This is yet another shocking account of an organization running lease management services without a software solution.
Our second cautionary tale in this eye-opening series reveals how a company missed out on $1 million during the acquisition of a new location.
Following a five-year plan for expansion, a regional retail franchisee secured a second location in a neighboring city. Because the company only had one site in their portfolio they had grown confident and accustomed to utilizing spreadsheets for their lease management and accounting needs.
After procuring their new location the company wanted to invest in more expansion opportunities. To make their process more efficient hey started researching lease management solutions. After a few in-depth consultations, the franchisee learned something much more valuable than originally anticipated: They discovered $1,000,000 went missing during their acquisition!
Here’s the detailed horror story in its entirety:
The second location addition included a tenant improvement allowance of $1 million transferable in the event of a sale. The TIA conditions were clearly spelled out in the lease documents, but the company assumed that this data was already incorporated into the seller’s Excel file.
How could a significant error like this go unnoticed?
Pertinent details that are integral during these transitional events will hold over rent clauses, lease terms, and pivotal conditions not easily captured in a Word application. Meaning, in the case of this tale, the information was simply not noticeable for the company’s knowledge.
Without automated triggers signaling a necessary review of all data, the details of an acquisition may become overlooked.
Optimize processes with the right lease administration systems
In addition to eliminating time-consuming manual tasks, automated lease management solutions lower the costs of occupancy, reduce the risk of missing critical deadlines, and provide simplified access to all necessary documentation. This is an all-inclusive umbrella that captures any contracts dedicated to property leases, vehicles leases and equipment leases.
These leasing systems are designed to integrate seamlessly with your accounting or ERP system, and will improve your efficiency and productivity through the following arenas:
✓ Active notifications and alerts
Listing all your renewal and key dates in one static file no longer makes sense. The initial responsibility of data importation takes up valuable time that should be invested elsewhere, while the constant checks to follow future deadlines repeats the cycle all together.
Lease management software automatically provides advance alerts via email (and additional reminders when no action is taken) to ensure a business is fully aware of impending dates.
✓ Anytime, anywhere access to lease data
Lease data needs to be frequently accessed by multiple departments - procurement, accounting, and facilities to name a few. Although it’s technically possible for multiple editors to update spreadsheets simultaneously, it is certainly not considered best practice (and can have unforeseen consequences).
Automated, cloud-based solutions create a centralized repository for all your leases, allowing authorized users to access what they need at any time, from any place. Users are able to locate necessary information and easily modify these segments, resulting in a real time accuracy of system records.
✓ Confidence in your calculations
Excel spreadsheets are susceptible to human error. Most often than not, Excel can be trusted to generate correct calculations; however, there are cases when formulas get broken. Tracking down the origin of a pricey miscalculation can be difficult and will elicit a level of uncertainty in overall system reliability.
Lease administration systems are fully tested and maintained by the provider, so any doubts of your data accuracy are relieved through error-free calculations.
✓ Accessible expertise built on experience
There are plenty of spreadsheet experts, but the complexities of lease accounting - especially when compounded by the requirements of the new lease accounting standards - can become massively convoluted. It requires specialized expertise to develop a document that auto generates reports, considers constant updates on new guidance regulations, and incorporates accounting best practices.
The best lease management and lease accounting solutions are built by experts with proven depth of industry knowledge. With years of experience in the field, these highly skilled professionals are able to provide invaluable insights for managing portfolios of all sizes.
✓ Reliable audit trail
An audit trail helps you track changes being made to your data. This is important when you have to reverse mistakes.
Lease administration software provides an audit trail showing who made an update as well as a note field to broadcast the last authorized user.
✓ Comprehensive document management
Even in today’s digital age, many businesses have delayed implementing cloud-based solutions for a variety of reasons: the task is seemingly overwhelming; the return on investment isn’t clear; and support systems from upper management are lacking. Nevertheless, the shift to using cloud platforms has proven lucrative for those that have done it.
Lease management technology allows easy access to all lease data. With just a few clicks, users can drill into both financial (like a transferable TIA) and non-financial lease clauses.
Conclusion: Don’t miss out on the benefits of lease management software to achieve corporate success
Few managers in today’s evolving business climate can keep up with the many requirements of effective portfolio lease management. This is why you need a leasing software.
For over 20 years, AMTdirect has been helping clients not only avoid costly errors (like neglecting to take advantage of favorable lease terms) but reduce their costs of occupancy by eliminating time-consuming inefficient duties.
The team here would love the opportunity to understand your lease administration challenges, and offer recommendations to reach your goals.