Microsoft Excel is a powerful spreadsheet program that many companies utilize for their data analysis and documentation.
But why is it so popular? It’s cheap, flexible, and we have all taken a few classes on it. The program is a great file format for uploading or downloading data from various other applications.
We are all so used to spreadsheets that no one questions if it is the most efficient tool for your company. In a world full of evolving technology and trends, Excel just can’t keep up. When it comes to your lease accounting software, Excel is much better in a supporting role.
Managing your entire business in Excel increases the risk of inconsistencies, incomplete data, and wasted time. Unfortunately, using Excel has significant consequences when your lease accounting compliance needs have surpassed its capabilities.
Spreadsheets can be bad for your business
There are many reasons why businesses should reevaluate their spreadsheet-based solutions. Why? They inevitably cause wasted time and talent in organizations.
Here are some significant problems your business can potentially face by keeping the Excel system going:
1. Costly mistakes
It’s inevitable. Humans make mistakes. Spreadsheets make it easy to create errors, such as misplacing a decimal point or entering the wrong number. Small mistakes like these can snowball into considerable errors in accounting.
Excel has no way to cross-check data entered into the spreadsheets that matches with the real results. Tracking down the origin of a pricey miscalculation can be difficult and will create a level of uncertainty in your system’s reliability.
If your business relies on manual data entry, you run the risk of introducing errors in your spreadsheets that could end up costing your business lots of money.
Choosing a lease accounting software means that you would no longer have to worry about these types of errors. The system is thoroughly tested and maintained by the provider, so any doubts about your data accuracy are guaranteed through error-free calculations.
2. Wasted time navigating through spreadsheets
Excel was initially developed to improve business efficiency. It is undoubtedly an upgrade from handling your company’s information all on paper, but it is starting to be an outdated organizational method. Spreadsheets were never designed to be accessed and updated by multiple people at the same time.
Even if only a limited number of your employees are authorized to make changes, at some point, all departments will more than likely need access to important information.
With lease accounting software, anyone can be given the access and update rights that they need to ensure they are doing their job effectively.
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 can locate necessary information and easily modify these segments, resulting in a real-time system of record accuracy.
3. Loss of crucial data
Security breaches are the main concern for all businesses. Allowing your employees to store business information on their desktop computers means that you might lose data if a computer crashes.
Other disasters, such as storms, computer viruses, or non-compliant employees, can have devastating effects on your business - especially when your data is stored locally. Sure, you can backup spreadsheets, but your data remains at risk if that is not occurring automatically.
To avoid making your company’s data vulnerable to theft, you will need to find a cloud-based software solution. It is essential to ensure that your business information is hosted in an environment with backups, fail-over equipment, and SOC (System and Organization Controls) compliant security measures.
Switching to a lease accounting software will provide you with a peace of mind knowing that your data is safe and available no matter what.
4. Lack of historical data
Excel spreadsheets are not meant to hold years’ worth of information. When companies lose historical data, it is difficult to identify trends to aid in forecasting and budgeting, resulting in missed opportunities or lost money for your business.
Losing historical data could also cause legal complications. Auditors are very interested in your lease schedules, and they want an audit trail.
Lease accounting software provides an audit trail showing who made an update and the last authorized user. This is critical information for compliance and tracking your data’s health. Maintaining a reliable audit trail is especially important when you have to reverse mistakes.
5. Inability to analyze what-if scenarios
What would happen if you were to add or remove the Landlord Allowance? With a spreadsheet, this type of question can be challenging to answer. Not every lease scenario will follow the same procedure and provide your company with similar outcomes.
Without a flexible lease accounting software, these what-if scenario analyses often require considerable overtime to capture answers. Lease accounting software allows you to make the changes quickly.
AMTdirect offers your business the benefits of sandboxing to complement your lease accounting software. Using this tool allows your company to test new features or different scenarios in your system by releasing them without risking changes to your live environment.
6. Limited visibility
Excel is a poor tool for role-based information access. As a result, a spreadsheet provides a limited view of the entire picture of the company.
Unexpected day-to-day events, such as adding or reducing space, require revisions to reflect accurate data. Lease accounting software is designed to automatically update your leases and general ledger as these daily changes occur.
You will likely have real estate, facilities, finance, and legal departments who need various forms of access to your schedules and information they need to fulfill their roles. Lease data needs to be easily accessible by multiple departments.
Although it’s technically possible for multiple editors to update spreadsheets simultaneously, it is certainly not considered a best practice.
7. There are more advanced tools
Microsoft Excel is expertly designed to create spreadsheets. Issues begin to arise when you start using Excel for financial processes that require a more advanced application. Your company should only use Excel to store small data sets and create simple models.
Even without the additional demands of compliance, managing a portfolio of more than ten leases with manual operational processes will negatively impact your business. New lease accounting standards will require the need for new reports.
The right lease accounting software accurately and efficiently performs the necessary calculations, runs ad-hoc reports, updates relevant data when lease events occur, tracks changes, and provides deadline alerts. Some cloud-based solutions come with hundreds of standard reports to use as-is or customize for your needs.
Taking business finances to the next level
An investment company that oversees several fast-food restaurants, retail locations, and multi-tenant commercial properties relied heavily on spreadsheets. Excel spreadsheets tracked all their information about their leased and owned properties.
The company managed over 200 leases, and their revenue stream was beginning to plateau.
Tthe amount of information the management team could gather was limited since their documents were scattered in multiple locations. Their team spent countless hours searching for files before being able to address a real estate issue.
On average, it would take the company up to 30 hours a month to make lease changes. These manual processes caused costly mistakes by missing lease deadlines and expiration dates.
To avoid these continued financial penalties, the investment company turned to AMTdirect’s automated, cloud-based solution. They were able to start performing the same tasks in about 15 minutes.
With AMTdirect’s lease accounting software, the investment company now has a centralized portfolio that can be accessed anytime and anywhere. As a result of the corrected discrepancies, the company immediately redeemed savings of $2,600 and 101 hours per year.
With the shift to a lease accounting software, the company has repositioned itself from reactive to proactive in their operations.
Eliminating silos of information
One of the largest U.S. residential and commercial heating, air conditioning systems, and refrigerant manufacturers lacked the technology to meet their growing portfolio demands.
The company was facing silos of information that hindered the team from meeting their goals. The company was overseeing 331 leases and employing 250 people to manage their portfolio. Their main priority was finding a new solution to migrate their existing data to flawlessly.
The risk of data loss or errors was a top concern when searching for a cloud-based software vendor. The manufacturer needed robust reporting and a broad feature set that supported lease administration, project management, and facilities management.
AMTdirect’s lease accounting software automated the rent payment process with strategic workflows. The software streamlined internal processes and improved visibility across new development projects, renovations, and retrofits.
As a result, the company now achieves faster response times, improved preventive maintenance tracking, and better visibility to when and where repairs should be made. With lease accounting software implementation, the company saves $4,400 and 166 hours per year.
Finding an effective solution
To solve issues caused by the use of spreadsheets, you need a lease accounting software solution that can do everything Excel cannot do. The ideal solution is flexible with a wide range of customizable applications that will fit your company’s needs.
Lease accounting software will also reduce and prevent errors by automatically capturing data and checking for inconsistencies. The software will prevent catastrophes by storing your information in a secure digital format that automatically backs itself up.
AMTdirect’s lease accounting software is designed to get you out of the daily grind of manual processes and increase time and money savings.
Multiple lease agreements and locations can be overwhelming. We have the cloud-based solution to allow your business to track contracts and lease data all in one place.
With AMTdirect's lease accounting software, your company can:
- Automate notifications so you will never miss a critical date
- Never overpay again with our CAM reconciliations and automated CPI for income and expense leases
- Have access to hundreds of reports right at your fingertips
- Access built-in compliance
Conclusion: Know when it’s time to shift from spreadsheets
Excel spreadsheets can still bring value to a company's business operations. With the implementation of the new lease accounting rules, spreadsheets can help create your lease inventory and organize the data before it's integrated into a lease accounting software.
While Excel is certainly easier than performing calculations manually, it provides several limitations that make it challenging when growing a lease portfolio, especially with the newly updated accounting standards.
It is crucial to analyze your company’s current situation. If you are experiencing any of the issues listed above, then is it time to consider a lease accounting software solution that offers the following benefits:
- Support for all types of leases
- Integration with your lease accounting systems
- FASB (or GASB) readiness
- Advanced reporting capabilities
- Safeguards for the safety and integrity of your lease data
- In-house technical expertise
- A high level of customer satisfaction
- Focused experience in lease accounting software
At AMTdirect, we can say with absolute confidence that our lease accounting software meets all of the above criteria.
Ready for your team to start excelling at lease accounting software instead of Excel?
Start now by getting in touch with our team today!