What a difference a few years can make. As recently as 10 years ago, lease administrators typically reported to one manager and functioned largely as team support, spending the workday processing piles of paperwork and chasing down rent payments.
This cautionary tale is about a smart, yet Excel-dependent victim unknowingly overpaying $157,920 on a property lease. Not because of a corrupt landlord or getting tricked into a scam. The significant overpayment was simply due to a lack of data insight and access to information.
Unfortunately, shocking accounts of overpayments on leases occur more often than imagined. In the case referenced above, the lessee used spreadsheets for lease administration and lease accounting, believing these tools to be sufficient.
Despite Excel being a useful application with countless benefits, the popular software does have limitations which can often lead to costly errors.
Until recently, this specific technology typically played a minor supporting role, making only brief appearances in the operations of larger organizations.
Over the past few years, however, lease administration software solutions have garnered increased attention. They are no longer overlooked as a low priority item or considered a resource that only major players could afford.
Commercial lease administration software is now viewed as a necessary tool for a critical function in the business practices of most companies.
More than 80% of American companies lease equipment rather than purchasing it.
That’s a big number.
And the reason you should care about it is even more significant. When your equipment lease accounting compliance deadline rolls around, all of your equipment leases will have to be noted on your balance sheet.
In the past, this treatment was reserved for capital leases only.
But now the Financial Accounting Standards Board (FASB) and its sister governing boards have also decided operating leases - including equipment leases - should move out of the footnotes to join the party on the balance sheet.
But just what is an equipment lease according to the accounting governing boards?
By now, everyone knows about the new lease accounting standard FASB ASC 842.
It’s taken the lease administration world by storm. Public companies were the first to take on compliance challenges in 2019. And now private companies are implementing new processes to meet their January 1, 2020 deadline.
The rules, their implications, and the challenges have been covered in detail:
- FASB ASC 842 Summary
- 13 Must-Read Articles for Lease Accounting Compliance
- Why Lease Accounting Lagards Face Serious Risks
- The Complete FASB ASC 842 Lease Accounting Resource Center
- New Lease Accounting Standard (ASC 842) – Adoption Readiness Planning
What many organizations are finding out is the immense amount of time, energy and money it takes to implement these new lease accounting standards.
FASB 842 compliance is hard.
Picking a lease management system can be even harder.
We get it.
Most of the lease management companies offering this software today present similar features in different user interfaces.
And since everyone is clamoring to get the lease standards implemented pronto, many companies - who have little-to-no experience with this industry - have jumped on the lease management software bandwagon.
And they’ll do and say anything to get as many new clients as they can.
In fact, we’ve heard so many cautionary tales from customers and prospects about the shady tactics of these irrefutable lease management systems, we put together a list of the top 3 lies we’ve heard them tell over and over again.
Use them to ask the right questions and choose the best lease management software for your business.