Lease Management

Lease management, sometimes referred to as lease administration, is the day-to-day execution of tasks related to a company’s lease portfolio. There’s no single approach to lease management. It involves reporting, document management, coordinating between stakeholders, and a myriad of administrative tasks.

How to Establish a Lease Management Process?

Traditionally, lease negotiation, accounting, and administration were done in silos with little to not any coordination between the teams that handled each task. This led to scattered data, inconsistent lease decisions, and often, pay excessively for lease expenses owing to the lack of audit capabilities and centralized records. Effective lease management involves cross-functional collaboration and centralized access to lease management tools and lease data.

1. Centralize Lease Data & Management Tools

The first step for teams to work together & efficiently on lease management is to collect all lease data in a central repository, which creates a single source of truth and an audit trail for all lease changes and decisions. In order to set the teams up for effective lease management, choosing a software platform such as Visual Lease will enable the organization to centralize ALL data related to lease contracts. Besides, it will provides tools for automating auditing expenses and lease administration tasks. When the whole team managing leased assets is making use of the same system to update schedule payments, lease data, and create accounting journal entries, all team members are always working with the most current data.

2. Develop Leasing Policies

With technology and centralized lease management tools in place, an organization can now analyze the lease data and discover which leases are working fine and which are costing the organization more money than realized. Using those insights can help in determining how the organization wants to standardize leasing decisions. For financial leaders, it is the best practice to work with lease administrators, negotiators, and accountants to comprehend current practices and establish cost-effective leasing policies.

3. Create Lease Application & Update Processes

In order to ensure if an organizations’ accounting team always has precise lease information to feed financial reports and balance sheets, it’s necessary to establish standard practices for each group that is involved in acquiring & maintaining leases. This also includes processing new leases, handling lease terminations, and documenting lease changes. Every time leases change, an organization’s lease accounting must be updated. Choosing software that automates lease re-measurement and modification is a smart way to minimize the burden on the accounting team.

4. Set Up Controls

The complexity of financial reporting has increased due to the addition of leases to the balance sheet. This means that more oversight is needed to guarantee accounting accuracy. Besides, process validation and internal monitoring are required to ensure that all lease management procedures and policies are being followed.

Some of the important ways in which a lease management software can aid the process:

* Documenting every lease term, calculating every payment, and making changes if payments don not match the lease terms
* Offering audit tools to find late fees and overpayments
* Allowing to customize approvals essential for lease accounting tasks and lease administration
* Providing a track of audit for all lease changes
* Lease management process is efficient that benefits the business and organizations in different ways. Organizations should take this opportunity to examine and overhaul the lease management practices & policies while working towards lease accounting compliance.