There is certainly no winging it when it comes to the accounting profession. In a field that is designed around accuracy, checks and balances are crucial to ensure the integrity of information. But while accountants may feel safe and secure in their routines, it’s possible that the need to keep control over spreadsheets and data could be holding them and their company back.
Khalil Bouban is a Senior Lease Implementation Consultant with CoStar Real Estate Manager. Before that he was an accounting manager focused on real estate accounting with the largest home improvement retailer in the world. Bouban knows firsthand about the unique personalities in accounting.
Why do Lease Accounting Teams Resist Software Solutions?
“Being in corporate accounting, there are certain things you constantly have to do for close, and on top of that, there is a lease accounting element,” Bouban commented when asked about the difference between an accounting routine and an accounting rut.
Many of the repetitive tasks that must be done for every month-end, or a quarter-end close could be outsourced to a software solution. But some lease accounting professionals have a tough time relinquishing control to a software. Especially when they so habitually have worked in spreadsheets. Bouban shared some interesting justifications for why a lease accountant may be hesitant to adopt a lease accounting software.
“First is, ‘Do I trust this software?’” Bouban began. “Second is job-security – if they get this software do they need me? And third is the fact that you have to deal with it if the software is not all encompassing.”
Bouban’s first and third points can be combined to one important question for lease accountants. Is this software able to do what I do, as well as I do it?
“There are software where it’s [lack of functionality] is more prevalent.” Bouban expanded, “Yes, you can use the software, but you still have to do manual workarounds and excel spreadsheets. At that point, is it [the software] still worth it?”
How a Software Solution Can Help a Lease Accounting Team
A sophisticated software solution should make an accountant’s job much easier. First, it should end manual workarounds and Excel struggles. Standard tasks like fair value market analysis, classification testing, retrospective true-ups and more can be taken over by the software. This brings us back to Bouban’s second point – job security. However, he feels that this is a short-sided way of looking at the adoption of a software solution.
“If most of your day is spent on these routines that a software can do, software will free you up to learn more and do more in your day to day, to have different responsibilities and grow. These routines are definitely holding you back.”
Let’s think bigger. How else can a software solution help a a lease accounting team? For internal communication, compliance and audits, strong software will be a close ally to a successful lease accounting team.
“There are reports you use to make you more comfortable, to make auditors more comfortable,” said Bouban, “like the roll-forward report. You can explain what happened when you have those reports. You run reports to get to other departments, like your planning team, to get them comfortable with data and do their planning – like the forecast report.”
What a Strong Lease Accounting Software Should Do
A strong lease accountant would also want a system that verifies your work. When a lease accountant is using a manual solution, like spreadsheets, there is room for inevitable human error. With ETL and ERP uploads into a multifaceted software, you get verification of accuracy that only technology can offer.
Bouban is quick to warn that if the system is given incorrect information, it’s likely to return incorrect information. “Garbage in is garbage out,” he said astutely. However, a smart solution will fact-check that information and ask the user if they’re sure it’s correct. It will let the user know if it seems information is missing. A smart solution can catch those human errors and give the team an opportunity to correct them.
Later, Bouban narrowed in on the IBR discount rate. “Part of the thing you have to do is to obtain the IBR from treasury and update the system monthly. You have to reach out to the treasury department, who reaches out to the bank, to find out what interest rate you’d get charged. You then have to keep tables… There is a lot of human error that can get involved here because they could look up or copy the wrong rate. The system can match that interest rate as long as you upload the ETL. All you have to do is enter the begin and end date of the lease term.”
Remeasurement capability is a feature that Bouban believes will convert even the most stubborn accountants who are resisting software solutions. “Sure, I can enter my leases into an excel spreadsheet… [but] if you have hundreds of leases that are constantly changing then you have to manually calculate what the impact is on the schedule.”
When a software solution has remeasurement functionality, especially bulk remeasurement functionality, the difficulty of keeping up with changing lease and changes schedules decreases significantly. Bouban continued, “That [bulk remeasurement functionality] gives me confidence that I can use this software and not have to worry about figuring out on my own if it is right or is it wrong. The fact that you can do that in bulk is even more awesome.”
What’s Next for Your Lease Accounting Team?
If you are ready to grow, to expand your company and your career, it’s time to let go of routines and embrace what a lease accounting software solution can do for you.
For compliance, audits and day-to-day business, see what CoStar Real Estate Manager has to offer you. Including but not limited to the many features and functionalities mentioned above. Reach out today to learn more.