Lease accounting software is a complex purchasing decision, as a straightforward side-by-side comparison of price and features is not possible. Pricing models, features, and the costs associated with maintenance and upgrades varies among providers. For successful compliance, FASB recommends starting the compliance process as early as possible as the clock is ticking for companies racing to meet the December 2019 deadline, and there’s no doubt selecting the right software solution and migrating lease data into the system is a significant undertaking. Here are some tips on what to look for when comparing software vendors.
Analyze the overall value of lease accounting software
Many software solutions meet the minimum standards and capabilities of making accounting calculations under ASC 842 and IFRS16, including finance versus operating classification testing disclosure reporting and tracking data points for accounting calculations.
However, the change presents an opportunity to get more by improving overall lease management. Features to look for in a best-in-class lease accounting software solution includes:
- Retroactive re-measurements
- Automated (workflow) adjustments when critical lease details change
- Advanced re-measurement functionality & re-measurement categories (renewal, impairment, termination – full and partial, etc.)
- Most mature accounting product on the market
- APY, daily rate calculations
- Client specific calendar (4-4-5,etc)
- Multi portfolio and BU reporting
It’s also important to look into the quality of the features. Specifically, during software demonstrations ask specific questions about how robust and comprehensive the following features are:
- Accounting schedule approval workflow
- Accounting policy profiles
- Automatic journal entry posting to GL
- Lessor – Operating
- Functional Currency Calculations
- Flexible GL account configuration by asset class, business unit, ERP
- Accounting Schedule Export
- Accounting Dashboard (Balance sheet impact live updates)
- End-to-end, no double data entry (Data from lease abstract in admin system)
Lease accounting software pricing models
Finding the best value includes a thorough analysis of both the features and pricing, which can prove difficult given different pricing models. The pricing model below has proven to be an economical way to manage lease accounting data.
Real estate leases
- Priced per location
- Allows for as many leases or subleases under that location
- Annual subscription price includes
- Application access, system hosting, user and integrations support, security (SOC) audits and future updates/upgrades
- Production and non-production system environments
- Individually amoritized assets
- Coterminous Master Leases or Sub Agreements with multiple assets may be amortized as one schedule
- Unlimited users: give access to all needed stakeholders and departments
- Integrations: fees to host, manage and support
- Infrastructure Add Ons: options for single sign-on, enhanced security (encryption) etc.
A thorough assessment of software options includes analyzing both qualitative and quantitative qualities. When making the decision to centralize lease data, evaluate the vendors previous successes with complex lease accounting compliance and lease management needs for industry-leading companies. Evaluate track records of implementation and data correction during the process. Learn more about CoStar’s more than 20 years of lease accounting software and lease administration software solutions available for both real estate and equipment.
For more helpful information selecting the right lease accounting software for your organization, see these 10 Questions: A guide for lease accounting software comparison.