There is a wealth of information available on lease accounting software solutions, but like many complex purchasing decisions, comparing the nuances is not always apples-to-apples. Here’s a checklist of “Do’s and Don’ts” to consider when evaluating new lease accounting software for compliance with ASC 842 and IFRS 16 guidance.

Do:

Do ask vendors if they have experience implementing lease accounting software for similar companies within your industry.

Do work with a vendor that already offers years of experience providing software to customers for lease accounting compliance for both real estate and equipment leases under current ASC 840 (FAS 13) guidance.

Do favor a vendor that understands the nuances of data and options that must be calculated for accurate reporting under ASC 842 and IFRS 16.

Do select a vendor that has proven security measures in place and conducts annual SSAE SOC audits for compliance with Sarbanes-Oxley.  Ask about clients they currently serve that have stringent security requirements.

Do select a vendor backed by a large, financially stable company to assure long-term data management and operations.

Don’t:

Don’t overlook the hidden costs associated with on-premises solutions, including upgrade fees and long-term maintenance costs.

Don’t work with a vendor that isn’t officially endorsed or recommended by notable accounting firms.

Don’t buy a software product from a vendor that doesn’t offer a specialized service team to help with implementation, customer support and ongoing data management.

Don’t overlook the need for a reliable, tested method for exporting data from the existing system and importing it into the new system.

Don’t invest in a solution that doesn’t readily integrate with existing ERP and IWMS systems.

Don’t underestimate the value of a system’s ability to provide custom and ad hoc reporting.

Don’t forget to listen to your peers.  Choose a software vendor that has a high renewal rate and highly rated customer service and support.

Don’t miss this opportunity to bring added value to your organization.

While the short-term goal of compliance with new lease accounting standards is important, it is equally important to ensure the software and policies put in place will continue to be a valuable mechanism for acquiring business assets on an ongoing basis.  Ultimately, the changes necessary for compliance present a bigger opportunity to become more streamlined and efficient.