The process of accounting for leases can be difficult and time-consuming, particularly since new lease accounting standards such as ASC 842 and IFRS 16 have been introduced. Many companies are turning to accounting software for leases in order to simplify this process and ensure that they are in compliance. In this article, we will discuss the top 5 reasons why it is important for your company to think about investing in lease accounting software.
1. Compliance with accounting standards
The primary reason for using lease accounting software is to ensure compliance with relevant accounting standards such as ASC 842, IFRS 16, and GASB 87. These standards require businesses to recognize leases on their balance sheets, which can significantly impact financial reporting and decision-making. Lease accounting software is designed to help you accurately track and report lease information, making it easier to comply with these regulations and avoid costly penalties.
2. Time and cost savings
Manually managing lease accounting can be a labor-intensive and time-consuming process, particularly for businesses with large lease portfolios. By automating the process with lease accounting software, you can significantly reduce the time and effort required to manage leases, calculate depreciation, and prepare financial statements. This not only saves your finance team valuable time but also reduces the risk of errors that can result from manual calculations and data entry.
3. Improved accuracy and consistency
Lease accounting software provides a centralized platform for managing all of your lease data, making it easier to maintain accurate and consistent records across your entire organization. This can help eliminate discrepancies and errors that can arise when lease information is managed in multiple spreadsheets or systems. Furthermore, lease accounting software often includes built-in validation checks and automated calculations, reducing the risk of errors and ensuring that your financial reporting is accurate and reliable.
4. Enhanced reporting capabilities
Robust reporting is essential for effective lease management and compliance with accounting standards. Lease accounting software typically includes a wide range of customizable reporting features, allowing you to generate the specific information you need for financial statements, audit purposes, and internal analysis. This can help you gain valuable insights into your lease portfolio, identify trends and potential risks, and make more informed decisions about your leasing strategy.
5. Scalability and flexibility
As your business grows and evolves, so will your lease portfolio. Lease accounting software is designed to be scalable and flexible, allowing you to easily add new leases, manage changes to existing agreements, and handle complex lease structures. This means that as your business expands or your leasing needs change, your lease accounting software can adapt to meet those needs without requiring a significant investment in additional resources or training.
Get the Right Software
Lease accounting software offers numerous benefits for businesses of all sizes, making it an essential tool for managing leases and ensuring compliance with accounting standards. By automating the lease accounting process, reducing the risk of errors, improving reporting capabilities, and providing a scalable solution, lease accounting software can save time, reduce costs, and improve the overall efficiency of your finance team. If you’re still managing leases manually or using outdated systems, now is the perfect time to explore the advantages of lease accounting software for your business.
