Choosing the right software can streamline processes, ensure accurate financial reporting, and improve overall lease management efficiency, enabling you to significantly reduce costs. In this article, we explore the key factors to consider when evaluating lease accounting software, empowering you to make an informed decision that aligns with your organization’s needs and objectives.
The global lease management software market has grown due to the surging adoption of software, growing adoption of cloud-based lease management software, and increasing internet penetration worldwide, among other factors. The lease administration software market size was valued at $3.9 billion in 2021 and is expected to reach $6.1 billion by 2030, growing at a CAGR of 5.7% from 2022 to 2030, according to Verified Market Research.
Why Use Lease Accounting Software
Most accounting software can offer advantages beyond compliance, particularly in lease accounting, where numerous facets impact financial insights and decision-making. Businesses can benefit from superior lease accounting software solutions in several ways:
Reduction in manual intervention: Automates compliance with accounting standards.
Elimination of human errors: Increases financial reporting accuracy.
Improved visibility: Enhances access to important financial and portfolio data.
Lease Accounting Software Evaluation: What to Look For
With new standards, accounting for software leases is complex, involving many factors. Spreadsheet implementation is risky, even though some businesses still use them to manage leases. Utilizing technology and software is wiser, but it comes with a problem: how do you pick the best lease accounting software for your requirements? When evaluating options, consider your company’s objectives, budget, and clientele to make the best decision.
When selecting the ideal lease accounting software for your business, keep these factors in mind.
Accounting: Compliance with new lease standards is crucial when assessing software solutions. Depending on your client mix, you might need to consider both FASB (ASC 842) and IASB (IFRS 16). Odessa’s premier, next-generation platform for the global asset leasing and financing industry guarantees adherence and compliance with global accounting standards and practices across all regions, giving clients an automatic edge and enabling seamless enterprise expansion worldwide.
Ease of Use: One of the most frequent complaints about software platforms is their complexity or fragmented user experience. When a system is not intuitive, employees take too long to execute simple activities, increasing frustration and reducing productivity. By selecting a technology partner that prioritizes usability and provides a superior user experience, you can prevent these problems. Lease administration and accounting software with a clear, adaptable design offer advantages like seamless handoffs and quick workflows, reducing human errors.
Value Over Cost: To get the most out of your software, research its built-in features and determine how it will scale with your company. Some providers appear to offer many benefits but charge extra for essential features. Find out from the software provider what is included in their package and how they will meet your needs as your company expands. Check out recent customer reviews to understand their experiences, including challenges and utilized features. A reliable platform should reengineer business processes for cost efficiency, automate tasks to reduce human capital costs, and offer flexible pricing options for smaller companies.
Integration with Existing and Third-party Systems: Successful integration of leasing accounting software with your current tech stack allows for seamless communication and data sharing. It’s crucial to consider whether the new lease accounting software vendor can work with your existing technology. Advanced interfacing capabilities, including web services and APIsare essential for smooth integration with other third-party systems and credit bureaus.
Configurable and Capable of Cloud Deployment: Properly designed lease accounting software should include functionalities like user permissions, validation alerts for incorrect data, global accessibility, search capabilities, and centralized documentation. Cloud deployment offers benefits such as subscription-based pricing options, swift deployments, and the ability to scale on demand, making it imperative for software vendors to provide their platforms both on-premise and on the cloud.
Audits and Reviews: One of the biggest advantages of using lease administration and accounting software over spreadsheets is the simplification of the audit and review process. Ensure that the software has built-in audit trails, transparency, and reporting options to audit inputs and outputs effectively.
Regulatory Compliance: Compliance with ASC 842, IFRS 16, and other regulations is crucial. Lease accounting software helps standardize procedures, boost accuracy, and ensure timeliness while easing lease accounting operations and audits. The system should be configurable to meet regulatory requirements in different countries, supporting multi-country operations seamlessly.
Security: In the leasing sector, the security of documents and sensitive customer information is paramount. A data breach could compromise the integrity of your company, reputation, and customer trust. Lease accounting software must highlight data protection and security, offering effective authentication, authorization, and user management systems to prevent database breaches.
Dedicated Support: Evaluate the support services offered by the technology partner. Continuous, committed support ensures smooth onboarding of new employees and helps navigate any changes or problems, preventing inconsistencies and productivity loss. Look for a technology partner that offers unrivaled support throughout deployment and post-implementation phases.
Specific Features for Lease Accounting in a Company
If the lease accounting software can manage the essentials, consider additional portfolio requirements. These elements may not be necessary for every business, but the following should be top priorities:
- Multi-currency accounting: Essential for managing leases in foreign currencies.
- Consolidated reporting: Crucial for running reports across several businesses.
- Accounting for the lessor and subleases: Important for portfolios with many sublease agreements.
Futureproof Your Leasing and Financing Operations with Odessa
Odessa’s modern, cutting-edge technology simplifies managing end-to-end operations for automotive and equipment leasing and finance companies, banks, and other financial institutions. Designed to support business growth, it offers broad domain coverage and powerful configurable engines. Odessa’s platform minimizes human intervention, significantly reduces turnaround time, and ensures operational dominance well into the future. Enhanced maintainability allows innovation and sustainable growth in a rapidly changing market environment.
In an era where the financial landscape is becoming increasingly digitized, the specter of cyber threats looms large over the asset finance and leasing industry. As the sector embraces technological advancements, vulnerabilities to cyberattacks rise, necessitating a comprehensive approach to cybersecurity.