That way, you can follow regulations and keep track of your spending and the value of the asset. You won't have to worry as much about missing important transactions during the lease term.
If leasing is a prominent part of your business, you definitely need lease accounting software. It gives you a written and numerical trail to track your leasing transactions, and that trail is a vital part of your business data, how efficiently you’re able to operate, and your profit and revenue formula.
There’s a lot that goes into it, so let’s review. What follows is a breakdown of everything you need to know about lease accounting software, from the basics to some of the more advanced concepts and capabilities.
What is Lease Accounting Software?
Simply put, lease accounting software is a program or a series of software modules that gives you the necessary calculations and reports to track your leases and the expenses associated with them.
It tells you what types of leases you have, and what transactions have transpired for each lease, and it provides a data and financial trail for auditing and reporting purposes.
As a result, this lease accounting software helps you see exactly how your leases are operating from a financial perspective, and it helps you use your leases as a tool to increase both revenue and profit.
How Software Helps You Manage Lease Data and Record Transactions
In some ways, lease transactions are recorded in a way that’s similar to other accounting transactions, especially for companies that are already using double-entry accounting.
Journal entries allow you to track assets and liabilities as they are related to both the specifics of the lease itself and the term of the lease.
Minimum payments allow you to see the overall economic life of your lease, but it’s important to create these entries right from the commencement date of the lease up until the end. This will give you a better idea of the fair value of the lease as an item on your balance sheet.
Lease Accounting Software and Real Estate
There are many examples of how this works in different industries, but real estate is one of the most common applications.
For companies involved in buying, selling, or managing properties, houses, office buildings, etc., effective lease accounting software is an incredibly important part of their business.
It helps property managers, landlords, and lessors track and automate their payments, collections, and financial records, but there are other benefits that lease accounting software provides.
Lease Accounting Software Benefits
- Reduce the cost of both equipment and real estate transactions.
- Ensure compliance with both accounting standards and business-specific best practices and standards.
- Allows collaborative decisions for multi-department transactions
- Make better business decisions about important purchases and investments
Using Lease Accounting Software as a Lease Management Tool
Now let’s talk a little about lease management software and how it ties into lease management.
When it comes to management functions, one of the biggest benefits of lease accounting software is that it helps organizations consolidate and access all their leasing information in one place.
That means the information from multiple departments can be accessed in a single place, regardless of which manager needs it. This leasing information can also be correlated with data from other leases that are already in a company’s database.
Lease Accounting Software and Lease Management Software
Lease management software helps managers and executives track and analyze key lease data. This information can also be used to improve overall business operations.
Lease accounting software is an important part of this tracking, analysis, and improvement. It automates lease-related calculations to provide accurate numbers instantaneously, and those numbers can be used for reporting purposes across the company.
What Accounting Guide Standards Apply to Leasing?
There are multiple accounting standards that can apply to lease accounting software, depending on the company, the business, and the nature of the lease.
These standards must be followed explicitly in the calculations and data collection that pertain to both individual leases and your lease portfolio as a whole, so let’s do a snapshot breakdown of what they are and how they work:
- FASB standards. These standards are created by the financial accounting standards board (FASB), and as such, they can be applied to all public companies.
- GASB Standards. As their name implies, standards created by the Governmental Accounting Standards Board (GASB) are typically applied to both state and local governments.
- IFRS 16. IFRS stands for International Financial Reporting Standards, and it provides a single lessee accounting model for all leases with terms that extend for more than 12 months. It’s especially important for companies that do a lot of business abroad.
- ACS 842. This standard was enacted by the Financial Accounting Standards Board in
ASC 842 to replace ASC 840.
It’s designed to record lease transactions for different types of leases so that they accurately reflect a company’s performance on a balance sheet and in cash flow statements.
Some of the calculations involved in these are performed and recorded differently, so it’s important to have lease accounting software that can make the proper calculations to provide accurate lease data and information.
Get the Best Lease Accounting Software Solution from iLeasePro
At iLeasePro, we understand every aspect of leasing, including lease accounting. That means we know what lease features are involved, how calculations need to be performed and recorded, and how you can best use your leases and lease data as a business asset.
We also know the ASC 842 standard inside out, and as such we know how lease accounting software has to work to be compliant with that standard.
We’ve provided lease accounting software for small businesses, and for larger companies as well. Our lease accounting software pricing is among the best in the industry, and when you call us we can set you up with a lease accounting software free demo.
To do this, call us at 888-351-4606, or you can email us at firstname.lastname@example.org. We also have plenty of great information about lease accounting software on our website, which is ileasepro.com, and you can chat with a live representative there as well.