Among the various services that accounting software enables, lease accounting is currently one of the most important ones in the financial administration of modern enterprises. Lease software can handle much more than just compliance; it can also properly manage renewals, important dates, databases, as well as budgeting and financial decisions. The advantages of using these tools are perfect for helping modern firms expand and become sustainable.
85% of businesses in the US currently use lease accounting applications to simplify the management of portfolios. Improved data accuracy is the main advantage of utilizing lease accounting software for 73% of businesses. Improved compliance comes in third at 63%, and improved efficiency is placed second at 68%.
However, in order to derive the most benefits, you need to research extensively which lease accounting software is best for your business. Here’s how to tell:
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1.Evaluate the needs of your business
Identifying your company’s demands is the first step in choosing the best lease accounting software. Take into account the volume of your lease investments, the amount of detail of your lease contracts, and any necessary specialized functionality. Other things you will need to consider include specialization of category, whether your primary clientele is businesses or individuals, and if there are any international contracts of your business.
Moreover, it is also beneficial to consider whether you require features like systematic computations, help with ASC 842 compliance, or conformity to other accounting rules such as IFRS 16, lease administration, reporting capabilities, and system integration. All these functions are essential for a lease accounting business since they ensure the efficiency, sustainability, and productivity of the assets within the company.
2.Consider the ease of use
Technology adoption has been a major issue with organizations, especially those not employing young people. Even with young people, there is a certain learning curve when it comes to new software, and if the program has a complicated interface, employees can find it hard to figure out the relevant features.
Therefore, another important element to consider when picking a lease accounting software is ensuring an intuitive interface, clear workflow, and simple navigation options. There are other things that your software of choice needs to provide, which include but are not limited to:
- Robust maintenance and update schedules to ensure relevance in the market at all times,
- A clear and comprehensive process outline for onboarding new users,
- A cache of training resources that detail every single function of the software,
- 24/7 support that facilitates maximum utilization and smooth adoption.
3.Enables compliance with various standards
Modern business requirements for leasing companies have evolved considerably. In the past, there weren’t many extensive regulations to comply with. However, today, there are. These can include environmental regulations, compliance with accounting standards, and even conformity to data protection frameworks implemented by different countries.
As a result, it is important for the software to be equipped with respective features for complying with these requirements. Particularly, in terms of accounting, the programs need to be able to perform accurate calculations of various items on the balance sheet, record assets and expenses, as well as generate financial reports at regular intervals.
4.Allows boost in efficiency through automation
Automation is one of the main benefits of lease accounting software. Consider applications that can automate processes like data entry for leases, computations, deadline alerts, and report generation. These simple but necessary tasks can take up a lot of man-hours along with other resources, which can be saved through automation and allocated more optimally toward other functions.
In addition to saving time, automation lowers the possibility of mistakes and increases overall effectiveness. An ideal lease accounting software provides strong automation tools that help firms improve efficiency and streamline accounting procedures. These tasks enable the growth and sustainability of business operations, too.
Business departments these days work in close collaboration to improve productivity and the chances of achieving company milestones effectively. As such, the lease accounting software needs to integrate seamlessly with other tools from various arms of the business. These systems can include CRM, ERP, and financial management programs, to name a few.
Through this cross-functional incorporation, a lot of processes are streamlined. Companies can avail the benefits of phasing out manual data entry procedures, mitigate any data discrepancy risks, and ensure that all information across various platforms is consistent. The synchronization and communication features of the software allow hassle-free handling of different aspects.
6.Analytics and reporting features
Most strategic decisions in companies these days are made on the basis of data analytics. The capacity to provide accurate and meaningful lease reports is crucial for making decisions and financial evaluations. It is important for a business to analyze the lease accounting software’s reporting and analytics features, as these options offer a competitive edge while operating in a saturated market.
A customized dashboard, real-time data visualization, and the capacity to produce in-depth reports with insightful data on asset investment portfolios, cash flow, and compliance status are all desirable. A lease accounting software needs to provide extensive reporting and analytics capabilities that give firms useful lease information.
7.Extensive data security
Cybercrimes are a rising nuisance these days. Billions of dollars are lost each year to hacking and other relevant activities. Companies’ systems can be compromised by malicious elements, which puts the organization’s sensitive data at risk and exposes the customer base to numerous threats. And since lease accounting software holds almost all financial information, it needs to be equipped with the most robust cybersecurity features.
The type and extent of features that various tools provide may differ. However, in essence, the program or application your business is considering must have options like end-to-end data encryption, multi-factor authentication, differentiating tools that allow access to specific roles, and constant data backups along with regular scanning of these backup systems. Your lease accounting tool must prioritize data security over a lot of other things.
Choosing the right lease accounting software is imperative because the tool will essentially form the foundations of your entire financial mechanism. It is important, therefore, to extensively research the features and capabilities that software provides so that your company can enjoy the perks of process automation, data security, seamless integration, and cross-departmental communications in a seamless manner.