Time is running short for compliance with the new FASB 842 and IFRS 16 lease accounting mandates. Selecting the right technology solution is essential for meeting the deadline in the short term and streamlining ongoing compliance into the future. There are several types of solutions on the market, so it can be difficult to know exactly what to look for. Here are some questions you can ask any vendor you consider to ensure you are getting the technology you need.
Are you actively implementing customers with your FASB/IASB solution today?
Lots of vendors claim to have a solution for the new standards, but we’ve heard from buyers that many are still in the early development stages. That’s why it is important to choose a vendor with active implementations. You should get a demonstration of the solution and make sure that the vendor has clients like you in terms of size and industry.
Do you support the current ASC 840 (FASB 13) standard for real estate and equipment leases?
A good way to make sure the vendor isn’t just jumping on the lease accounting bandwagon because of the new standards is to find out whether they support the current standard. You’re better off avoiding vendors who are brand new to financial reporting for leases.
Do you offer a lease classification test?
Correctly classifying a lease as finance or operating under the FASB 842 standard is a lot more challenging than many people think. Much of the information you’ll need to classify the lease isn’t usually abstracted today, and a lot of the data isn’t even
What security documentation can you provide?
Security is an important consideration for all corporate data, but now that lease data will be impacting the balance sheet, it is even more critical. Look for a vendor that can provide SSAE 16 audits. We also recommend three-factor authentication to ensure that only authorized users access your solution.
Has the solution been validated by CPAs and financial reporting experts?
We’re not going to lie, the accounting necessary for compliance is complex. This is especially true if the solution you are considering supports both tenants and landlords. The auditors are going to want to know that you’ve selected a solution that’s been vetted by multiple CPAs.
How do you address implementation and support?
Implementing a solution for the new standards requires data migration or lease abstraction, integration with your accounting system, and configuration to meet your specific needs. Look for a vendor with an in-house team to help with each phase of implementation and one that will provide the support you need to be successful in the long run.
What are the reporting capabilities of the solution?
Getting data into your lease accounting system is important but getting what you need out of it is essential as well. The best solutions come with standard reports that can be easily customized for your needs.
Which ERP and accounting systems do you integrate with?
Of course, you need a solution that integrates with your current accounting or ERP system, but it is smart to look for technology that can integrate with a broad range of solutions in case your integration needs
What is your average customer retention rate?
Once you get your data into a lease accounting solution and go through the implementation process, you want to be sure that you will be happy with the results and the support the vendor provides. The average length of time that other customers have been with your vendor gives you insight into the quality of the technology and the service as well as the stability of the organization.
What percentage of your company revenue is related to
This might seem like an odd question, but there are a lot of companies out there with corporate leasing technology as an afterthought. Their core business may be site selection software, or real estate data, creating competing priorities. We think that lease administration and accounting is so important that the best solutions are created by companies that focus only on that area.
Does the technology support both tenants and landlords?
Even if you aren’t a landlord today, look for technology that will be able to support your portfolio no matter how it changes in the future.
Hopefully, these questions will help you find the FASB 842 or IFRA 16 technology that is right for your organization.