While companies across all industries are focusing on ASC 842 and IFRS 16 lease accounting compliance, the routine payments necessary for use of an asset are at the very core of lease accounting. This means the lease accounting software selected for compliance and “Day 2” ongoing business operations needs to make this functionality easy and intuitive. When vetting lease accounting software options, don’t forget to request a demo of basic day-to-day functionality, such as accounts payable, that provide ease-of-use and accurate transfer of information between systems
The basic functionality of accounts payable includes making accurate journal entries necessary to process invoices and make payments to lessors. Functionalities to look for in lease accounting software solutions include the ability to:
- Designate lease and non-lease components to include or exclude from the accounting schedule based on GAAP and company policy
- Accurately transfer lease data between systems, eliminating the need for multiple entries
- Provide visibility of critical data and payments for all critical users, such as visibility to details regarding payment, such as the amount, invoice number and date
- Forecast the amounts due based on information in the system
- Visibility to management of forecasted amount to actual amount, giving management the ability to look into potential miscalculations or expenses that were not a part of the original schedule
- Details associated with variable leases should be noted in the lease accounting subledger
- Automate posting of payments to AP
- Automated alerts when critical information changes
- Track work flow and audit trail of all data changes
With this level of internal transparency, accuracy and accountability, when lessors call with questions about remittance advices and payments, the lease accounting software can be a fully-integrated, reliable resource for vital information about leases associated with real estate, equipment, vehicles and other assets.
Ready to find the right lease accounting software for your organization? See these 10 Questions in our guide to selecting lease accounting software.