6 Benefits of Lease Accounting Software
The fast and competitive business environment with limited financial resources paves the way for leases. Regardless of their size, many companies rely on leases to excel in the business world without spending money on upfront payments.
Lease accounting is essential for every business interested in reaping potential benefits from leasing agreements. However, without cutting-edge tools, it is difficult to meet the demands of modern times.
Why is a digital lease accounting solution significant? How can it upgrade the system efficiency? Read on to learn the six benefits of lease accounting software that can help you with business expansion.
Efficient meeting of deadlines for lease renewal
A critical task you may face in lease activities is to keep up with deadlines. When your business relies solely on a manual system for notifying important dates of contracts and leases, there is a high chance of missing deadlines. An accounting department might feel overwhelmed with other crucial tasks, or a designated person might overlook the upcoming dates for renewals, extensions, etc. In this case, your business can suffer from heavy losses based on missed and late payments, late fees, etc. Regardless of your business performance, you lack the right tool to manage the lease accounting critical dates.
How can you stay on top of deadlines? It’s simple, by installing a lease accounting software, you can enter all crucial dates into the system and never miss an approaching deadline with automated alerts. It empowers your business to explore better lease opportunities and safeguard resources without incurring a financial loss.
Seamless management of relationships with vendors
As the business expands, it faces pressure to keep up with the increasing number of vendors. At this point, you can leverage lease management software for tracking and managing all business contracts and vendors easily.
A lease accounting software can provide a holistic view of all business handling with vendors over time. Also, you will be able to harness the software’s reports and insights. So, you will be able to expand your leasing and purchasing power over time and excel in the market.
Furthermore, automating the system will save you time in administration, so you can focus on building better relationships with vendors.
Simple and Easy Compliance
After implementing new lease accounting standards, it has become essential for every public or private entity to process leases accordingly. Every lease accounting standard has different parameters for the lessor and lessee. It is difficult to take note of every crucial detail of leases with a manual system when your business is in the transition phase.
You might wonder which classification your lease falls under and what standard you must comply with. A lease accounting software can help you with an in-built classification system where you can enter information as a lessor or lessee. In addition, you can comply with the latest lease accounting standard in no time.
The automated system can identify which leases are not under the jurisdiction anymore. For instance, any lease shorter than 12 months is exempted from regulatory standards. Moreover, it might cover leased items that are no longer used due to obsolete technology. Doing all this manually increases the chances of errors, can cause delays and require more manpower.
Improved interdepartmental collaboration
Do you still use Microsoft Excel to manage and process data on your lease agreements? Does your organization allow limited access based on a decentralized system? If this is the case, you’re way behind the modern times, and you need to adopt the latest lease accounting software. Why? Multiple departments are involved in handling lease contracts in an organization. A lease accounting software allows your employees to access a centralized system where they can work in collaboration without wasting time. It enables different teams to create an accessible chart of accounts that meets standard processes and provides consistent information to improve interdepartmental processes and communication. For instance, the centralized system can alert the facilities team about upcoming deadlines, and the accounting team can track payments of leases.
Fast and well-informed decision making
How much money do you spend on leases annually? Can you identify the expenditure on leases for each department or particular region? With the huge pile of lease-related data at your disposal, it is a cumbersome and painstaking task to divulge valuable insights manually.
However, with the right digital tool, you can get deeper into the enormous data and get crucial information about expenses, profits and losses. It helps you fine-tune your business strategy and gives you the advantage of improving cost management. You can create a better budget based on information received from the software.
By getting a clear picture of your finances, you are better positioned to anticipate your needs and make well-informed decisions for the future. As a result, you can negotiate leases whenever a good opportunity arrives, mitigate the risks and improve the financial performance of your business.
Easy and faster audits
How do you store your lease-related data and documents? Does each department maintain its record? How much time does it take to filter out the information or the document? While searching on a network drive is a troublesome and time-consuming task. You can utilize lease accounting software functionalities to narrow down your search and quickly get to the information you want. And since the software offers a cloud-based centralized database, you will have easy and quick access to all lease-related documents and contracts at your fingertips.
A data repository with ready-to-use reports allows an easier and faster audit process. With a lease accounting solution, you no longer have to worry about responding to auditors’ requests. You can give read-only access to auditors so that they can quickly access data and report what they are looking for without disturbing you. It makes the whole auditing exercise of leases much simple and easier.
Final Thoughts
Implementing lease accounting software can save you from many headaches by accelerating the lease activities. You can save precious time, reduce costs and improve efficiency by automating the most time-consuming and cumbersome tasks. If your company has decided to adopt a digital lease accounting solution, congrats, you are one step closer to success.
