Maximizing Lease Performance: The Role of Lease Tracking and Management Solutions
Leases are part of life for most businesses. Whether you lease real estate, commercial real estate, vehicles, or equipment, someone in your company has to manage those leases.
If you have a large lease portfolio, or you invest a lot in your leases, you already know that good lease tracking is a vital part of your business.
But you need great lease tracking software to do it. That software should make sense of all the data and put it in one place for central access. It should also generate reports that lead to good business decisions by managers and executives.
There is a lot that goes into this, so let's look at what lease tracking software involves.
Key takeaways
- Lease tracking software records every lease a company holds and every transaction under those leases, in one place.
- It tracks payment due dates and critical dates, so a missed payment does not cost you late fees or void a good lease.
- It captures embedded leases, which are leases held inside broader contracts, and adds them to the rest of your lease data (ASC 842-10-15-3).
- It helps companies stay in compliance with ASC 842 and the other accounting standards that apply to their leases.
- It cuts the time staff spend searching for lease documents, and it prevents data errors such as duplicate entries and mismatched spreadsheets.
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What Is Lease Tracking Software?
Lease tracking software is a software package, or a suite of modules, that documents all the leases in a company and all the transactions that are part of those leases.
Some companies use the term “lease tracking software” to mean the same thing as lease management software. But the latter implies some higher-level functions, so we’ll stick with lease tracking software for clarity.
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Purpose of Lease Tracking Software
The primary purpose of lease tracking software is to keep accurate, current information about the leases in a company. It offers features that make it easy to enter, retrieve, and report on lease data. Because it keeps all lease data in one central place, the software gives easy access to lease information. It also helps you generate reports, track lease performance, and make informed business decisions.
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Lease Tracking Software Functionality
Lease tracking software often includes lease document management, payment tracking, notifications for critical dates and renewals, and calculation of financial metrics. It often integrates with accounting systems too. It may also offer customization options for specific lease types and industries.
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Lease Management Made Simple
Lease tracking software focuses mainly on the tracking side of leases, but it is an integral part of lease management as a whole. Because it provides accurate, accessible lease data, it supports higher-level functions such as lease administration, lease accounting, portfolio analysis, and compliance with accounting standards.
Lease tracking software serves as the central hub for managing and organizing lease information. It gives businesses a complete view of their lease portfolio, and it lets them track lease transactions and activities efficiently.
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Why Is Lease Tracking Software Important?
For most companies, the transactions under the leases in their portfolio are critical to success. To cite one example, missed payments can be costly, both in the moment and down the line.
They can also void the terms of a favorable lease. So it pays to stay on top of them, and to know how well each lease is performing as an asset.
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Preventing Missed Payments
When a lease payment is missed, it disrupts cash flow. It can also lead to penalties, late fees, and even legal complications. Repeated missed payments could put the lease in default, and default can end the lease agreement altogether. That hurts most when the lease terms were favorable, or when the lease provided resources the business needs to operate.
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Keeping Finances Organized
With lease tracking software, companies can monitor and manage their lease payments. The software typically lets you track payment due dates, send reminders, and generate reports on payment history and trends. This level of oversight keeps companies on top of their financial obligations, helps them avoid missed payments, and keeps relations with lessors positive.
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Asset Performance
Lease tracking software also helps businesses judge how each lease performs as an asset. Each lease is an investment for the company, whether it is real estate, commercial real estate, vehicles, or equipment. Watching how these assets perform is crucial for making informed business decisions and putting resources where they do the most good.
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Lease Data At Your Fingertips
Lease tracking software lets businesses gather full data on each lease, including lease terms, rental rates, maintenance costs, and any added expenses. With that data, you can assess how profitable and efficient each lease is, spot the assets that underperform, and make informed decisions about renewals, terminations, or negotiations.
With lease tracking software, companies gain valuable insight into their lease portfolio. They can spot trends, analyze financial performance, and see the overall impact of leases on the bottom line. That information helps businesses improve their leasing strategy, negotiate favorable terms, and keep leases in line with their operating and financial goals.
Lease tracking software is essential for companies that want to manage lease transactions well and assess how their lease assets perform. By staying on top of payments and understanding what their leases mean financially, businesses can reduce risk, make better use of resources, and make informed decisions that improve operations and financial health.
Lease Tracking & Accounting Software and Accounting Standards
Several accounting standards apply to leases, and lease tracking software helps companies stay in compliance with all of them. Here are just a few of the standards that may apply to a specific lease:
- GASB: the Governmental Accounting Standards Board sets the lease standard that state and local governments apply to their own financial statements (GASB Statement No. 87, paragraph 3); a company that leases to or from a government still reports under ASC 842. Lease tracking software helps companies with government leases by providing functions that line up with GASB requirements. It makes sure lease transactions tied to government contracts are recorded and reported accurately.
- FASB: The standards set by the Financial Accounting Standards Board apply to public and private companies in the US, along with nonprofits. Lease tracking software helps companies comply with FASB standards. It helps record and classify leases the right way, calculates lease payments, and generates financial reports that follow FASB guidelines.
- IASB: companies that also report under IFRS must stay in compliance with the standards set by the International Accounting Standards Board. Lease tracking software helps such companies line up their lease accounting with IASB requirements. It lets them measure and report lease obligations accurately, in line with international accounting standards.
- ASC 842: This standard replaced ASC 840. It took effect for public business entities in fiscal years beginning after December 15, 2018, and for all other entities, which means private companies and most nonprofits, in fiscal years beginning after December 15, 2021 (ASC 842-10-65-1(a) and (b)). It brought most leases onto the balance sheet: at commencement a lessee recognizes a right-of-use asset and a lease liability (ASC 842-20-25-1), including leases it would previously have kept off the balance sheet. Deloitte's Roadmap: Leases, section 1.2, summarizes the change. Lease tracking software is essential for compliance with ASC 842. It provides the tools to handle lease calculations, track lease terms and payments, generate accurate financial reports, and meet disclosure requirements.
It’s vital to have lease accounting software that can keep up with the calculations and transactions in a way that complies with ASC 842.
Lease accounting software with built-in lease tracking is vital for meeting the requirements of these accounting standards. It automates lease accounting, calculates lease-related financial metrics, keeps an accurate lease ledger, and generates financial reports that follow the specific guidelines of each standard. With lease accounting software, companies can keep their lease accounting accurate and compliant, and reduce the risk of financial misstatements or non-compliance with accounting standards.
Compliance
Lease tracking software is crucial for companies that need to stay in compliance with accounting standards such as GASB, FASB, IASB, and ASC 842. It provides the functions needed to track, record, and report lease transactions accurately under these standards. By using lease tracking software that lines up with accounting requirements, companies can keep accurate financial records and meet their obligations under the standards that apply to them.-
How Does Lease Tracking Software Handle Embedded Leases?
Some leases sit inside broader contracts. These are known as embedded leases, and you need lease tracking software that can record the transactions in these leases and add them to your existing lease data.
Lease tracking software plays a crucial role in managing embedded leases, which are leases contained within broader contracts or agreements. Embedded leases take many forms, such as lease components within service agreements, supply contracts, or construction contracts.
Embedded Leases
Embedded leases pose unique challenges for lease management. They are not standalone lease agreements but elements embedded within larger contracts. Lease tracking software is built to handle this and to manage the lease transactions tied to embedded leases.
One key function of lease tracking software is finding and isolating embedded leases within broader contracts. It uses advanced algorithms and parsing to pull lease-specific information out of complex contract documents. That lets the software capture and record the lease terms, lease payments, and other relevant data for each embedded lease.
Once the embedded leases are identified and recorded, lease tracking software folds them into the existing lease data. So every lease transaction, whether from a standalone lease or an embedded lease, is properly tracked, monitored, and reported.
By capturing the transactions under embedded leases, lease tracking software gives a complete view of the whole lease portfolio. Companies can see the full extent of their lease obligations and financial commitments, including those inside larger contracts. That full view supports better decisions, risk assessment, and financial planning around embedded leases.
ASC 842 requires an entity to determine at inception whether a contract is or contains a lease (ASC 842-10-15-2 through 15-3) and to account for any lease it finds, even when the lease sits inside a service or supply contract. Consideration is then allocated between the lease and non-lease components (ASC 842-10-15-30), unless the lessee elects the practical expedient in ASC 842-10-15-37, by class of underlying asset, to combine them as a single lease component. Deloitte's Roadmap: Leases, section 4.3, walks through the separation. Lease tracking software supports that work by holding the embedded leases with the rest of the lease data. The software includes the accounting calculations and reporting features needed to reflect the financial impact of embedded leases in financial statements and disclosures.
Lease tracking software is equipped to handle the intricacies of embedded leases. It can identify, isolate, and record transactions under embedded leases within broader contracts. By folding those transactions into the existing lease data, it gives a complete view of the whole lease portfolio and supports compliance with accounting standards. Companies need this to manage embedded leases well, see their lease obligations clearly, and report their financials accurately.
Lease Management Software and Specific Tracking
Managers and executives need specific information from their lease tracking software. Here is some of it.
Lease tracking software plays a crucial role in managing embedded leases, which are leases that are part of broader contracts. These leases need lease tracking software that can record their transactions and fold them into the existing lease data.
Documentation
Every lease transaction has to be recorded, and it has to be available in a way that is both searchable and shareable.
Documentation is one of the things managers and executives rely on most in lease tracking software. They need a complete record of each lease transaction, and the software should provide a searchable and shareable database of lease information. That way, every lease activity, such as rent payments, lease modifications, and lease renewals, is documented accurately and easy to find.
Audit Functions and Asset Management
Every company needs an audit trail, both for internal use and for outside auditors. A complete lease tracking software package can build one and make any data an audit needs available instantly.
Audit functions and asset management are vital parts of lease tracking software. Companies need an audit trail of lease activity, both for internal purposes and for external audits. A robust lease tracking software package builds that trail by capturing and storing all the relevant data on each lease transaction. That brings transparency, accuracy, and accountability, and it puts the needed information within reach during an audit.
Different Rules for Different Leases
The rules for transactions differ for certain types of leases, and lease tracking software helps companies keep up with those rules. It also standardizes the data it collects, so the data can go into reports and be understood easily.
Different types of leases often come with their own rules for transactions. Lease tracking software helps companies stay compliant by providing functions tailored to each lease type. It applies the right rules to each transaction, which removes the risk of non-compliance. It also standardizes the collected data, so the data is easier to put in reports and the financial effects of different leases are easier to compare.
With these features, lease tracking software streamlines the management of embedded leases. It provides one central platform for recording and tracking lease transactions, keeping proper documentation, staying compliant, and generating reports. This specificity and standardization improve efficiency, accuracy, and transparency in lease management.
Lease tracking software is essential for managing embedded leases well. It lets companies record lease transactions accurately, provides audit trail functions, and applies the specific rules for each type of lease. By standardizing data and keeping full documentation, the software simplifies lease management and helps managers and executives make better decisions.
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What Problems Does Lease Tracking Software Solve?
Information Searches, Accounting Software and Lease Management
Lease tracking software solves several problems that companies commonly run into in lease management.
Information Searches, Accounting Software and Lease Management
Employees lose real working time searching for the documents and files they need to do their jobs, and the time rises at audit. Lease tracking software can lower that time, streamline the search, and make important information available instantly. That means higher productivity for your business and your employees.
Lease tracking software cuts the time employees spend searching for lease documents and files. Lease tracking software cuts the time employees spend searching for the lease information they need to do their jobs. During audit season, that time grows. Lease tracking software streamlines the search by centralizing lease data and giving quick, easy access to the right information.
This saves time, improves productivity, and lets employees retrieve lease information instantly.
A Lease Tracking Software System Prevents Data Errors
Employees make mistakes, and when the mistakes are not caught in time they can be costly. They include wrong calculations, the same data entered more than once, mismatched spreadsheets, and so on.
Lease tracking software is built to keep that from happening, and it does so instantly, so the extra costs can be avoided.
Another problem lease tracking software solves is data errors. Human errors such as wrong calculations, duplicate data entries, and mismatched spreadsheets can be costly if they are not caught in time. Lease tracking software is built to minimize these errors. It automates calculations, eliminates duplicate entries, and keeps data consistent across the system.
That helps companies avoid needless costs and keep their lease data accurate and reliable.
Centralizing Stored Lease Information
Many companies are decentralized, with offices at home and abroad, which makes it harder to have important data on hand instantly. Lease tracking software is built to do just that, which helps them run far more efficiently.
Many companies are decentralized, with offices in many places, both at home and abroad. That can make it hard to have important lease data on hand instantly. Lease tracking software solves this by centralizing stored lease information. It provides one platform where all lease data is stored and can be reached from anywhere.
This central approach improves efficiency, helps teams work together, and keeps lease information within reach when it is needed.
Lease Consolidation and Lease Accounting and Tracking
For companies with a large lease portfolio, the question “Do you know where your leases are?” is not just an irreverent, off-the-cuff question. In many cases, lease tracking software can consolidate a large lease portfolio into a single summary that shows both lease-specific and overall ROI, which is invaluable.
For companies with a large lease portfolio, lease tracking software solves the problem of consolidation and tracking. Managing many leases is complex, and it is crucial to have a clear view of the whole portfolio. Lease tracking software can consolidate a large lease portfolio into a single summary that shows lease-specific details and the overall return on investment (ROI).
This consolidation simplifies the lease management system, helps with decisions, and gives companies a full picture of how their lease portfolio is performing.
Lease tracking software solves problems with information searches, data errors, scattered lease information, and lease consolidation. It improves efficiency by cutting search time, prevents costly data errors, centralizes lease information, and gives a complete view of the lease portfolio. By solving these problems, lease tracking software improves lease management and lets companies make informed decisions from accurate, accessible lease data.
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How Can Lease Tracking Software Help With Property Management?
Lease tracking software plays a crucial role in property management, where a large lease portfolio is often involved. It helps property management companies understand and analyze lease performance, and it tracks important dates for collections and payments.
Property Management
Property management is just one example of a real estate or commercial real estate function where a large lease portfolio can be in play.
Property management companies rely heavily on lease tracking software, because the lease management system is at the core of their business. The software gives valuable insight into lease performance by consolidating lease data, generating reports, and offering analytics tools. Property managers can assess key metrics such as occupancy rates, rental income, lease expirations, and tenant turnover. With that information they can make informed decisions, improve lease terms, and find ways to improve property performance.
Data Collection
Lease tracking software helps property management companies understand lease performance, and it also helps them track important dates for collections and payments.
Lease tracking software helps property managers stay on top of important dates for rent collections and payments. It sends automated reminders and notifications for upcoming payment due dates, so rent is collected on time and the risk of missed payments stays low. By streamlining these processes, the software improves cash flow management and helps keep landlord and tenant relations positive.
Since this is the core business of a property management company, it is no exaggeration to say that quality lease tracking software can spell the difference between success and failure.
The Lease Specifics of Asset Management
Every lease is a unique asset, with different transactions, rule variations, different standards that apply, and so on. Lease tracking software keeps all the details sorted so the data can be summarized and understood easily.
Lease tracking software also treats each lease as a unique asset with its own details and variations. It keeps all the lease specifics sorted and organized, so the lease data is easy to summarize and understand. That includes lease terms, rental rates, lease modifications, and any other relevant details. Property managers can use this consolidated information to see their whole lease portfolio, track how each lease performs, and make decisions based on the data.
Lease Accounting as Part of Lease Tracking Software
When it comes to lease transactions, calculations matter. They need to be accurate and complete, and the best lease tracking software includes lease accounting functions that keep up with payments, changes in terms, and so on. That means accurate data that can go into succinct reports and serve as an effective business tool.
Lease tracking software includes lease accounting functions as an integral part of its features.
It keeps the calculations for lease transactions accurate and complete, including rental payments, changes in lease terms, and financial obligations. This accounting function guarantees precise financial data that can go into succinct reports and serve as a valuable business tool.
Property managers can monitor lease-related financial metrics, track income and expenses, and comply with accounting standards, which supports accurate financial reporting.
Lease tracking software greatly aids property management. It gives insight into lease performance, makes it easy to track important dates, and keeps lease accounting accurate. Property managers can use it to improve property performance, manage cash flow better, and make informed decisions from reliable lease data.
With lease tracking software, property management companies can work more efficiently, reduce risk, and manage their lease portfolios with greater success.
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Get the Best Lease Management Accounting Solution from iLeasePro
At iLeasePro, we understand every aspect of lease tracking. We know what software and features you need, the functions and security protections that have to be included, and how to apply them best to your business leasing situation.
We also know the ASC 842 standard, so we know how lease tracking software has to work to comply with it.
We have provided lease tracking software for companies of all sizes, and our leasing software is considered among the best in the industry. When you call us, we can set you up with a free demo of our lease accounting software, which will give you an idea of how it all works.
To do this, call us at 888-351-4606, or email us at info@ileasepro.com. We also have plenty of great information about lease accounting software on our website, ileasepro.com, and you can chat with a live representative there too.
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Summary
Lease tracking software is an essential tool for businesses that want to manage their lease portfolios well and get the most from them. It provides the full set of functions needed to track lease data accurately and keep it current. That means easy access to information, insightful reports, and informed decisions by managers and executives.
Lease tracking software serves as the central store for all lease information, so businesses keep a complete view of their lease portfolio. Companies can track lease transactions, monitor payment schedules, and assess lease performance. By capturing and organizing lease data, the software streamlines documentation and provides searchable, shareable records of lease transactions.
One crucial thing lease tracking software handles is embedded leases. Embedded leases are leases that are part of broader contracts or agreements. Lease tracking software is built to identify and record transactions under embedded leases and fold them into the existing lease data. So every lease activity, whether from a standalone lease or an embedded lease, is tracked and managed accurately.
Lease tracking software also plays a vital role in keeping companies compliant with accounting standards such as GASB, FASB, IASB, and ASC 842. It records lease transactions under the specific guidelines of each standard. The software includes lease accounting functions, which support accurate calculations, financial reporting, and compliance with accounting standards.
Lease tracking software also solves common problems in the lease management system. It cuts the time spent searching for lease documents and files. It helps prevent data errors by automating calculations, removing duplicates, and keeping data consistent. It centralizes lease information, which makes it easy to reach across a decentralized company and improves efficiency.
In summary, lease tracking software is a critical tool for businesses that want to manage their lease portfolios well. It tracks, documents, and reports lease transactions accurately. It handles embedded leases, keeps companies compliant with accounting standards, and solves common problems in lease management. With lease tracking software, businesses can improve lease performance, reduce risk, and make informed decisions that drive success.
Frequently Asked Questions
Does lease administrative software help prepare an automated operating expense and cam analysis?
Yes, lease administrative software can help prepare an automated operating expense and Common Area Maintenance (CAM) analysis. These software solutions often include features that track and calculate the operating expenses and CAM charges tied to leases. This streamlines the process and helps generate accurate analyses based on the lease terms and relevant data.
What is lease management and what are the basics of a lease?
Lease management refers to overseeing and administering leases through their whole lifecycle. It covers lease creation, tracking lease terms and obligations, managing payments and collections, handling renewals and terminations, and keeping lease documentation. The basics of a lease include the parties involved (landlord and tenant), the lease term, the rent amount, the payment schedule, the rights and responsibilities of both parties, and any specific terms and conditions.
What is lease management software?
Lease management software, also known as lease administration software, a lease management system, or lease tracking software, is a set of tools that help businesses manage their lease portfolios. These software solutions centralize lease data, track lease terms and obligations, automate payments and collections, generate reports, manage lease documents, and support compliance with accounting and financial reporting standards. They streamline lease management workflows and improve efficiency.
Does lease administration software help manage my lease portfolio?
Yes, lease administration software is built to help manage lease portfolios. It tracks and organizes lease information, stores lease documents, monitors lease expirations and renewal dates, manages payments and collections, and generates reports on lease performance, financials, and obligations. By centralizing lease data and automating many lease management tasks, the software simplifies the management of the whole lease portfolio.
Does lease administration software simplify how I access key lease data?
Yes, lease administration software simplifies access to key lease data. It typically offers a central repository where all lease information, documents, and data are stored. Authorized users can search for and retrieve specific lease details, such as lease terms, payment history, critical dates, and other relevant information. There is no need to search through paper files or scattered digital documents, so important lease data is easy to reach whenever it is needed.
Can landlords and tenants sign leases remotely using electronic or digital signatures for residential lease agreements?
Yes, landlords and tenants can sign leases remotely using electronic or digital signatures for residential lease agreements. Electronic signatures are legally recognized in many jurisdictions and can be used to execute lease agreements without paper. These solutions capture signatures electronically in a secure and convenient way, and they protect the validity and integrity of the lease agreements.
However, it is important to comply with the laws and regulations on electronic signatures in the jurisdiction where the lease agreement is executed.
How does lease management software help companies stay compliant with financial reporting and generally accepted accounting standards?
Lease management software helps companies stay compliant with financial reporting and generally accepted accounting standards by building in lease accounting functions and keeping calculations and reporting accurate. The software is designed to follow accounting standards such as GASB, FASB, IASB, and ASC 842, which govern lease accounting. It tracks lease-related financial data, generates reports for financial statements, and calculates lease payments, amortization schedules, and other financial metrics.
By automating these processes and providing standardized data, lease management software helps companies stay compliant with accounting standards and report their financials accurately. For the practice rather than the software — deciding whether to lease, negotiating terms, controlling cost and tracking critical dates — see [all 34 lease management articles](/blog/lease-management/), grouped by what you are trying to do.