradual incorporation
Furthermore, we recognise the importance of minimising disruption to your established workflows and the need for a gradual incorporation of our software into your operations. Our software solution allows for seamless compatibility with your current accounting practices. This means that you can easily download or export information from Nomos One to complement your existing systems and processes. This helps promote a smooth transition and maximise efficiency until you're ready to fully adopt our platform.
Onboarding services
In addition, we provide exceptional onboarding services that will help you hit the ground running. Our team will assess your existing information to develop an efficient onboarding plan, review your entire lease portfolio, customise the way your account is set up, and help you determine which data structure to use. Then we’ll upload your documentation and check your data for any inconsistencies, errors, or missing records.
Training & support
Finally, to truly empower your team, Nomos One offers a comprehensive support system. We provide personalised in-depth training sessions (which may be subject to an additional cost), extensive resources, and continuous support from our expert team to answer any questions and facilitate a successful move to a more streamlined way of managing your leases. As your company’s lease portfolio grows, we can help with uploading new agreements, running customised reports, completing rent reviews and renewals, actioning variations & assignments, and updating payments, properties and parties.
The time to embrace modern technology solutions is now. Transitioning from manual lease management methods to dedicated software solutions can significantly improve your organisation’s lease administration processes by leveraging automation, streamlining workflows, and centralising data management.
To learn more about how dedicated lease accounting and lease management software can transform your practices, watch our on-demand webinar. Discover the benefits of transitioning from manual methods and take the first step toward a more efficient and streamlined lease administration process.
