Due to the increasing complexity of lease accounting standards, organizations of all types need to use lease accounting tools. New standards, like the ASC 842 and IFRS 16, for example, require strict compliance and monitoring, a chore that is almost impossible to accomplish through manual efforts. Lease accounting tools help organizations in the compliance process.
To make it easier to follow stringent compliance standards, these tools are intended to cover everything, including the first lease calculations, preparing journal entries, and more. It is important to select appropriate solutions to avoid time wastage, increase efficiency and improve report (financial) reliability.
In this guide, we will help you to identify all the critical aspects related to the selection of the most suitable lease accounting software.
Key Features to Look for in Lease Accounting Software
Here are some essential capabilities to consider:
a. Compliance and Reporting Tools
Lease accounting software must be equipped with robust compliance elements to meet the required compliance reporting requirements. When everything is automated, there is less chance of error and quicker reports are generated for the financial auditors.
b. Data Integration and Import Capabilities
Aspire to find software that can effectively incorporate with your current ERP or accounting solution. This results in data consolidation, which in turn eliminates data duplication and increases the accuracy of data at the central repository. Many solutions provide an option for the import of multiple leases at the same time, which is preferable for organizations that may handle many leases regularly.
c. Ease of Use and Accessibility
An intuitive interface is essential for quick adoption and ease of use. Other options that should be looked for include software that offers cloud based solutions. These provide extra mobility because it allows the users to access data from any place. This feature can be extremely useful for companies with teleworking options or that have multinational branches.
d. Lease Lifecycle Management
The lease accounting software has to be able to manage the lease lifecycle—from the time the lease is initiated to the time it has to be renewed or perhaps terminated. The tools should also offer automatic alerts for the due dates—for lease renewal and payment purposes. This would help in the smooth management of leases, as vital events would not be missed.
e. Audit Trail and Security Features
Lastly, it is important to ensure that data security is provided, especially important when dealing with issues to do with finance. Select a solution that has in-built data security features and an audit trail feature that ensures all modifications made within the system are traceable. This not only helps in meeting compliance expectations but also aids in providing transparency—for audit purposes.
Final Thoughts
Selecting the most appropriate lease accounting software is not a process that should be taken lightly, because the benefits of having appropriate software are many. These include guaranteeing compliance, saving time, and increasing the accuracy of the results. The best tools help ensure that lease management is less complicated, as everything that is relevant to your kind of business will have been taken into consideration.
