Lease accounting software automates the process of tracking and reporting leases, making it easier for companies to comply with the new standards and provide more accurate financial statements.
It can also help companies identify and manage lease obligations, reducing the risk of financial penalties for non-compliance.
Keep reading to gain better insights into lease accounting and get a list of the 5 best lease accounting solutions.
What Is Lease Accounting Software?
Lease accounting software helps businesses manage and account for their leases, which are agreements to rent property, equipment, or other assets. It also provides calculations to meet the financial reporting requirements for lease contracts.
Typical lease accounting software capabilities include managing rent payments, tracking leases, and accounting for lease-related transactions. Additionally, it can assist businesses in adhering to IFRS 16 and ASC 842, two examples of accounting rules.
6 Benefits of Lease Accounting Software
Lease accounting programs offer several benefits for small businesses and enterprise companies looking to manage and track their leases more effectively. Some of the key benefits include -
A lot of the manual activities involved in lease accounting, such as figuring up rent payments and keeping track of lease expiration dates, are automated by the lease accounting platform.
The software aids organizations in adhering to accounting regulations like ASC 842 and IFRS 16, which were put in place to increase comparability and transparency in lease accounting.
By automatically computing rent payments and some other lease-related expenses, the technology helps in assuring the accuracy of lease-related transactions.
Better Data Visibility and Reporting
Lease accounting software provides real-time visibility into lease-related data, allowing businesses to generate reports easily and track key performance indicators.
The software can help enterprises save time and money by automating some tedious chores associated with lease accounting, enabling them to focus on more critical and essential operations of the company.
Easier To Manage
With all lease information in one place and clear tracking of payments, lease accounting software makes it easy to manage your leases, and you can easily identify any issues or concerns.
Typical Features of Lease Accounting Software
Lease accounting software provides a variety of features to help companies manage and track their leases more effectively. Below is the list of key features of lease accounting software -
Businesses can manage and keep track of their leases in one place thanks to lease tracking. The lease agreement, start and end dates, rent payments, and any other pertinent information can all be entered and stored using this tool.(Video) Top 20 Leasing Manager Interview Question and Answers in 2023
Additionally, it aids in keeping track of important lease indicators like rent reductions and lease payments. The ability to handle and track all of a company's leases in one location rather than having to manually keep track of each lease makes this feature very helpful for businesses with many leases.
Management of Rent Payments
With lease accounting software, you can easily track and manage all your rent payment associated with the lease. You can store rent information such as the payment due, its due date, and the payment status of past transactions.
Moreover, you can also set up automated rent payment reminders and notifications to ensure that rent payments are made on time.
Accounting for lease-related transactions
The software collects and records lease payments in the general ledger and calculates depreciation to account for lease-related activities.
This can help you keep track of all your past transactions and help you manage every activity in a better way.
Accounting Standard Adherence
Lease accounting software helps companies adhere to accounting standards by providing the tools and functionality needed to record and report lease transactions accurately. These tools include the ability to classify leases as finance or operating leases, calculate lease assets and liabilities, and generate reports that comply with ASC 842, IFRS 16, and GASB 87 accounting standards.
For example, with lease accounting software, companies can automatically calculate and record lease assets and liabilities on the balance sheet per standard requirements. It can also provide the necessary information to disclose lease-related information in the financial statement footnotes, including information on lease terms, lease payments, and other relevant details.
Alerts And Reminders
Traditionally, a company's IT department or IT professionals are responsible for developing, monitoring, and maintaining its web infrastructure.
If there is a performance problem, the IT people should be first informed as they possess the necessary skill to find the solution.
Data from theweb monitoring toolsis thus valuable for IT departments to understand and strive towardsimproved customer experience.
Additionally, user tracking features help organizations gain a better understanding of their audience and their unique association with the brand.
Companies can generate various reports and analyze their lease-related information with lease accounting software. With this information, companies can study their portfolio and make better decisions.
For instance, you can generate reports on lease payments, rent concessions and abatements, lease liabilities and expiration dates.
Cloud-Based or On-Premises
The majority of cloud-based lease accounting software is subscription-based, meaning users must pay a monthly or yearly charge to access it. Users of this kind of software can access it from any device with an internet connection, and it is often simple to set up. Software for lease accounting in the cloud is scalable and accessible by several users at once.
On the other hand, on-premise lease accounting software is software that is installed and run on a business's own computer or server. Usually, this kind of software must be bought outright and just once. It has the advantage of being able to keep sensitive data within the organization's own infrastructure and can be tailored to the particular demands of a company. However, it also needs IT support for upkeep and updates, which is typically more expensive over time.
Some lease accounting software easily gets integrated with other tools like Customer Relationship Management (CRM) software, ERP, document management software, Excel sheets, and payment processing software, and it provides a seamless experience by reducing manual work and data entry errors
List of Top 5 Lease Accounting Software
If you are looking to invest in a lease accounting platform, you can check out the list of top 5 tools and compare them based on the features, pros and cons, and pricing.
Freshbooks is one of the most preferred lease accounting software. Businesses can handle billing effectively and efficiently thanks to FreshBooks. Its user interface is straightforward and easy to use.
As a result, accountants can easily pick up using it for lease accounting activities. Professional financial papers can be produced with this digital accounting tool. It may also automatically do duties like billing, tracking accounting periods, and organizing expenses. Additionally, FreshBooks enables quick and effective client follow-up.
- FreshBooks allows users to create and send professional-looking invoices, including recurring invoices and estimates.
- You can track and categorize expenses and attach receipts for easy record-keeping.
- Track time spent on projects, making bill clients for hourly work easy.
- FreshBooks has the ability to accept online payments such as credit card and ACH payments.
- Provides tools for managing projects and tasks and for collaborating with team members.
- Generates various reports, including income and expense reports, and sales tax reports.
- Lite: $1.50 per month, 5 billable clients
- Plus: $3 per month, 50 billable clients
- Premium: $5.50 per month, unlimited billable clients
- Select: Custom pricing
2. FMIS Asset Management
In order to maintain compliance with the most recent IFRS 16 accounting standard simpler, FMIS Lease Accounting Software offers a tried-and-true lease management solution.
Lessee finance experts throughout the public sector and publicly traded corporations rely on FMIS to centralize their lease data, track and automate lease accounting operations, and support IFRS 16 compliance.
With the help of our lease management software, your team can successfully manage your financing leases and operating leases for equipment and real estate assets without the use of spreadsheets.
- Recording and tracking lease liabilities and assets as per ASC 842, GASB 87 and IFRS 16.
- Automated lease abstracting, lease data extraction, and lease data loading.
- Management of lease files, lease expirations, rent escalations and other lease-related obligations.
- Track and manage leased assets and liabilities across a portfolio of properties.
- Generate reports to support compliance with lease accounting regulations.
$4500 per user/one-time payment
LeaseMate is a lease accounting software that helps companies to manage their lease portfolio, comply with accounting standards and improve decision-making. It is designed to automate and simplify the process of accounting for leases under ASC 842 and IFRS 16.
The software provides tools for lease abstraction, lease calculations, lease amortization and lease accounting journal entries and also allows users to create customized lease reports and manage lease data in a centralized location. Additionally, it has the option to integrate with other systems, such as ERP and general ledger systems.
- Manage different portfolios of properties.
- Generate various reports to stay compliant with lease accounting regulations.
- Efficiently manage expirations of lease and rent escalations.
- Integrate with other platforms to create streamlined processes.
$29 per user per month.
Not only are the new lease accounting requirements challenging, but they also significantly impact your financial statements. While adhering to stringent financial reporting rules, lease accounting includes massive volumes of data from multiple sources, inconsistent processes and controls, and a tremendous amount of manual work.
This can be resolved by using Cradle, the best lease accounting software for all business sizes. Cradle can handle any combination of leases. It has been designed to deal with extreme lease accounting situations.
- The user-friendly design of Cradle makes lease accounting simpler than ever.
- Financial reports and disclosures are generated by Cradle, and they can be requested for any period range.
- When you make a modification, Cradle completes the accounting in accordance with the relevant standard.
- Log all changes to the lease portfolio so that every user can see what has changed.
- Cradle takes care of the rest while you upload the currency rates.
- Small plan:$99 per month
- Regular plan:$100 per month
- Enterprise plan:Custom pricing
LeaseQuery is one of the top lease accounting software that offers a range of features to help companies manage their lease portfolio, including lease abstraction, lease calculations, lease amortization and lease accounting journal entries.
It also allows users to create customized lease reports and manage lease data in a centralized location. The software also provides a lease vs. buy analysis, enabling companies to decide whether to lease or purchase assets.
Additionally, it has the option to integrate with other systems, such as ERP and general ledger systems.
- Interactive and attractive data visualization and dashboards.
- Automated journal entries to help companies to stay compliant with lease accounting regulations.
- Managing lease files and other important documents.
- Lease portfolio management for different properties.
The Cost of Lease Accounting Software for Small Businesses
Lease accounting software pricing is based on the features it provides and how advanced it is compared to other tools.
Some lease accounting software providers offer a monthly subscription model, while others may charge a one-time fee or a combination. Additionally, the cost may also depend on the number of users and the number of leases that need to be managed. The cost of lease accounting software ranges between $20 to $250.
There are two types of offers usually, a free trial for a few days for the user to experience the software or a basic version with limited features that is available at no cost, while others may offer a range of pricing plans based on the size of the company or the number of leases that need to be managed.
While making a choice, it is recommended to enquire well about the vendor's pricing options and to compare them to those of alternative software.
Trends Related to Lease Accounting Software
Lease accounting software is a specialized tool that helps businesses comply with the new lease accounting standards set forth by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB). Some trends related to lease accounting software include:
With the implementation of the new lease accounting standards, more and more companies are looking for lease accounting software to assist them in adhering to the new regulations.
Many companies prefer lease accounting software that can be accessed and used collaboratively from any location.
Some lease accounting software easily gets integrated with other tools like Customer Relationship Management (CRM), ERP, and other accounting software and provides a seamless experience by reducing manual work and data entry errors.
Automation And Machine Learning
As technology advances, lease accounting software is becoming more automated and using machine learning to improve efficiency and accuracy.
With the increasing usage of mobile devices, many software providers are developing mobile apps to allow lease accounting information to be accessed on the go.
Compliance With Global Standards
As more and more companies operate globally, lease accounting software providers are developing solutions that are compliant with both IFRS and US GAAP standards.
Key Considerations When Buying Lease Accounting Software
When buying lease accounting software, there are several key considerations to keep in mind
Ensure that the software is compliant with the new lease accounting standards set forth by the FASB and IASB to ensure compliance management.
Consider the size of your business and ensure that the software can accommodate your current and future needs and requirements.
Check whether the software can easily integrate with the other existing softwares you are using to avoid the repetition of data entry and to enhance the business efficiency.(Video) Guitar Lesson 1 - Absolute Beginner? Start Here! [Free 10 Day Starter Course]
Check whether the software is easy to use and navigate for your team to use and whether it requires excessive training sessions for your team to use it.
Take assurance that the software can generate all the insightful and important reports you need, such as balance sheet and income statement reports.
Support and maintenance
Consider the level of support and maintenance provided by the software provider, including training, upgrades, and customer service.
Evaluate the total cost of ownership, including the initial cost of the software, ongoing maintenance fees, and the cost of any additional services or support required.
Look for software that meets the data security standards, and is compliant with the regulations like GDPR, HIPAA, SOC 2 etc.
If your employees are on the move, consider a software that is mobile-friendly and allows remote access.
By considering these factors, you will be able to choose a lease accounting software solution that best meets your business needs and helps you comply with the new accounting standards
Which Platforms Can Integrate with Lease Accounting Software?
There are many software platforms that can integrate with lease accounting software for a seamless flow of processes.
Enterprise Resource Planning (ERP) Software
Lease accounting systems can be combined with enterprise resource planning (ERP) software to provide a comprehensive picture of a business's financial and operational data.
By integrating accounting software with lease accounting software, accounting transactions and financial data may be sent between the two systems more easily and without fuss.
Property Management Software
In order to offer information on the premises that a company rents as well as the tenants who inhabit them, property management software type of software can be integrated with lease accounting software.
Document Management Software
Leasing-related paperwork can be stored in one location thanks to the integration of document management and lease accounting software.
Analytics And Reporting Software
Software for advanced reporting and analytics can be integrated with lease accounting software to offer features like the ability to design unique reports and conduct in-depth data analysis.
What are the Disadvantages of Lease Accounting Software?
Lack of integration with other systems
It can be challenging to guarantee that data is correct and current if the lease accounting software is not coupled with other systems, such as ERP or accounting software.
Difficulty in tracking leases
It can be challenging to monitor the status of leases and make sure that all lease-related duties are being satisfied without a robust system in place.
Difficulty in reporting
Keeping up with lease accounting standards can be challenging for businesses without the capacity to quickly generate reports.
Difficulty in identifying lease-related data
It can be challenging to distinguish between items that are leases and those that are not without an appropriate system in place, which can result in accounting problems.
Lack of Data Extraction
Making educated decisions on lease accounting becomes challenging in the absence of an effective mechanism for data extraction and analysis.(Video) BST's Leveraging the New Lease Accounting Standard - How to Maximize Value and Minimize Cost
In conclusion, lease accounting software is valuable for any company that leases assets. This makes it easier for companies to provide more accurate financial statements and reduces the risk of financial penalties for non-compliance.
So, compare different lease accounting tools based on their features and pricing and make an informed decision for your business.