Woodbridge, N.J. –April 11, 2024 – Visual Lease (VL), the #1 lease optimization software provider, today announced its Q1 results, reporting sustained double-digit annual recurring revenue and customer percentage growth, year-over-year.

“At Visual Lease, we are witnessing a transformative year where Operational and Finance leaders are aligning to achieve value beyond baseline compliance requirements,” said Robert Michlewicz, VL’s Chief Executive Officer. “Our continued commitment to collaborating with our customers and partners allows VL to serve as a newfound system of record, seamlessly managing the entire lease lifecycle. We are proud to empower our clients by making lease operations, reporting and compliance sustainable – all while integrating data across their business to drive strategic financial and operational outcomes.”

In Q1 2024, Visual Lease:

• Named a Leader in nine G2 Spring 2024 reports, focused on how the platform is a fit for larger, more complex organizations, including: The Enterprise Relationship Index for Lease Administration, Enterprise Relationship Index for Lease Accounting, Enterprise Grid® Report for Lease Accounting, Enterprise Grid® Report for Lease Administration, Grid® Report for Lease Accounting, Grid® Report for Lease Administration, Mid-Market Grid® Report for Lease Administration, Momentum Grid® Report for Lease Accounting and Momentum Grid® Report for Lease Administration. This recognition validates VL’s unique ability to help systems and stakeholders across any organization work together to maintain accuracy as leases and regulatory requirements evolve.
• Enhanced key platform functionality, including asynchronous reporting, empowering users to request reports while continuing their work elsewhere in the platform. VL also enhanced its Roll Forward Report to ensure continued, quality year-end reporting for its users.
• Received accolades from Accounting Today, recognizing VL ESG Steward as a Top New Product in 2024. This is the third industry award that VL has received for VL ESG Steward since its launch in 2023.
• Continued to elevate VL ESG Steward’s capabilities, introducing support for international energy grids, as well as support for estimates in addition to actual measures for carbon accounting. VL also introduced import templates to establish organizational and operational boundaries, and upload data and supporting documentation at scale across energy, waste, water, emissions, and climate risk.
• Shared its in-house ESG experts’ perspective on the Security Exchange Commission’s final climate disclosure rule announced in March 2024 by hosting a news briefing with VL partner, FORVIS, and engaging with multiple publications, including Daily Mail, Bisnow, Globe St., Fortune, Yahoo! Finance and others.
• Hosted its first Customer Advisory Board (CAB) meeting of 2024 for select customer representatives across organizations’ Finance, IT and Real Estate teams, providing a platform for all key stakeholders to discuss industry trends and share feedback on upcoming integrations and user experience enhancements.
• Held its annual Sales Kick Off in St. Petersburg, Florida, gathering teammates across its sales and go-to-market organizations for several days of presentations, collaboration, and workshops. Two of VL’s valued partners, RSM US LLP and Baker Tilly, presented at the event.

To keep up with additional announcements from Visual Lease, visit the Visual Lease Newsroom.

About Visual Lease

Visual Lease is the #1 lease optimization solution provider, empowering organizations to leverage their lease portfolio for strategic financial and operational outcomes. Our powerful and secure platform serves as a centralized system of record for all lease financial, operational and legal data, and is purpose-built to support every team that interacts with a company’s lease portfolio. Informed by nearly three decades of experience, our solutions help companies easily sustain compliance with FASB, IFRS, GASB and ISSB reporting requirements, and mitigate the risks and maximize the value associated with their lease records. Our award-winning software is used by 1,500+ organizations to manage more than 1 million real estate, equipment and other leased asset records globally. For more information, visit visuallease.com.

Media Contact:

Erica Bonavitacola
Visual Lease
T+1 732 860 4838
ebonavitacola@visuallease.com

Carbon accounting and sustainability management solution recognized for empowering Enterprises with the data and visibility needed to progress toward their ESG goals

Woodbridge, N.J. –February 8, 2024 – Visual Lease (VL), the #1 lease optimization software provider, today announced that VL ESG Steward has been named a Top New Product in 2024 by Accounting Today.

VL ESG Steward is the first carbon accounting and sustainability management solution for enterprise real estate and equipment portfolios. Built on decades of lease management best practices, it serves as a centralized system of record for contracts, workflows, financials, and climate risk, providing a complete operational, financial, and environmental view of the portfolio and real-time, asset-level data for sustainability calculations.

“Nearly 70% of senior accounting and finance executives report that their organizations are not fully prepared in terms of their ability to track and measure the environmental impact of leased and owned asset portfolios to comply with the new and emerging environmental reporting requirements,” said Robert Michlewicz, CEO of Visual Lease. “After confirming this need mirrored with our customers and partners, we expanded our platform to include VL ESG Steward, which will not only aid in reporting efforts, but also, illuminate areas of opportunity to help companies create a more sustainable future.”

VL ESG Steward automatically tracks portfolio changes and calculates asset-level emissions in accordance with the greenhouse gas protocol. It also tracks energy, water, waste, and biodiversity impact in compliance with global regulations, and offers configurable controls to ensure accurate data and complete documentation for attestation.

“It is an honor to have been included in Accounting Today’s list of Top New Products for 2024 alongside other industry leaders,” added Michlewicz. “This recognition reinforces our team’s commitment to helping organizations across the globe leverage their portfolio for strategic financial and operational outcomes.”

In 2023, VL ESG Steward was recognized as a finalist for a Software as a Service (SaaS) award within the category of Best SaaS Product for CSR, Sustainability and ESG, and also named a Sustainability Product of the Year by the Business Intelligence Group.

To learn more about VL ESG Steward, please visit this link.

About Visual Lease

Visual Lease is the #1 lease optimization solution provider, empowering organizations to leverage their lease portfolio for strategic financial and operational outcomes. Our powerful and secure platform serves as a centralized system of record for all lease financial, operational and legal data, and is purpose-built to support every team that interacts with a company’s lease portfolio. Informed by nearly three decades of experience, our solutions help companies easily sustain compliance with FASB, IFRS, GASB and ISSB reporting requirements, and mitigate the risks and maximize the value associated with their lease records. Our award-winning software is used by 1,500+ organizations to manage more than 1 million real estate, equipment and other leased asset records globally. For more information, visit visuallease.com.

Media Contact:

Erica Bonavitacola
Visual Lease
T+1 732 860 4838
ebonavitacola@visuallease.com

Lease optimization software provider redefines excellence with a single system of record
for lease accounting, management and sustainability tracking

Woodbridge, N.J. – January 18, 2024 – Visual Lease (VL), the #1 lease optimization software provider, today announced its results from 2023, reporting sustained double-digit annual recurring revenue and customer percentage growth, year-over-year.

“Visual Lease’s accomplishments in 2023 serve as a launchpad for our journey ahead,” said Robert Michlewicz, VL’s Chief Executive Officer. “Drawing upon our 25+ years of deep domain expertise and inspired by the strategic input we continue to seek and incorporate from our customers and partners; we’ve made focused investments in our platform and support offerings to increase the value to our users and partners. We also continue investing in our people to foster cross-departmental collaboration and support expanded growth and development opportunities for our team. As a result, VL has been consistently recognized for its unique ability to help enterprises leverage their lease portfolio to drive more strategic financial and operational outcomes.”

In 2023, Visual Lease:

Solutions and Services

• Launched its newest offering, VL ESG Steward, the first carbon accounting and sustainability management solution for enterprise real estate and equipment portfolios. Since its launch, VL has released several new capabilities, including managed emissions factors for International Energy Grids, intelligent imports to establish organizational boundaries and upload sustainability entries at scale, detailed reports and exports, advanced user permissions and flexible configurations.
• Introduced product enhancements, including updating the user interface of its lease accounting solution, delivering a new Currency API to automatically update and synchronize foreign exchange rates, enhancing its GASB Roll Forward Report for lessees to gain visibility into asset and liability activity that occurred in the reporting period and elevating its Accumulated Amortization feature.
• Expanded its network of consulting, reporting, technology and data partners, providing additional financial and operational benefits to mutual customers by strengthening its existing relationships with Cresa Lease Administration, Scribcor and others. VL also deepened its relationship with managed services partner RSM US LLP.
• Hosted its second annual Customer Advisory Board (CAB) Summit in San Antonio, TX, a multi-day event where select customers and partners gathered to discuss industry trends, as well as review and provide feedback on VL’s roadmap.
• Announced the winners of its annual Customer Excellence Awards, recognizing American Axle Manufacturing, Compass and Quanta Services for capitalizing on VL’s unique capabilities to streamline critical workflows, promote cross-departmental collaboration and ensure data accuracy. VL also recognized RSM US LLP as its Partner of the Year for the work it is doing to help organizations implement processes and technologies to recognize risks and opportunities across their lease portfolios.
• Established Technical Account Managers (TAMs) to address enterprise clients’ evolving business needs, extending value to direct customers and supporting the company’s growing global partner network.

Industry Recognition

• Named a Leader in the IDC MarketScape: Worldwide SaaS and Cloud-Enabled Lease Accounting and Administration Applications 2023 Vendor Assessment (doc # US48562222, August 2023), the first analyst report to provide a comprehensive evaluation of the combined lease accounting and lease administration capabilities of more than a dozen solution providers.
• Received industry recognitions for the VL ESG Steward platform extension, recognized as a finalist for a Software as a Service (SaaS) award within the category of Best SaaS Product for CSR, Sustainability and ESG, and also named a Sustainability Product of the Year by the Business Intelligence Group.
• Recognized as a Leader in Enterprise Lease Administration and Enterprise Lease Accounting, as well as an overall Leader in the Lease Accounting and Lease Administration categories by G2, quarter-over-quarter.
• Unveiled new research under The Visual Lease Data Institute (VLDI), including The 2023 Commercial Real Estate and Leasing Trend report and The 2024 Office of Finance Outlook: Environmental Impact Reporting. Findings from the research have been featured in The Wall Street Journal, Accounting Today, Yahoo! Finance, Benzinga, Globe St., CPA Practice Advisor and more.

Leadership

• Appointed Amie Durr as VL’s first Chief Product Officer, responsible for overseeing the organization’s product and engineering teams to ensure continued product innovation with even greater speed to market. Durr’s team lead the development of VL ESG Steward.
• Announced Kathryn Eskandarian as VL’s first Chief Financial Officer, having previously served as the organization’s SVP of Finance & Accounting. Eskandarian is responsible for VL’s financial operations, including corporate financial planning, audit and tax functions, as well as its IT, legal and human resources departments.
• Welcomed Gene Cook as Vice President of Global Partners, responsible for helping the company expand the value it provides to its growing network of Global Partners across leading accounting firms, professional services organizations, commercial real estate firms and solution providers.

Culture

• Named a Best Place to Work in New Jersey by NJBIZ for the fourth consecutive year, recognized for its culture, strong leadership, high levels of employee satisfaction and the many growth and development opportunities provided to the team.
• Held its Summer Innovation Days, gathering team members from across the organization to come together and share creative ideas for developing new platform capabilities to support customers’ needs and align with its corporate vision.
• Hosted its inaugural VL Week, providing an opportunity for employees to learn, connect and apply key concepts that are critical to supporting its customers, collaborating with its global partners and achieving shared corporate goals.

To keep up with the latest findings from The Visual Lease Data Institute and additional announcements from Visual Lease, visit the Visual Lease Newsroom.

About Visual Lease

Visual Lease is the #1 lease optimization solution provider, empowering organizations to leverage their lease portfolio for strategic financial and operational outcomes. Our powerful and secure platform serves as a centralized system of record for all lease financial, operational and legal data, and is purpose-built to support every team that interacts with a company’s lease portfolio. Informed by nearly three decades of experience, our solutions help companies easily sustain compliance with FASB, IFRS, GASB and ISSB reporting requirements, and mitigate the risks and maximize the value associated with their lease records. Our award-winning software is used by 1,500+ organizations to manage more than 1 million real estate, equipment and other leased asset records globally. For more information, visit visuallease.com.

Media Contact:

Erica Bonavitacola
Visual Lease
T+1 732 860 4838
ebonavitacola@visuallease.com

Solution provider is recognized for empowering companies to leverage their lease portfolios for strategic financial and operational outcomes

Woodbridge, N.J. – Dec. 21, 2023 – Visual Lease (VL), the #1 lease optimization software provider, today announced it has been featured in 55 of G2’s 2024 Winter reports and received 17 badges for the winter season. VL has been named a leader in the Enterprise Grid® Report for Lease Accounting, Enterprise Americas Regional Grid® Report for Lease Accounting, Enterprise Relationship Index for Lease Accounting and Enterprise Relationship Index for Lease Administration.

“The advancement – and value – of technology hinges on customer feedback,” said Robert Michlewicz, Chief Executive Officer at Visual Lease. “For 25+ years, we have expanded VL’s platform based on the evolving needs and interests of our customers to ensure that they continue to receive maximum value from our solutions. Inclusion in G2’s reports affirms that VL consistently provides organizations that have complex lease and asset portfolios with the ability to accurately manage, track and report on their leases and related records. This capability not only fuels their compliance efforts, but also provides them with the strategic advantage of being able to use their portfolio data to make better-informed operational decisions and prepare for emerging business needs, such as environmental reporting.”

Visual Lease earned this status as a leading lease accounting and lease management platform based on customer feedback, such as:

• Robust product features to support ongoing compliance and accurate reporting.
  “Visual Lease is built for both lease administration and lease accounting, which is especially great for teams that have a lease administration need that do not want to duplicate the work for ASC 842 management. Visual Lease is also great with reporting with several robust reports (including disclosure reports for financial statements), and awesome with bulk uploads of data if you have a number of leases that takes up a big amount of time fixing from month to month.”
• Unparalleled lease management capabilities and customer support.
  “VL is a very intuitive tool, which makes training a global user base of hundreds of users easier. Integrating new plants post-acquisition is efficient with the various upload templates that allow you to create many new leases at once. The customer support team responds in a timely manner and the senior leadership of the company is focused on continued enhancements with the input of their customer base.”
• Ability to facilitate audit-readiness.
  “Visual Lease provides us with the reports that we need for our annual audit. The reports are concise, clear and contain everything needed for footnote preparation.”
• Full lease lifecycle support.
  “Visual Lease provides a clean, organized platform to both house my lease documents but also, stay organized with rent schedules, deferred rent, lease renewals and essentially everything lease related. The also offer easy-to-navigate tools via their cloud website that I can access anywhere.”
• Commitment to continuous improvement.
  “Visual Lease has been quick to make improvements and updates after being provided feedback. I appreciate that they are very adaptable to changes and their customer support is very quick to respond. They’re very receptive to constructive feedback.”

Learn more about what real users have to say (or leave your own review of Visual Lease) on G2’s VL review page.

About G2

G2 is the world’s largest and most trusted software marketplace. More than 90 million people annually — including employees at all Fortune 500 companies — use G2 to make smarter software decisions based on authentic peer reviews. Thousands of software and services companies of all sizes partner with G2 to build their reputation and grow their business — including Salesforce, HubSpot, Zoom, and Adobe. To learn more about where you go for software, visit www.g2.com and follow us on LinkedIn.

About Visual Lease

Visual Lease is the #1 lease optimization solution provider, empowering organizations to leverage their lease portfolio for strategic financial and operational outcomes. Our powerful and secure platform serves as a centralized system of record for all lease financial, operational and legal data, and is purpose-built to support every team that interacts with a company’s lease portfolio. Informed by nearly three decades of experience, our solutions help companies easily sustain compliance with FASB, IFRS, GASB and ISSB reporting requirements, and mitigate the risks and maximize the value associated with their lease records. Our award-winning software is used by 1,500+ organizations to manage more than 1 million real estate, equipment and other leased asset records globally. For more information, visit visuallease.com.

Media Contact:

Erica Bonavitacola
Visual Lease
T+1 732 860 4838
ebonavitacola@visuallease.com

Survey reveals 84% of enterprise organizations are prioritizing lease management due to lease accounting standards and emerging regulatory requirements around environmental impact reporting

Woodbridge, N.J. – Oct. 31, 2023 – Visual Lease (VL), the #1 lease optimization software provider, today released the newest report from the Visual Lease Data Institute (VLDI), “The 2024 Office of Finance Outlook: Environmental Impact Reporting.” Findings from this report uncover how the heightened global focus on environmental, social and governance (ESG) programs is affecting how the Office of Finance must evolve to leverage lease portfolios to meet regulatory requirements and achieve more strategic financial and operational outcomes.

VL reports that nearly 70% of surveyed senior finance executives say that their organizations are not fully prepared to track and measure the environmental impact of their leased and owned asset portfolios in order to comply with new and emerging requirements. In 2023 alone, various regulatory bodies have committed to introducing standardization to the environmental reporting process, including the International Sustainability Standards Board (ISSB), The Securities and Exchange Commission (SEC) and most recently, California’s state government, further highlighting the importance of strong lease management.

“Considering that 40% of global carbon dioxide emissions stem from real estate-related assets, effective lease management serves as an organization’s gateway to not only quantifying and disclosing its environmental impact but, also to tracking its progress against internal and external sustainability goals,” said Robert Michlewicz, CEO of Visual Lease. “Without a strong level of control over your leased and owned assets, you risk inaccurate financial reporting and as a result, damaged relationships with crucial stakeholders, including consumers, investors and employees.”

Investing in dedicated technology can also address concerns that 99% of surveyed senior finance executives have with maintaining control over their organization’s lease portfolio, including concerns about data accuracy and completeness (48%), sustaining lease accounting compliance (44%) and compliance with ESG requirements and policies (44%).

“Despite how critical data collection and management is in the reporting process, our study found that 51% of enterprise organizations are either relying on Excel or a third party to help them manage their lease administration processes,” said Michlewicz. “However, it is imperative that the Office of Finance leverages a centralized system of record with a strong controls framework to ensure complete and accurate asset data and emissions inventory.”

The new VLDI report found that prioritizing ESG initiatives remains top-of-mind for most senior finance and accounting executives at companies with more than 1,000 employees, with 90% looking to enact new sustainability goals within the next 2-5 years, and 97% saying they are currently involved with ESG reporting decisions within their organization.

Additional findings on organizations’ commitments to ESG program development and reporting include:

• 88% of surveyed senior finance executives say that sustainability factors are a high priority when entering into new lease agreements, such as increasing the number of LEED-certified buildings in their lease portfolios or increasing the number of energy-efficient vehicles in their fleets.
• Less than one-third of senior finance executives report that their ESG reporting framework is fully established and includes a variety of environmental factors, with 30% disclosing that their framework is limited to specific organization initiatives.
• While the majority of surveyed senior finance executives reported that they’ve collected key environmental data, less than 40% have analyzed or used the data to establish benchmarks.

To download the report and view the full data findings, click here.

Visual Lease conducted a national survey of 200 U.S. senior finance executives at private, public and government organizations with more than 1,000 employees.

About Visual Lease

Visual Lease is the #1 lease optimization solution provider, empowering organizations to leverage their lease portfolio for strategic financial and operational outcomes. Our powerful and secure platform serves as a centralized system of record for all lease financial, operational and legal data, and is purpose-built to support every team that interacts with a company’s lease portfolio. Informed by nearly three decades of experience, our solutions help companies easily sustain compliance with FASB, IFRS, GASB and ISSB reporting requirements, and mitigate the risks and maximize the value associated with their lease records. Our award-winning software is used by 1,500+ organizations to manage more than 1 million real estate, equipment and other leased asset records globally. For more information, visit visuallease.com.

About the Visual Lease Data Institute

The Visual Lease Data Institute is a collection of market-leading data, trends and insights on lease accounting, management, sustainability reporting and optimization created and curated by Visual Lease, provider of the #1 lease optimization software. The Institute was founded on 35+ years of experience managing lease data and financials, and was created to empower organizations with the market data required to leverage their lease portfolio for strategic financial and operational outcomes.

Media Contact:

Erica Bonavitacola
Visual Lease
T+1 732 860 4838
ebonavitacola@visuallease.com

Longstanding pioneer in lease management and accounting continues to advance its platform capabilities to address evolving environmental reporting requirements

Woodbridge, NJ – October 16, 2023 — Visual Lease (VL), the #1 lease optimization software provider, today announced its results from Q3 2023, reporting sustained double-digit annual recurring revenue and customer percentage growth, year-over-year.

“A forthcoming analysis from The Visual Lease Data Institute indicates that 99% of senior accounting and finance executives from companies with more than 1,000 employees have made lease management a higher priority in light of the new lease accounting standards and rising, widespread interest in sustainability,” said Robert Michlewicz, CEO of Visual Lease. “Our continued growth and industry recognition reflects our unique ability to address this pivotal shift in the Office of Finance, which is rooted in VL’s 25+ years of experience maximizing the value organizations receive from their lease portfolio. We continue to invest in our people, platform and the services we provide to empower our growing community of 1,500+ customers to leverage their lease portfolio for strategic financial and operational outcomes.”

In Q3, Visual Lease:

Solutions & Services

• Enhanced its GASB Roll Forward Report for lessees, which provides detail of the asset and liability activity that occurred in the reporting period. This report makes it easy for organizations that need to comply with the GASB standards 87 and 96 to manage and reconcile period-over-period changes to their balance sheet accounts, and can also be used to help in preparing statements of cash flows.
  
  
• Hosted its second annual Customer Advisory Board (CAB) Summit in San Antonio, TX, a multi-day event where select customers and partners gathered to discuss industry trends, as well as review and provide feedback on VL’s roadmap. During the summit, VL unveiled the winners of its annual Customer Excellence Awards, recognizing American Axle Manufacturing, Compass, Quanta Services and RSM US LLP for capitalizing on VL’s unique capabilities to streamline critical workflows, promote cross-departmental collaboration and ensure data accuracy.

• Welcomed Gene Cook as Vice President of Global Partners, responsible for helping the company expand the value it provides to its growing network of Global Partners across leading accounting firms, professional services organizations, commercial real estate firms and solution providers.

Industry Recognition

• Named a Leader in the IDC MarketScape: Worldwide SaaS and Cloud-Enabled Lease Accounting and Administration Applications 2023 Vendor Assessment (doc # US48562222, August 2023), the first analyst report to provide a comprehensive evaluation of the combined lease accounting and lease administration capabilities of more than a dozen solution providers. According to Kevin Permenter, Research Director at IDC, the analysis found that, “VL offers substantial platform extension capabilities around tracking and reporting on the environmental impact of leased and owned assets to support their clients’ ESG initiatives and help organizations harness the power of their portfolio to enhance business resiliency.”

• Received two awards for its newest offering, VL ESG Steward, recognized as a finalist for a Software as a Service (SaaS) award within the category of Best SaaS Product for CSR, Sustainability and ESG, and also named a Sustainability Product of the Year by the Business Intelligence Group. VL ESG Steward is the first solution of its kind within the lease accounting and administration space designed to empower users to report on the environmental impact of their owned and leased assets in accordance with the sustainability disclosure requirements from the International Sustainability Standards Board (ISSB), IFRS S1 and IFRS S2.

• Recognized by G2 as a Leader and High Performer for Enterprise businesses in both the Lease Administration and Lease Accounting categories, as well as Leader and High Performer status in both categories for businesses of all sizes.

Company Culture

• Named a Best Place to Work in New Jersey by NJBIZ for the fourth consecutive year, recognized for its culture, strong leadership, high levels of employee satisfaction and the many growth and development opportunities provided to the team.

• Hosted its inaugural VL Week, providing an opportunity for employees to learn, connect with one another and apply key concepts that are critical to supporting its customers, collaborating with its global partners and achieving shared corporate goals. The week consisted of informative sessions, workshops and volunteer opportunities with local organizations Elijah’s Promise and Clean Ocean Action. .

To keep up with the latest findings from The Visual Lease Data Institute and additional announcements from Visual Lease, visit the Visual Lease Newsroom.

About Visual Lease

Visual Lease is the #1 lease optimization solution provider, empowering organizations to leverage their lease portfolio for strategic financial and operational outcomes. Our powerful and secure platform serves as a centralized system of record for all lease financial, operational and legal data, and is purpose-built to support every team that interacts with a company’s lease portfolio. Informed by nearly three decades of experience, our solutions help companies easily sustain compliance with FASB, IFRS, GASB and ISSB reporting requirements, and mitigate the risks and maximize the value associated with their lease records. Our award-winning software is used by 1,500+ organizations to manage more than 1 million real estate, equipment and other leased asset records globally. For more information, visit visuallease.com.

Media Contacts 

Erica Bonavitacola
Visual Lease
T+1 732 770 2270
ebonavitacola@visuallease.com     

Woodbridge, NJ – September 27, 2023 — Visual Lease (VL), the #1 lease optimization software provider, today announced the winners of its annual Customer Excellence Awards, recognizing organizations that are using VL’s platform to achieve optimal strategic financial and operational outcomes. The winners were unveiled at the company’s annual Customer Advisory Board (CAB) Summit, a multi-day event in San Antonio, TX, for select customers and partners.

“This year’s recipients reflect how best-in-class companies are capitalizing on VL’s unique capabilities to streamline critical workflows, promote cross-departmental collaboration and ensure data accuracy,” said Robert Michlewicz, Visual Lease’s Chief Executive Officer. “With more than 1,500 global organizations leveraging VL’s platform to mitigate risks, create value and minimize costs associated with their lease records, these companies represent a valuable guidepost for our evolving industry.”

This year’s VL Customer Excellence Award winners were recognized for:

• Enhanced Controls: American Axle Manufacturing. A two-time VL Customer Excellence Award winner, American Axle Manufacturing extended its controls framework and audit-preparedness, resulting in an 85% reduction in its controls deficiencies.
• Data-Driven Decisions: Compass. By merging its lease portfolio and business data into a proprietary visualization tool using the VL platform, the company now makes more strategic, data-driven decisions.
• Unified Teams & Data: Quanta Services. By automating cross-departmental workflows, Quanta Services saved an impactful amount of time and money, allowing for a more collaborative and efficient workflow.
• Driving Shared Success: RSM US LLP. VL’s partnership and shared mission with RSM assists a diverse and complex field of organizations seeking to implement processes and technologies which recognize risks and opportunities across a client’s lease portfolio.

For other updates from VL, visit this link.

About Visual Lease

Visual Lease is the #1 lease optimization solution provider, empowering organizations to leverage their lease portfolio for strategic financial and operational outcomes. Our powerful and secure platform serves as a centralized system of record for all lease financial, operational and legal data, and is purpose-built to support every team that interacts with a company’s lease portfolio. Informed by nearly three decades of experience, our solutions help companies easily sustain compliance with FASB, IFRS, GASB and ISSB reporting requirements, and mitigate the risks and maximize the value associated with their lease records. Our award-winning software is used by 1,500+ organizations to manage more than 1 million real estate, equipment and other leased asset records globally. For more information, visit visuallease.com.

Media Contacts 

Erica Bonavitacola
Visual Lease
T+1 732 770 2270
ebonavitacola@visuallease.com     

Woodbridge, NJ – September 19, 2023 — Visual Lease (VL), the #1 lease optimization software provider, today announced the company’s newest offering, VL ESG Steward, has been recognized by the Business Intelligence Group as a winner of a 2023 Sustainability Award under the category of Sustainability Product of the Year. This recognition comes on the heels of VL being named a Leader in the IDC MarketScape: Worldwide SaaS and Cloud-Enabled Lease Accounting and Administration Applications 2023 Vendor Assessment (doc # US48562222, August 2023).

“It is an honor to continue to receive industry recognition that not only celebrates VL’s foundation as a centralized system of record for all lease financial, operational and legal data, but also acknowledges our commitment to help organizations harness their portfolio to prepare for emerging business needs and compliance requirements,” said Robert Michlewicz, Visual Lease’s Chief Executive Officer. “VL ESG Steward is uniquely designed to help companies track and report on the environmental impact of their owned and leased assets in accordance with the sustainability disclosure requirements from The International Sustainability Standards Board (ISSB), IFRS S1 and IFRS S2.”

The Visual Lease Data Institute (VLDI) has uncovered that 90% of organizations in the U.S. with more than 1,000 employees are looking to implement new sustainability goals over the next two to five years. VL ESG Steward is the first ESG reporting tool of its kind within the lease accounting and administration space specifically created to help organizations consolidate the records needed to track their environmental impact across their commercial real estate, fleet, equipment and more. With these insights in hand, businesses will be empowered to make better-informed decisions regarding how to reduce their carbon footprint in line with corporate goals and emerging global regulatory guidance.

“Recent research from The VLDI has also shown that with the new lease accounting standards in effect and a rising interest in sustainability, 84% of companies have prioritized lease management,” said Amie Durr, Visual Lease’s Chief Product Officer. “While the majority of organizations are just now realizing how critical their lease portfolio is to their financial and operational success, this is not a new concept for VL. Our entire platform is built on 25+ years of experience maximizing the value customers receive from their lease portfolio.”

The Sustainability Awards honor those who have made sustainability an integral part of their business practice. For-profit and not-for-profit organizations of all sizes submitted nominations, which were evaluated by business executives using the organization’s proprietary and unique scoring system. Other solutions recognized under the category of Sustainability Product of the Year include IBM Environmental Intelligence Suite: Renewables Forecasting, S&P Global Sustainable1 Nature & Biodiversity Risk Solution, and Honeywell Emissions Management Suite.

To learn more about VL ESG Steward, please visit this link.

For other updates from VL, visit this link.

About Visual Lease

Visual Lease is the #1 lease optimization solution provider, empowering organizations to leverage their lease portfolio for strategic financial and operational outcomes. Our powerful and secure platform serves as a centralized system of record for all lease financial, operational and legal data, and is purpose-built to support every team that interacts with a company’s lease portfolio. Informed by nearly three decades of experience, our solutions help companies easily sustain compliance with FASB, IFRS, GASB and ISSB reporting requirements, and mitigate the risks and maximize the value associated with their lease records.

Media Contacts 

Erica Bonavitacola
Visual Lease
T+1 732 770 2270
ebonavitacola@visuallease.com     

Company’s proven SaaS solutions are recognized in first analyst report
dedicated to full lease portfolio management

Woodbridge, NJ – August 29, 2023 — Visual Lease (VL), the #1 lease optimization software provider, today announced that it has been named a Leader in the IDC MarketScape: Worldwide SaaS and Cloud-Enabled Lease Accounting and Administration Applications 2023 Vendor Assessment (doc # US48562222, August 2023). 

The IDC MarketScape is the first analyst report to provide a comprehensive evaluation of the combined lease accounting and lease administration capabilities of more than a dozen software providers. Over the last two years, IDC cross-compared the product strategies and capabilities of the vendors in this space through multiple system demos, customer references and surveys designed to collect details on platform functionality, roadmap, integrations, security and global use.

“Being named a Leader in this inaugural report reinforces our belief that when prioritized, lease record data has the potential to contribute significant strategic value to a business that extends far beyond meeting compliance requirements,” said Visual Lease’s CEO, Robert Michlewicz. “Informed by more than two decades of lease portfolio management experience, Visual Lease is the only solution that provides organizations with the visibility and controls needed to mitigate risk, optimize value and minimize cost – all critical capabilities in today’s market.”

The IDC MarketScape: Worldwide SaaS and Cloud-Enabled Lease Accounting and Administration Applications 2023 Vendor Assessment notes, “Consider Visual Lease if you are looking for an end-to-end solution that leverages 25+ years of experience maximizing the value customers receive from their lease portfolio by ensuring they have strong, sustainable financial and operational controls and comprehensive reporting capabilities.”

“Serving as a centralized system of record for all lease financial, operational and legal data, Visual Lease provides organizations the opportunity to sustain lease accounting compliance and simultaneously leverage their leases for strategic financial and operational outcomes,” said Kevin Permenter, Research Director at IDC. “Based on our analysis, VL offers substantial platform extension capabilities around tracking and reporting on the environmental impact of leased and owned assets to support their clients’ ESG initiatives. The platform is well positioned to help organizations harness the power of their portfolio to enhance business resiliency.”

To date, in 2023, Visual Lease has earned 12 Leader badges on G2, including Leader status for Enterprise businesses in both the Lease Administration and Lease Accounting categories for every consecutive quarter, as well as Leader status in both categories for businesses of all sizes. VL was also named a High-Performing Solution for Asset Management and Lease Management for small businesses. Most recently, Visual Lease was recognized as a finalist in the category of Best SaaS Product in CSR, Sustainability and ESG by the Software as a Service Awards.

To access a copy of the report, visit this page.

To keep up with announcements from Visual Lease, visit the Visual Lease Newsroom.

About IDC MarketScape
IDC MarketScape vendor assessment model is designed to provide an overview of the competitive fitness of ICT (information and communications technology) suppliers in a given market. The research methodology utilizes a rigorous scoring methodology based on both qualitative and quantitative criteria that results in a single graphical illustration of each vendor’s position within a given market. IDC MarketScape provides a clear framework in which the product and service offerings, capabilities and strategies, and current and future market success factors of IT and telecommunications vendors can be meaningfully compared. The framework also provides technology buyers with a 360-degree assessment of the strengths and weaknesses of current and prospective vendors.

About Visual Lease
Visual Lease is the #1 lease optimization solution provider, empowering organizations to leverage their lease portfolio for strategic financial and operational outcomes. Our powerful and secure platform serves as a centralized system of record for all lease financial, operational and legal data, and is purpose-built to support every team that interacts with a company’s lease portfolio. Informed by nearly three decades of experience, our solutions help companies easily sustain compliance with FASB, IFRS, GASB and ISSB reporting requirements, and mitigate the risks and maximize the value associated with their lease records. Our award-winning software is used by 1,500+ organizations to manage 500,000+ real estate, equipment and other leased assets globally. For more information, visit visuallease.com.

Media Contacts 

Erica Bonavitacola
Visual Lease
T+1 732 770 2270
ebonavitacola@visuallease.com     

Company invests in its Partner network in preparation for the next stage of growth

Woodbridge, NJ – August 8, 2023 — Visual Lease (VL), the #1 lease optimization software provider, today announced the appointment of Gene Cook as its first Vice President of Global Partners. In his new role, Cook will help VL expand the value it provides to its growing network of Global Partners across leading accounting firms, professional services organizations, commercial real estate firms and solution providers.

“It’s a pleasure to welcome Gene to our leadership team as we take the VL Global Partner program into the next phase of its evolution,” said Visual Lease CEO, Robert Michlewicz. “VL has an active and growing partner network because the platform makes it easy for cross-functional teams to track and report on dynamic datasets, ensuring accuracy and timely access to critical information while also reducing risk and improving business agility. With Gene’s background and experience, we look forward to collaborating with new and existing partners to offer mutual clients best-in-class software and services, empowering them to deliver better strategic financial and operational outcomes to their businesses.”

Before joining Visual Lease, Cook was Senior Director of Global Bank Alliances at Coupa Software, the cloud platform for business spend management (BSM). Prior to Coupa Software, Cook served as FSI Partner Business Director at Concur Technologies, an SAP Company, where he was responsible for the organization’s top six banking partners.

“I am honored to join the VL team in support of its mission to help organizations across the globe mitigate the risks and maximize the associated with their lease portfolio,” said Cook. “By joining forces with other industry leaders, we will collectively expand our reach and empower more businesses to gain complete control over their financial, operational and legal data with our platform.”

To keep up with announcements from Visual Lease, visit the Visual Lease Newsroom. 

About Visual Lease  

Visual Lease is the #1 lease optimization solution provider, empowering organizations to leverage their lease portfolio for strategic financial and operational outcomes. Our powerful and secure platform serves as a centralized system of record for all lease financial, operational and legal data, and is purpose-built to support every team that interacts with a company’s lease portfolio. Informed by nearly three decades of experience, our solutions help companies easily sustain compliance with FASB, IFRS, GASB and ISSB reporting requirements, and mitigate the risks and maximize the value associated with their lease records. Our award-winning software is used by 1,500+ organizations to manage 500,000+ real estate, equipment and other leased assets globally. For more information, visit visuallease.com.

Media Contacts 

Erica Bonavitacola
Visual Lease
T+1 732 770 2270
ebonavitacola@visuallease.com     

Dedicated investments in its solutions, services and leadership expand company value

Woodbridge, NJ – July 13, 2023— Visual Lease, the #1 lease optimization software provider, today announced its results from Q2 2023, reporting double-digit annual recurring revenue and customer percentage growth, year-over-year.

“Today, finance and operational leaders are working together in shaping and realizing their organization’s growth strategies,” said Robert Michlewicz, CEO of Visual Lease. “Their ability to make informed and effective decisions around critical areas, such as budget and resource allocation, as well as ESG program development and reporting, hinges on the integrity of their organization’s data. By 2025, 50% of FP&A leaders will have enterprise-wide data strategy as a core responsibility, furthering the need for technology-backed data management processes. At Visual Lease, our proven solutions make it easy for cross-functional teams to accurately track and report on dynamic financial and operational datasets.”

In Q2 2023, Visual Lease:

• Expanded its platform value.
  With its 23.6 release, Visual Lease launched a new Currency API to automatically update and synchronize foreign exchange rates to maintain consistency and comparability across Visual Lease, the ERP and the customer’s entire finance ecosystem. Visual Lease facilitates unlimited currencies and allocations for lease accounting to support multinational organizations.
• Enhanced its customer support offerings.
  Visual Lease established Technical Account Managers (TAMs) to address enterprise clients’ evolving business needs. This offering extends value to direct customers and supports the company’s growing partner network.
• Recognized as an industry leader.
  G2 named Visual Lease a Leader in Enterprise Lease Administration and Enterprise Lease Accounting, as well an overall Leader in the Lease Accounting and Lease Administration categories. Visual Lease was also named a High Performer in the Small-Business Lease Administration category.
• Held its quarterly Customer Advisory Board (CAB) meeting.
  Visual Lease’s executive leadership team invited a select group of customers to discuss and provide feedback on upcoming expanded reporting features, product roadmap prioritization and Visual Lease’s strategic vision. Visual Lease will hold its annual on-site CAB meeting in Q3 2023.
• Held Summer Innovation Days.
  Visual Lease empowered team members from across the organization to come together and share creative ideas for developing new platform capabilities to support customers’ needs and align to its corporate vision. The result – several platform extensions now included in our roadmap for review and consideration with our clients and partners.

To keep up with announcements from Visual Lease, visit the Visual Lease Newsroom.

About Visual Lease

Visual Lease, the #1 lease optimization software provider, empowers organizations to leverage their lease portfolio as a strategic asset. Our platform is uniquely designed to meet the needs of every team that interacts with a company’s lease portfolio to reduce risk, drive confident and sustained lease accounting compliance and provide the visibility required to make agile business decisions. Informed by nearly three decades of experience, our solutions help companies easily sustain compliance with FASB, IFRS and GASB lease accounting standards and implement proper lease controls to improve the financial, legal and operational performance of their leases. Our award-winning software is used by 1,000+ organizations to manage 500,000+ real estate, equipment and other leased assets globally. For more information, visit visuallease.com.

Media Contact

Erica Bonavitacola
Visual Lease
T+1 732 860 4838
ebonavitacola@visuallease.com

Company continues to demonstrate its commitment to strategic growth and operational excellence

Woodbridge, NJ – July 6, 2023 — Visual Lease, the #1 lease optimization software provider, today announced the appointment of its first Chief Financial Officer, Kathryn Eskandarian. Having most recently served as the organization’s SVP of Finance and Accounting, Eskandarian has extensive experience building out accounting and finance functions within high-growth SaaS companies. With the introduction of this role to the business, Visual Lease continues to invest in its senior leadership team, having announced the addition of a Chief Customer Officer, Chief Revenue Officer and Chief Product Officer to its C-Suite within the last year.  

“Working alongside Kathryn, I’ve witnessed her unwavering passion for our company and relentless pursuit of operational excellence in critical functional areas, including Finance, Human Resources, Legal and Information Technology,” said Visual Lease CEO, Robert Michlewicz. “During her time with VL, Kathryn has been instrumental in evolving these pillars of our business on pace with the company’s growth. Her leadership will continue to help drive VL’s success as we further expand our platform and the value that we provide to our growing community of customers and partners.” 

Eskandarian joined Visual Lease in August 2017 as Director of Finance and Accounting. During her tenure, Visual Lease has experienced double-digit, year-over-year percentage growth in both revenue and customer count. Prior to joining the company, Eskandarian served as the Controller at iCIMS, where she was heavily involved in building the financial infrastructure to scale and support the business, as well as facilitating various equity raises. 

“Today, finance leaders are relied on to help their organizations prepare for emerging needs and challenges, such as the global sustainability disclosure standards that were recently announced by the International Sustainability Standards Board (ISSB),” said Eskandarian. “I’ve experienced firsthand how critical the ability to adapt to changing market conditions is to business health and success. This knowledge fuels my passion for the work we do to help our customers stay ahead of what’s ahead.” 

To keep up with announcements from Visual Lease, visit the Visual Lease Newsroom. 

About Visual Lease  

Visual Lease, the #1 lease optimization software provider, empowers organizations to leverage their lease portfolio as a strategic asset. Our platform is uniquely designed to meet the needs of every team that interacts with a company’s lease portfolio to reduce risk, drive confident and sustained lease accounting compliance and provide the visibility required to make agile business decisions. Informed by nearly three decades of experience, our solutions help companies easily sustain compliance with FASB, IFRS and GASB lease accounting standards and implement proper lease controls to improve the financial, legal and operational performance of their leases. Our award-winning software is used by 1,000+ organizations to manage 500,000+ real estate, equipment and other leased assets globally. For more information, visit visuallease.com.  

Media Contacts 

Erica Bonavitacola
Visual Lease
T+1 732 860 4838
ebonavitacola@visuallease.com     

Carbon accounting, sustainability management and ESG reporting tool receives global recognition on the heels of newly announced international sustainability standards (IFRS S1 and IFRS S2)

Woodbridge, NJ – July 5, 2023 — Visual Lease, the #1 lease optimization software provider, today announced the company’s newest offering, VL ESG Steward, has been shortlisted for a Software as a Service (SaaS) award within the category of Best SaaS Product for CSR, Sustainability and ESG.

VL ESG Steward is an ESG reporting tool, and the first of its kind within the lease accounting and administration space, specifically created to help organizations consolidate the records needed to track their carbon footprint across commercial real estate, fleet, equipment and more. The tool empowers users to be able to report on the environmental impact of these assets in accordance with the newly announced sustainability disclosure requirements from The International Sustainability Standards Board (ISSB), IFRS S1 and IFRS S2.

“ESG reporting remains a top priority for organizations across the globe,” said Visual Lease CEO, Robert Michlewicz. “With Visual Lease’s history of serving as a leading lease record management solution for more than two decades, we are in a unique position to be able to help businesses use this data to go beyond lease accounting compliance to track and report on the environmental impact of their owned and leased assets. Our team is at the forefront of these evolving business needs, and provided guidance on the new international sustainability disclosure standards from the ISSB. We are proud to provide Visual Lease customers with the advantage of being able to confidently report on this data in accordance with the latest requirements.”

Hundreds of entries were received for The SaaS Awards 2023, the organization’s 8th awards ceremony. VL ESG Steward was evaluated against worldwide submissions from organizations across North America, Canada, Europe, the Middle East, and Australia. The software is recognized alongside solutions from industry leaders such as IBM, IBM Cloud, LineLeader by ChildcareCRM, Submittable, ECM PCB Stator Technology, Diligent Corporation, Wolters Kluwer Enablon, Coats Digital and Avetta.

Given that nearly 40% of global carbon dioxide emissions originate from real-estate-related assets, Visual Lease extended its platform to help its customers access their lease record data to not only achieve compliance with the evolving requirements, but also to understand – and ultimately transform – the environmental impact of their owned and leased assets.

“The true power of technology lies in its ability to effectively meet current needs while preparing to address emerging needs, which is a guiding principle for our product development efforts here at Visual Lease,” said Amie Durr, Visual Lease’s Chief Product Officer. “Visual Lease is uniquely positioned to be able to track and report on dynamic financial and operational datasets, which is a core capability to support a carbon accounting program. With these insights readily available, organizations can successfully pave the way for a more sustainable future,” Durr added.

To learn more about VL ESG Steward, please visit this link.

About the SaaS Awards

The SaaS Awards is a sister program to the Cloud Awards, which was founded in 2011. The SaaS Awards focus on recognizing excellence and innovation in software solutions. Categories range from Best Enterprise-Level SaaS to Best UX or UI Design in a SaaS Product.

About Visual Lease

Visual Lease, the #1 lease optimization software provider, empowers organizations to leverage their lease portfolio as a strategic asset. Our platform is uniquely designed to meet the needs of every team that interacts with a company’s lease portfolio to reduce risk, drive confident and sustained lease accounting compliance and provide the visibility required to make agile business decisions. Informed by nearly three decades of experience, our solutions help companies easily sustain compliance with FASB, IFRS and GASB lease accounting standards and implement proper lease controls to improve the financial, legal and operational performance of their leases. Our award-winning software is used by 1,000+ organizations to manage 500,000+ real estate, equipment and other leased assets globally. For more information, visit visuallease.com.

Media Contacts

Erica Bonavitacola
Visual Lease
T+1 732 860 4838
ebonavitacola@visuallease.com

Woodbridge, NJ – April 19, 2023 — Visual Lease, the #1 lease optimization software provider, today announced its results from Q1 2023, reporting double-digit annual recurring revenue and customer percentage growth year-over-year. The company continues to invest in its platform and services to provide extended value to its growing customer base.

“This quarter, our customers used Visual Lease to demonstrate the strategic value of their leases, resulting in accelerated growth for our organization,” said Robert Michlewicz, CEO of Visual Lease. “Furthermore, we welcomed an impressive class of new customers who are using recent regulatory changes to enhance their business operations while simultaneously maintaining compliance. In March, we launched VL ESG Steward, deepening Visual Lease’s commitment to being a strategic provider positioned to assist companies’ sustainability efforts across their portfolio of leased and owned assets. We are grateful to our loyal customers, industry experts and the hardworking VL team for their valuable contributions to our successful growth and platform expansion.”

In Q1 2023, Visual Lease:

• Announced the Launch of VL ESG StewardA carbon accounting and ESG reporting solution designed to track and report on the environmental impact of an organization’s owned and leased asset portfolio, including energy consumption, water, biodiversity and greenhouse gas emissions. VL ESG Steward is the first tool of its kind within the lease management and accounting solution space and will help businesses and governments establish their ESG baseline, manage and report on emissions at an asset level and establish auditable controls to help teams work together, efficiently and reliably.
• Appointed Amie Durr as VL’s First Chief Product Officer
  With nearly 15 years’ experience in product management, Durr is responsible for overseeing the organization’s product and engineering teams to ensure continued product innovation with even greater speed to market. Durr’s team lead the development of VL ESG Steward.
• Launched Product Enhancements
  Visual Lease enhanced existing product functionality and provided an updated user interface to its lease accounting system to effectively reduce load times and create efficiencies during a critical time of year for accounting and finance teams.
• Unveiled a New Report from The VL Data Institute (VLDI)
  The 2023 Commercial Real Estate and Leasing Trend report from The VLDI reveals how businesses are changing and why they enter into new leases in response to the evolving workplace and economy. Highlighted in this recent analysis are lease term priorities, post-pandemic economy lease impact, ESG priorities and more. Findings from the research have been featured in Accounting Today, Yahoo! Finance, Benzinga, Globe St. and more.

To keep up with announcements from Visual Lease, visit the Visual Lease Newsroom.

About Visual Lease

Visual Lease, the #1 lease optimization software provider, empowers organizations to leverage their lease portfolio as a strategic asset. Our platform is uniquely designed to meet the needs of every team that interacts with a company’s lease portfolio to reduce risk, drive confident and sustained lease accounting compliance and provide the visibility required to make agile business decisions. Informed by nearly three decades of experience, our solutions help companies easily sustain compliance with FASB, IFRS and GASB lease accounting standards and implement proper lease controls to improve the financial, legal and operational performance of their leases. Our award-winning software is used by 1,000+ organizations to manage 500,000+ real estate, equipment and other leased assets globally. For more information, visit visuallease.com.

Media Contact

Erica Bonavitacola
Visual Lease
T+1 732 860 4838
ebonavitacola@visuallease.com

The first sustainability-focused lease tracking and reporting software designed to help companies meet their environmental policy goals

Woodbridge, N.J. – March 29, 2023 — Visual Lease, the #1 lease optimization software provider, today launched VL ESG Steward, a solution designed to track and report on the environmental impact of an organization’s owned and leased asset portfolio. This is the first tool of its kind within the lease management and accounting solution space. The solution will enable businesses around the globe to consolidate the data needed to track their carbon footprints across assets like commercial real estate, fleet, equipment and more, and make the necessary changes to address their environmental, social and governance (ESG) goals.

As companies move forward with internal ESG initiatives and keep an eye on the future where there may be set policies and standards in place that require compliance, clearly tracked and detailed energy consumption insights across leased and owned assets will be critical. However, the process of collecting and organizing this data is anything but straightforward. Much like the lease accounting process, the datapoints required to track environmental impact are dynamic and complex. To streamline the process, VL ESG Steward converts consumption data of greenhouse gas emissions (CO2, PFCs, CH4, SF6, N2O, HFCs) using calculations based on the Greenhouse Gas Emissions Protocol and EPA Energy grid emissions factors. The result is an up-to-date and ongoing greenhouse gas inventory as it relates to leased, owned and other intangible assets across an organization’s portfolio.

“VL ESG Steward is a natural extension of the capabilities we have provided to our customers for more than two decades. As we look ahead, the businesses that have a clear understanding of their greenhouse gas inventory will be in the unique position to easily identify areas where shifts can be made to meet internal and external goals,” said Robert Michlewicz CEO of Visual Lease. “It is a perfect complement to VL’s long standing partnership with our clients as they access dynamic lease data to maintain compliance, ensure accurate accounting practices and leverage their portfolios to their fullest potential.”

In addition to greenhouse gas emissions, VL ESG Steward tracks a wide variety of environmental factors, including energy consumption, water usage, waste management and more. It collects data from a range of sources and automatically converts it into the standardized measurement of choice.

Continues Michlewicz, “We’re seeing ESG reporting become an increasingly crucial part of asset management for our clients. In fact, our recent research revealed that 99% of senior real estate executives at companies with more than 1,000 employees believe it is important to reduce the carbon footprint of their future leases. And yet, there hasn’t been a solution to support the accurate tracking and management of this critical data – until now.”

“As MISTRAS recognizes our responsibility to serve as an agent for positive change and advancement of the company’s ESG initiatives, we’re thrilled to become a pilot customer for VL ESG Steward. We’ve used Visual Lease as our system of record for our portfolio of facility, automobile and equipment leases – and feel that they are well positioned to expand and provide meaningful value into the complex landscape of ESG reporting,” said Thomas Tobolski, Treasurer, MISTRAS Group, Inc.

VL ESG Steward will provide leaders at both new and existing customers with the clarity needed to further leverage their lease portfolio as a strategic business asset. The launch of VL ESG Steward sets a new precedent in the lease management and accounting space, offering a long-term solution for tracking and reporting ESG commitments that are complex and constantly evolving.

To learn more about VL ESG Steward and see it in action, visit the Visual Lease website and register for the solution overview webinar on Wednesday, April 19th at 1:00 PM ET.

About Visual Lease
Visual Lease, the #1 lease optimization software provider, empowers organizations to leverage their lease portfolio as a strategic asset. Our platform is uniquely designed to meet the needs of every team that interacts with a company’s lease portfolio to reduce risk, drive confident and sustained lease accounting compliance and provide the visibility required to make agile business decisions. Informed by nearly three decades of experience, our solutions help companies easily sustain compliance with FASB, IFRS and GASB lease accounting standards and implement proper lease controls to improve the financial, legal and operational performance of their leases. Our award-winning software is used by 1,000+ organizations to manage 500,000+ real estate, equipment and other leased assets globally. For more information, visit visuallease.com.

Media Contact:

Holland Eichorn
Visual Lease
T+1 301 873 9653
visuallease@calibercorporate.com

88% of businesses are planning for physical space needs just one year or less in advance

Woodbridge, N.J. – February 22,2023 — Visual Lease, the #1 lease optimization software provider, today unveiled its 2023 Commercial Real Estate & Leasing Trend Report, which reveals that businesses are changing how and why they enter into new leases in response to the evolving workplace and economy.

Visual Lease found that while 70% of senior real estate executives reported that their businesses are looking to add space as a part of their 2023 real estate strategy, 88% are planning for physical space needs just one year or less in advance – a significant increase from 2022, when only 35% of companies reported planning physical space needs with the same timeline in mind. This change illustrates organizations’ desire to protect their ability to pivot should any unforeseen circumstances arise – a lesson learned from the COVID-19 pandemic. In fact, senior real estate executives identified the ability to sublease and flexible lease termination as top factors to negotiate into future leases.

This study also found more than half (52%) of senior real estate executives report that their companies are planning to add new satellite locations and 28% are looking to downsize existing spaces. The growing interest in satellite locations and alternate spaces is indicative of how businesses are working to meet the needs of a reimagined workplace – one with flexibility as a core component, embracing hybrid work arrangements, fully remote hires and shared workspaces. In fact, this year 46% of senior real estate executives report that shared desks or offices (booked as needed by workers) provide the best office working environment for their companies.

“In today’s macro-economic environment, business leaders have to be even more strategic with resource allocation,” said Robert Michlewicz, Visual Lease’s CEO. “As a result, companies are changing how they view their real estate and equipment leases. Once a widely overlooked area of the business, lease portfolios are now helping companies remain agile by providing opportunities for significant hard- and soft-dollar savings. The key, however, to accessing these many benefits is first implementing a strong lease controls framework.”

Further highlighting the power of proper lease management, 45% of surveyed senior real estate executives report their companies have overpaid rent or expenses due to inadequate lease controls. These costly errors can be attributed to the fact that 83% of real estate executives also share that their companies are not prioritizing an investment in the dedicated technology, people and processes required to successfully manage their lease-related expenses, which is typically the second largest line item for businesses.

“Without the right technology and processes in place, leases can very quickly turn into substantial liabilities, exposing businesses to compliance risks, failed audits, fees, damaged credibility and wasted resources,” continues Mr. Michlewicz. “There is a major opportunity available to companies across all industries to safeguard themselves against these risks, and also, use their lease data to make better-informed decisions and successfully anticipate future needs.”

The report also revealed a clear correlation between leases and Environmental, Social, and Governance (ESG) programs and reporting:

• There is a lot of progress to be made in developing ESG initiatives – 95% of companies do not have a fully established ESG program with 41% reporting they have not begun any ESG initiatives yet.
• Leasing decisions can support – or undermine – an organization’s environmental sustainability efforts – 99% of those surveyed believe it is important for their company’s future leases to reduce its carbon footprint.
• Real estate teams need a seat at the table – Despite having access to all the details within a company’s lease portfolio, 55% of senior real estate executives have little to no involvement currently in ESG reporting at their organization.

Visual Lease surveyed 200 U.S. senior real estate executives at companies with more than 1,000 employees. For full study results, download here.

About the Visual Lease Data Institute

The Visual Lease Data Institute is a collection of market-leading data, trends and insights on lease accounting, management and optimization created and curated by Visual Lease, provider of the #1 lease optimization software. The Institute was founded on 35 years’ experience managing lease data and financials and was created to arm organizations with the knowledge required to achieve and maintain lease accounting compliance and leverage their leases as strategic business assets.

About Visual Lease

Visual Lease, the #1 lease optimization software provider, empowers organizations to leverage their lease portfolio as a strategic asset. Our platform is uniquely designed to meet the needs of every team that interacts with a company’s lease portfolio to reduce risk, drive confident and sustained lease accounting compliance and provide the visibility required to make agile business decisions. Informed by nearly three decades of experience, our solutions help companies easily sustain compliance with FASB, IFRS and GASB lease accounting standards and implement proper lease controls to improve the financial, legal and operational performance of their leases. Our award-winning software is used by 1,000+ organizations to manage 500,000+ real estate, equipment and other leased assets globally. For more information, visit visuallease.com.

Media Contact:

Erica Bonavitacola
Visual Lease
T+1 732 860 4838
ebonavitacola@visuallease.com

Private companies and government entities continue to face challenges around properly managing and reporting their leases in accordance with the new lease accounting standards

Woodbridge, N.J. – July 25, 2022 — Visual Lease, the #1 lease optimization software provider, today unveiled its newest report from The Visual Lease Data Institute, The 2022 Lease Market Analysis: Lease Accounting Readiness. The study found that despite leases typically making up a large portion of an organization’s budget, nearly three-quarters (71%) of private companies are not entirely confident they know how much their leases cost their business. This lack of awareness and visibility is one reason companies are slow to transition to the new lease accounting standards. Notably, a third (33%) of private companies are still not fully prepared to transition to ASC 842, which is effective for all 2022 and 2023 financial statements and beyond.

Despite the GASB 87 effective date being six months earlier (June 15, 2021), a delay appears to be emerging in the implementation of the standard. Forty-four percent of the government market is not fully prepared to transition to GASB 87 and only 18% of government institutions are at a point where they are considering lease accounting maintenance beyond initial compliance. In addition, nearly one-fourth of government entities are not aware of GASB 96, a looming standard that will impact how governmental organizations report on their Subscription-Based Information Technology Agreements (SBITAs) for fiscal years beginning after June 15, 2022.

“For years, companies may have been able to get away with loosely managing and tracking their leases, but that is no longer the case with new lease accounting standards, which require leased assets to be reflected on the balance sheet,” said Visual Lease’s founder and CEO, Marc Betesh. “In addition to these new standards, the global economic climate is creating additional concerns around implementing proper internal controls and lease management processes.”

Workforce shortages and retention issues are also contributing to private companies and government entities delaying their transition to the new standards. A staggering 93% of private companies and 86% of government organizations say their teams are already stretched thin, making lease accounting even more overwhelming. And nearly 40% of private companies report that avoiding employee burnout is a top concern associated with maintaining proper control over their lease portfolio.

“The silver lining is that the new standards are providing companies with the opportunity to prioritize lease management to not only achieve lease accounting compliance, but also, to make stronger business decisions and better manage risk,” added Betesh.

Risks associated with not implementing a proper lease management strategy include:

• • An unnecessarily complex lease accounting process that relies on manual efforts.
  • A failed annual audit due to incomplete and inaccurate lease data, potentially resulting in increased fees, damaged credibility and diminished credit.
  • The inability to pivot and address new business needs due to a lack of visibility into important lease details.

By implementing a centralized system of record, private companies and government entities have been able to recognize a range of benefits, including automation, reduction of risk, more cost-saving opportunities and a new level of customer service and support. Because of these many advantages, private companies were able to save an average of 600 hours and government entities were able to save an average of 765 hours by using third-party lease accounting software.

To compile the findings in the report, Visual Lease surveyed 200 senior finance and accounting professionals at companies with more than 1,000 employees and 100 U.S. financial management professionals at local, state and federal governmental organizations. Within the research, industry leaders from Visual Lease and other organizations such as RSM, On Q Financial and Indeed, break down common challenges and roadblocks experienced by the private and government markets; how organizations can leverage lease accounting to make faster, smarter decisions; and best practices for accelerating and maintaining lease accounting compliance, while preparing for new guidance, such as GASB 96.

For additional insights, visit The Visual Lease Data Institute.

To access insights on lease accounting and strategic lease portfolio management, subscribe to The Visual Lease Data Institute Podcast.

About The Visual Lease Data Institute

The Visual Lease Data Institute is a collection of market-leading data, trends and insights on lease accounting, management and optimization created and curated by Visual Lease, provider of the #1 lease optimization software. The Institute was founded on 35 years’ experience managing lease data and financials and was created to arm organizations with the knowledge required to achieve and maintain lease accounting compliance and leverage their leases as strategic business assets.

About Visual Lease

Visual Lease is the #1 lease optimization software provider. We help organizations become compliant with FASB, IFRS and GASB lease accounting standards, while simultaneously improving the financial, legal and operational performance of their leases. Our easy-to-use SaaS platform is embedded with more than three decades of best practices from major corporations and leading industry professionals. Our award-winning solutions are used by 1,000+ organizations to manage 500,000+ real estate, equipment and other leased assets. Committed to ongoing innovation and unparalleled customer service, Visual Lease helps organizations transform their lease compliance requirements into financial opportunities. For more information, visit visuallease.com.

Media Contact:

Erica Bonavitacola
Visual Lease
T+1 732 860 4838
ebonavitacola@visuallease.com

Lease accounting is an incredibly time-consuming, complex endeavor that involves a lot of initial preparation, cross-departmental collaboration and ongoing maintenance. So, how can businesses ensure their lease accounting remains reliable and accurate?  

In our recent webinar, Lease Accounting: Building confidence in compliance efforts, Joe Fitzgerald, SVP of Lease Market Strategy at Visual Lease, and Denise Hinkle, Principal of Business Development at Scribcor Global, covered how businesses can successfully prepare for lease accounting and offered tips about how to feel confident about compliance Many companies struggle to feel confident in their lease accounting compliance efforts with the new standards (ASC 842, IFRS 16 and GASB 87). 

High-level takeaways from the webinar include: 

What makes lease accounting so complex?

There are multiple factors that make lease accounting difficult to both achieve and maintain. Besides the complex calculations required, leases themselves are lengthy and intricate. Typically, lease contracts are detailed documents with critical information such as obligations, clauses, options and dates. If your lease contracts are in different offices or handled by different departments, they may be difficult to locate and identify. 

Further, any changes within your leases must be represented on the balance sheet, or you risk misreporting your company’s lease information.  

Misreporting lease financials can result in increased audit fees and fines, along with damage to your company’s reputation and the risk of legal action. It’s important to keep this in mind as you prepare for lease accounting.

How to prepare for lease accounting success

There are steps you can take that have been proven to set you up for success. In this webinar, you will learn about each one, including but not limited to: 

• Establishing a dedicated team 
  • Who needs to be involved? 
  • What are they responsible for?  
  • Which departments need to be consulted? 

• Identifying your leases 
  • What are best practices to do this? 
  • Where do you begin? 

• Determining a reliable process 
  • What will it take to adopt and maintain the lease accounting standard? 
  • What are the risks of your identified solution? 
  • What should you (and should you not) do? 

• Creating a post-adoption plan 
  • How will you account for ongoing lease data maintenance? 
  • Who will be responsible, and for what? 
  • What will your processes look like? 

For more information about how to be confident in your lease accounting compliance efforts, view our on-demand webinar, Lease Accounting: Building confidence in compliance efforts.  

Do you know if you are overpaying for your leases? Unfortunately, many businesses are, but are not aware of it until after they begin tracking their lease data to comply with the new lease accounting standards (ASC 842 and IFRS 16). This is often due to the lack of visibility into lease terms, such as expiration dates, options and more. 

In particular, businesses in the manufacturing industry often have a large volume (hundreds and thousands) of equipment leases that they lack visibility into. This lack of control often costs them a significant amount of money.  

In our recent webinar, How to optimize your equipment leases while accomplishing lease accounting compliance, Joe Fitzgerald, SVP of Lease Market Strategy at Visual Lease, and Jon Hunke, VP of Accounting and EIT at MDU Construction Services Group, shared why and how businesses should optimize their lease portfolios while accomplishing lease accounting.  

Some key takeaways from the webinar include: 

Lease optimization is the next logical step after lease accounting 

Although lease accounting is an elaborate and complex process, when done right, it can also provide additional advantages beyond compliance. In fact, in a recent VLDI report, 100% of surveyed senior finance and accounting professionals acknowledged that lease accounting compliance comes with real business benefits.   

This is because once all your lease data is in an easily accessible, reliable location, you’ll be in a better position to analyze your leases and identify new opportunities for savings. This is where lease optimization comes into play.  

Lease optimization will help you make strategic leasing decisions 

The process of lease optimization enables you to revisit existing leases and bridge gaps to make better informed business decisions, such as identifying an opportunity to purchase an existing lease rather than continuing to lease a particular asset or property. Optimizing your equipment leases also empowers your business to: 

• Level-set lease rates across your lease portfolio, 
• Improve vendor management, 
• And more (further defined further in the webinar). 

Lease optimization leads to significant cost savings

Having visibility into your leases also enables you to identify areas where you may be overpaying for leases. Before businesses optimized their lease portfolio, many have found that they significantly overpaid for existing leases due to lack of awareness into the contract terms.  

In example, a large manufacturing company lost $105k because they did not realize that their lessor was continuing to bill expenses for surrendered property. 

For more insight about the steps you can take to optimize your lease portfolio, view our on-demand webinar, How to optimize your equipment leases while accomplishing lease accounting compliance.  

The new lease accounting standards have radically changed the way private and public companies record leases on the balance sheet. Naturally, this had a direct impact on lessees, lessors and how they classify lease agreements.

Under ASC 842, lease agreements are defined as “a contract, or part of a contract, between a lessor and a lessee that conveys the right to control the use of identified property, plant, or equipment (an identified asset) to the lessee for a period of time in exchange for consideration.“

Both the lessee and lessor are signatories to the agreement and must abide by its rules. Additionally, both parties will need to classify what kind of lease the agreement is, either finance or operating as defined under ASC 842.

What’s the difference between a lessor and a lessee?

Before we review how both parties classify a lease under ASC 842, let’s take a look at the definitions of a lessor and lessee.

The lessor is the party that either owns or leases and subleases the asset – which can range from property, vehicles or equipment.

The lessee is the party receiving the right to use the asset for a specified period of time, per the lease agreement.

Under ASC 842, the definitions of a lessor and lessee haven’t necessarily changed, however, both parties must change how they present leases in their financial statements.

For the first time, lessees must show all leasing obligations, including operating leases, on the balance sheet – and classify them either as operating or finance leases.

Before ASC 842, operating leases were not included in the balance sheet. This is one of the larger changes lessees must address under ASC 842. Luckily for lessors, this change isn’t as significant because they already had to make these classifications prior to the new lease accounting standard.

What’s the difference between an operating lease and a finance lease?

ASC 842 requires the classification of a lease at the commencement of the lease agreement, based on specified economic criteria. It’s important for both parties to understand these criteria as they determine differences between and classification of an operating lease and a finance lease.

Operating leases are contracts that permit the use of a certain asset without transferring the ownership of that asset for any less than a major part of the asset’s life. For example, the lessee uses the asset, while the lessor provides the maintenance or upkeep of the asset. Expenses related to operating leases were not previously recorded on a company’s balance sheet until ASC 842. The leased asset, along with the corresponding liabilities, are now presented on the balance sheet.

A finance lease is a contract that does not qualify as an operating lease; the risks and rewards associated with the leased asset get transferred to the lessee. In other words, they have full control of the asset. Under ASC 842, finance leases continue to be recorded on the lessee’s balance sheet as an asset with a corresponding liability.

The impact of ASC 842 and the importance of lease accounting software

Although lessees and lessors have not fundamentally changed under ASC 842, the impact of the new lease accounting standard has required both parties (especially lessees) to classify their leases with a higher degree of scrutiny.

Given the transparent nature of ASC 842, whether it’s a finance or operating lease, both parties need to ensure they are properly accounting for them on the balance sheet.

Lease classification is just one of the many complexities of ASC 842. To ensure your lease data and financial reports remain accurate, you’ll want to make sure your lease data is always up-to-date and organized in one centralized location. By utilizing lease management and lease accounting software such as Visual Lease, you’ll be able to leverage the platform as your single source of truth to manage and track your lease data.

Visit our blog to stay up to date on the latest news, trends and tips in lease accounting.

Looking for more information or have a lease accounting question? Get in touch with one of our lease accounting experts. Click here to schedule time with one now.

According to a recent VLDI survey, 35% of private companies were less than halfway through or had not yet started the process of gathering information needed to adopt ASC 842. This puts businesses in danger of misreporting lease financials, which exposes them to serious consequences, such as increased audit fees.  

In our recent webinar, How to Avoid Lease Accounting Compliance Risks, Rosemary Courtney, Manager of Technical Accounting at Visual Lease, and Bill Harter, Principal Solution Advisor at Visual Lease, discussed common challenges and risks associated with lease accounting compliance. They also provided tips to ensure you are set up for a successful audit post-adoption.  

As a result, you should have a better understanding of the risks of inaccurate lease financials and how to avoid these mistakes. Let’s take a closer look.  

Lack of processes

The new lease accounting standards require cross-functional collaboration in order to stay on top of any updates made to leases. Without clear responsibilities and defined processes, some critical lease updates may slip through the cracks – and put you at risk of inaccurate lease information. That’s why it’s important to develop defined, reliable processes that involve the right personnel while clearly identifying internal controls.  

Manual accounting calculations

Manual accounting calculations are not only time-consuming given the complexity of ASC 842, but they are also prone to human error. Automated technology significantly reduces both the risk of miscalculation and time spent on reporting. 

Lack of dedicated resources

It’s rare for companies to have a dedicated resource for lease accounting. So, how do you ensure you stay compliant amidst employee turnover? Our experts agree that naming a project lead in each functional area that contributes to the lease portfolio is the best approach, such as finance, real estate and legal.  

Lack of visibility into maintaining lease information

Leases change all of the time (i.e. extend, terminate) and each change needs to be accounted for on the balance sheet. It can be difficult to ensure your lease data is up to date if your leases are not in an accessible, centralized location.  

For more insight into how to prepare for lease accounting success, view our on-demand webinar “How to Avoid Lease Accounting Compliance Risks”.   

Related Resources: 

• Five Questions That Should Be On Every Financial Leader’s Mind 

Visual Lease is the #1 lease optimization software provider. We help organizations become compliant with FASB, IFRS and GASB lease accounting standards, while simultaneously improving the financial, legal and operational performance of their leases. Our easy-to-use SaaS solution has been used by over 1,000 companies with a 99% retention rate.   

• What is IFRS 16?
• What changed under IFRS 16?
• What is considered a lease under IFRS 16?
• Exceptions to the IFRS 16 Lease Accounting Standard
• IFRS 16 Impact on Financial Reporting
• IFRS 16 Impact on the Balance Sheet
• IFRS 16 Impact on Profits and Loss Statement
• IFRS 16 Impact on Cashflow Statement
• Who Does IFRS 16 Impact?
• History of IFRS 16

What is IFRS 16?

IFRS 16 Summary: What is IFRS 16?

The International Accounting Standards Board (IASB) published the new IFRS 16 lease accounting standard, which replaces IAS 17. For the global community, IASB is responsible for developing and promoting the International Financial Reporting Standards (IFRS) for accounting.

What changed under IFRS 16?

IFRS 16 changes the way companies account for leases in their financial disclosures, including balance sheets and income statements. Under IFRS 16, a lessee applies a single lease accounting model where leases are considered finance leases.  A lessor classifies a lease as either a finance lease or an operating lease.

Here’s what Ernst & Young (EY) says about the changes: “Whether you report under International Financial Reporting Standards (IFRS) or U.S. GAAP, you are likely to be facing significant changes in reporting requirements as you assess the impact of new standards for revenue recognition, financial instruments, and lease accounting. And these changes are not just impacting organizations reporting under IFRS and US GAAP — many national accounting standard setters are also aligning local standards to IFRS.” Read more here: IFRS Compliance Software & New IFRS Lease Accounting Changes

IFRS Compliance Software

What is considered a lease under IFRS 16?

Under IFRS 16, a lease is defined as a contract that enables international businesses to use another entity’s identified asset for a specified period of time in exchange for consideration. Common leased assets include:

• Real estate property, buildings, offices and warehouses
• Office equipment
• Medical equipment
• IT equipment
• Vehicles (automobiles, trucks, vans)

These contracts must specify a timeline in which the right-of-use of the asset is established (or an identified amount of use). It should also include all the potential economic benefits from using said asset. Simply put, some contracts that may not have been considered a lease with the original IAS 17 compliance standard, may now be a lease under IFRS 16 – and must be added to the balance sheet.

Exceptions to the IFRS 16 Lease Accounting Standard

Under the International Financial Reporting Standards (IFRS) 16, the lease accounting standard, there are a few exceptions or specific scenarios where certain leases may be excluded or treated differently. Here are some exceptions to IFRS 16:

• Short-term leases: Leases with a lease term of 12 months or less and that do not contain a purchase option are considered short-term leases. Entities can choose to exclude short-term leases from recognizing lease assets and liabilities on the balance sheet. Instead, they can expense the lease payments on a straight-line basis over the lease term.
• Low-value leases: Leases of assets with a low value (i.e. under $5,000) when new, such as small office equipment or computer peripherals, can be excluded from the balance sheet. While there is no specific threshold defined in IFRS 16, it suggests that a materiality-based approach can be adopted for such leases.
• Leases of biological assets: Leases of biological assets within the scope of IAS 41, Agriculture, are exempted from the requirements of IFRS 16. These leases are accounted for under the applicable provisions of IAS 41.
• Leases of minerals, oil, natural gas, and similar assets: Exploration and evaluation assets, as defined in IFRS 6, Exploration for and Evaluation of Mineral Resources, are excluded from the scope of IFRS 16. Therefore, leases of minerals, oil, natural gas, and similar assets are not subject to the requirements of IFRS 16.
• It’s important to note that the specific application of these exceptions may vary depending on the circumstances and professional judgment exercised by the reporting entity. It is recommended to consult the full text of IFRS 16 and seek guidance from accounting professionals or standard-setting bodies for specific situations.

IFRS 16 Impact on Financial Reporting

IFRS 16 has a significant impact on financial reporting, affecting the balance sheets, profit and loss statements, and cash flow statements of companies. It’s important to note that the impact of IFRS 16 on financial reporting can vary depending on the specific lease arrangements and the nature of the business. Companies should carefully assess the implications and ensure accurate and transparent reporting in accordance with the standard.

IFRS 16 Impact on the Balance Sheet

Recognition of lease assets: Under IFRS 16, lessees are required to recognize lease assets, representing the right to use the leased asset, on the balance sheet. This increases the total assets of the company.

Recognition of lease liabilities: In addition to lease assets, lessees must recognize lease liabilities, representing their obligation to make lease payments, on the balance sheet. This increases the total liabilities of the company.

Change in presentation: The classification of leases as operating leases or finance leases, which was previously used under IAS 17, is eliminated. Instead, the balance sheet shows a single category of lease assets and lease liabilities.

However, if a lease’s terms happen to be under 12 months or low value under $5,000, they will typically be exempt from this new rule (assuming the asset itself isn’t recognized as high value or has purchase options).

IFRS 16 Impact on Profits and Loss Statement

Changes in expense recognition: Under IFRS 16, lessees are required to recognize both interest expense on the lease liability and depreciation of the right-of-use asset. This replaces the straight-line operating lease expense recognition under IAS 17. As a result, the profit and loss statement shows higher expenses in the earlier years of the lease and lower expenses in the later years.

Impact on EBITDA and operating profit: The changes in lease expense recognition affect EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) and operating profit. EBITDA increases as lease expenses previously classified as operating expenses are replaced by depreciation and interest expenses. Operating profit may also be affected due to changes in lease-related costs.

IFRS 16 Impact on Cashflow Statement

Changes in cash flow presentation: Under IFRS 16, lease payments are classified differently in the cash flow statement compared to IAS 17. The operating lease payments, previously presented as operating cash outflows, are now divided into a principal portion classified as financing activities and an interest portion classified as operating or financing activities.

Impact on operating cash flow: The classification of lease payments and the inclusion of interest and principal portions affect the operating cash flow. In the earlier years of the lease, operating cash outflows decrease as a portion of lease payments is classified as financing activities. Conversely, financing cash flows increase as the principal portion is classified as such.

Who Does IFRS 16 Impact?

Lessees who follow the International Financial Reporting Standards are affected by the new lease accounting standard. Over 160 countries all over the world will need to adhere to IFRS 16, including Spain, Ukraine, United Kingdom, Russia, Norway, Brazil, Japan, France and more.

History of IFRS 16

The International Accounting Standards Board introduced IFRS 16 in 2016. It is one of the most significant changes to their lease accounting policies in over 25 years. The goal of the new standard was to create transparency in representing leases on the balance sheet for all international businesses. IFRS 16 replaces IAS 17 as the new standard that all companies who operate under IFRS must adhere by and went into effect on January 1st, 2019.

Transition with IFRS 16 Software

Visual Lease provides international businesses with the tools to achieve and maintain IFRS 16 compliance while unlocking financial opportunities within their lease portfolios. Visual Lease’s powerful and easy-to-use cloud-based solution automates lease accounting, all in one centralized location.

Looking for a reliable lease accounting software? Click here to schedule a demo and see how Visual Lease can help you with IFRS 16.

The Financial Accounting Standards Board (FASB) recently issued an update to ASC 842 that addresses complexities associated with discount rate calculations. In this blog, we share how this update affects private companies and nonprofits.       

What does the discount rate update mean for private companies? 

The update to ASC 842 simplifies the way private companies, nonprofit organizations and employee benefit plans are required to determine the present value of lease payments. Under the new update, these businesses can elect risk-free rates by class of underlying asset, rather than at the entity wide level.  

This update replaces the previous rules within ASC 842 for how private companies and nonprofits handled discount rates to comply with the lease accounting standard.  

 Why was the discount rate update proposed? 

Prior to the update, companies ran into similar challenges when determining the discount rate and present value of lease payments. They had to use the rate implicit in the lease to calculate the right of use (ROU) asset and lease liability. However, the rate implicit in the lease isn’t always accessible. 

Given the difficulties private companies were experiencing, FASB recognized a need to streamline calculation guidance – and in response, proposed and issued this discount rate update.  

 How do private companies apply the new discount rate guidance? 

Organizations may now make a policy election to use a risk-free rate as the discount rate for all leases. This calculation is much easier to run, which helps businesses save time and lowers the impact on the balance sheet.  

 Are you set up to account for lease accounting guidance updates? 

The discount rate update issued by FASB to ASC 842 is just one example of why private companies and nonprofit organizations can benefit from lease accounting technology. Beyond providing lease accounting automation, ASC 842 software like Visual Lease is equipped to seamlessly adapt to changes to the lease accounting standards or a lease portfolio.  

It can also streamline your lease accounting process by automatically generating audit-ready journal entries, disclosures and reports that you need to achieve and sustain compliance.  

Additionally, the right solution will provide you with the visibility you need to thoroughly understand your lease data and use that information to make better informed operational decisions.  

Interested in learning more? See how lease accounting software like Visual Lease can help. 

What is lease capitalization?

Lease capitalization is the act of recording Right-of-Use Assets and related lease obligations on a company’s balance sheet, as required for the lease accounting standard ASC 842.

Placing these operating lease liabilities on the balance sheet can have a significant impact on a business’ financial position – potentially affecting credit rating and debt covenants under its corporate borrowings.

What is the importance of lease capitalization under ASC 842?

With the new lease accounting standard, there is an emphasis on accuracy, comprehensiveness and transparency as to what is accounted for in a company’s balance sheet. The new lease accounting standard emphasizes accuracy, comprehensiveness and transparency of a company’s balance sheet.

It’s common for business’ stakeholders – such as a public company’s shareholders or a privately held company’s bank or private lender – to want to understand the financial health of the business they have invested in and/or provided financing.

As a result of ASC 842, a company’s audited financial statements now have a more accurate representation of the company’s overall financial health.

Which leases are under ASC 842?

Prior to ASC 842, operating leases were not captured on the balance sheet. However, under ASC 842, both operating leases and finance leases (formerly known as capital leases) need to be included on the balance sheet (in our Complete Guide to Lease Accounting, we share how operating and finance leases are capitalized and accounted for).

To identify whether a lease is classified as a finance lease or operating lease under ASC 842, check out our blog on Capital Lease Accounting for ASC 840 and ASC 842.

There are some exceptions to capitalization under ASC 842, such as the ability to not capitalize short-term leases (leases of 12 months or less). To see a further breakdown and examples, take a look at our blog on Balance Sheet Changes for ASC 842.

ASC 842 requires businesses to disclose much more detail about their lease portfolios. If your company has a high volume of leases (100 or more), and/or manages complex leases (like real estate), it is impossible to keep track of them without leveraging lease accounting software.

Leases are incredibly dynamic – changing constantly as companies renegotiate their lease terms. And each of these lease modifications needs to be examined and potentially accounted for under the new lease accounting standards. Lease capitalization has been restructured and needs to be accurately accounted for on the balance sheet – one of the many elements associated with the new lease accounting standards. It’s important to not only understand the rules but make sure your company utilizes the right software to get and stay compliant.

Companies are currently reevaluating their lease portfolios to ensure these costly agreements still make sense in light of their new business goals and operations. As a result, many of these same organizations are making modifications to existing leases or are considering different options and/or terms for new agreements.

Stepping into 2022 should be a good deal less jarring. And yet, there might be changes and surprises. Here’s what experts see as coming up.

The verdict is in: the Financial Accounting Standards Board (FASB) will not issue a third delay to the ASC 842 effective date for private companies, which will take effect Dec. 15, 2021. This means many firms may be flat-footed when the new standards go into effect.

If you thought you would have had more time to prepare for the new lease accounting standard, you’re not alone. As of late July 2021, 75 percent of surveyed senior accounting and finance professionals at private companies with more than 1,000 employees said they were not yet compliant with ASC 842, with 30 percent less than halfway through the process. Furthermore, 40 percent claimed they were only somewhat confident about their ability to successfully adopt the new standard in time for their next scheduled reporting period after Dec. 15. This data indicates that many private companies were, indeed, waiting for another extension.

In a piece of good news for Manhattan’s battered office market, over 3M SF of office space was leased in November — the first time since before the coronavirus pandemic the nation’s largest office market eclipsed the 3M SF mark.

A total of 3.09M SF was rented last month, according to Colliers’ monthly snapshot. That was the highest monthly leasing total since January 2020, when 3.6M SF of office leases were signed just before the pandemic hit the city and brought activity to a sudden halt.

Three-quarters (75%) of privately held companies surveyed this spring by Visual Lease, a lease accounting software company, were not yet fully compliant with the standard, which is set to take effect on Dec. 15 after multiple delays.

Organization recognized as one of the fastest-growing private companies in America for the second consecutive year

Woodbridge, NJ – August 17, 2021 — Visual Lease, the #1 lease optimization software provider, was named on the 2021 Inc. 5000 list of the fastest-growing private companies in America. Rankings were based on participating companies’ three-year growth rate, and this inclusion marks Visual Lease’s second consecutive year placing within the top 20% of the private companies recognized.

“These past few years have required businesses to pivot and work differently,” said Visual Lease’s founder and CEO, Marc Betesh. “In navigating this challenging climate, many organizations have uncovered new ways to operate and support their customers. Our consistent and continued growth mirrors just how important lease accounting compliance has become for companies across all sectors, and how Visual Lease is rising to help them take control over their lease portfolios.”

The list represents a unique window into the most successful companies within the American economy’s most dynamic segment—its independent businesses. Intuit, Zappos, Under Armour, Microsoft, Patagonia and many other well-known names gained their first national exposure as honorees on the Inc. 5000.

In addition to this recognition, earlier this year Visual Lease was ranked among the Top 100 Software Companies of 2021 by The Software Report. The company was also honored with a Bronze Stevie® Award in the Fastest Growing Company of the Year category in The 19^th Annual American Business Awards^® and named a Top Workplace in New Jersey by NJ.com.

In 2020, Visual Lease gained its first placement on the Inc. 5000 list of fastest-growing companies in America and was named among the top third of high-growth companies on the Deloitte 2020 Technology Fast 500. Visual Lease was also recognized by NJBIZ as one of the Best Places to Work in New Jersey and was named No. 10 on NJBIZ’s list of New Jersey’s 50 Fastest Growing Companies in 2020.

To keep up with all of Visual Lease’s announcements and milestones, visit its newsroom.

About Visual Lease

Visual Lease is the #1 lease optimization software provider. We help organizations become compliant with FASB, IFRS and GASB lease accounting standards, while simultaneously improving the financial, legal and operational performance of their leases. Our easy-to-use SaaS platform is embedded with more than three decades of best practices from major corporations and leading industry professionals. Our award-winning solutions are used by 800+ organizations to manage 500,000+ real estate, equipment and other leased assets. Committed to ongoing innovation and unparalleled customer service, Visual Lease helps organizations transform their lease compliance requirements into financial opportunities. For more information, visit visuallease.com.

Media Contacts
Erica Bonavitacola
Visual Lease
T+1 732 860 4838
ebonavitacola@visuallease.com

Katie Vroom
Gregory FCA
T+1 212 398 9680
kvroom@gregoryfca.com

Package provides robust tech capabilities and all-inclusive implementation and support required to achieve lease accounting compliance with ASC 842

Woodbridge, NJ – August 10, 2021 — Visual Lease, the #1 lease optimization software provider, today introduced ASC 842 Proven Path, a full end-to-end lease accounting solution for private companies with fewer than 100 leases. Similar to the company’s GASB 87 Complete solution, ASC 842 Proven Path combines Visual Lease’s industry-leading software solution with all-inclusive implementation and ongoing support. It was expertly designed to enable the seamless and accurate adoption of the new lease accounting standard in 50 business days or less.

“Achieving and maintaining compliance with lease accounting standard ASC 842 is incredibly nuanced,” said Joe Fitzgerald, SVP of Lease Market Strategy at Visual Lease. “There are over 70 data elements to capture and track, and any company with any appreciable number of leases needs to plan out the process carefully. As we saw with public companies back in 2019, it takes significant time to identify all of the leases, collect the documents and capture the data before you can run any lease accounting calculations. Trying to do this without software extends the time even further.”

ASC 842 Proven Path package users will benefit from:

• Complete lease accounting and management capabilities to automatically perform all needed lease accounting calculations as well as centralize and manage a company’s lease portfolio, stay on top of important dates and milestones and track all options and obligations.
• Robust, flexible reporting options with access to a library of more than 100 templates, including one-click Roll-Forward reports which provide a view of an organization’s balances from the beginning through the end of a specific period.
• Access for unlimited, cross-functional users, all of whom can fully interact with lease data in one centralized system, fueling their ability to reinforce internal processes and create efficiencies.
• Unparalleled support from an experienced, dedicated team of implementation and account managers and ongoing customer support representatives to maximize the value and use of the platform.

“We recently conducted a survey of 500 senior finance and accounting professionals and found that the adoption of new technologies was one of biggest anticipated challenges to maintaining compliance with lease accounting standards after 2021,” said founder and CEO, Marc Betesh. “Working with a solution provider that you can rely on is what will help you maintain confidence, ongoing compliance. With a 98% customer retention rate, we are a trusted partner to our customers, and we’re deeply committed to navigating this journey with them.”

To learn more about Visual Lease’s ASC 842 Proven Path package, visit here.

Media Contacts
Erica Bonavitacola
Visual Lease
T+1 732 860 4838
ebonavitacola@visuallease.com

Katie Vroom
Gregory FCA
T+1 212 398 9680
kvroom@gregoryfca.com

About Visual Lease
Visual Lease is the #1 lease optimization software provider. We help organizations become compliant with FASB, IFRS and GASB lease accounting standards, while simultaneously improving the financial, legal and operational performance of their leases. Our easy-to-use SaaS platform is embedded with more than three decades of best practices from major corporations and leading industry professionals. Our award-winning solutions are used by 800+ organizations to manage 500,000+ real estate, equipment and other leased assets. Committed to ongoing innovation and unparalleled customer service, Visual Lease helps organizations transform their lease compliance requirements into financial opportunities. For more information, visit visuallease.com.

There is power within your lease portfolio. Over the last year, public and private businesses have taken a closer look at their leases – and experienced the downstream benefits of lease optimization. Businesses who must comply with the new lease accounting standards (e.g., FASB ASC 842) are now examining their leases with a higher level of scrutiny than ever before. Additionally, over the last year, companies looked to their leases to reduce the financial impact of COVID-19. In return, these businesses have experienced operational benefits associated with lease optimization.

What is lease optimization?

Optimizing your lease portfolio means:

1. Having a controlled inventory of all lease documentation that is updated to account for all changes and modifications.
2. The ability to capture, monitor and act on all critical lease dates, including end of-term options.
3. Ensuring changes in lease terms are reflected in payment schedules and lease accounting disclosure reports.
4. Conducting regular audits of your leases and the underlying assets by taking stock of your portfolio and identifying gaps and opportunities.

Lease optimization allows your business to uncover savings, streamline lease accounting compliance and accommodate pivotal business needs with agility.

Identify cost-saving opportunities

Over the last year, businesses looking to cut excess business expenses were increasingly mindful of their leases, given leases are the second largest business expense besides payroll. Lease optimization helps organizations identify areas of their leases where they are overspending – and save money through visibility into that data.

Real customer lease optimization examples

Here are some examples of how Visual Lease has helped hundreds of customers save money through lease optimization. Before partnering with us:

• A large manufacturing company lost $105k because they did not realize that their lessor was continuing to bill expenses for surrendered property.
• One of the largest insurance companies in the US lost $185k because they didn’t realize their landlord needed to offset operating expense increases against tax decreases.
• A national bank lost $500k because the tenant forgot to request reimbursement for tenant improvements from the landlord.
• A large tech company lost $210k because the tenant was not aware that tax abatements were not being added back to the base tax amount.

These are examples that with the right information, perspective and tools in hand, lease optimization can be leveraged to materially improve business processes and generate savings in a previously undermanaged area of an organization.

Capture modifications and adjustments that impact lease accounting compliance

Leases change – and adjustments need to be tracked and evaluated under the new lease accounting standards (ASC 842, IFRS 16, GASB 87).

Determining whether a modification has taken place can be operationally challenging, particularly for companies with large lease portfolios or for organizations that do not have the systems and processes in place to properly handle and account for these events. This analysis is complicated and will most likely require a dedicated team and technology to ensure attention to detail.

That said, this is THE perfect time for you to take the extra steps towards optimizing your lease portfolio.

You need to feel confident throughout every stage of the lease accounting compliance journey:

• Day 1 – Compliance (centralizing leases and producing accurate reports)
• Day 2 – Sustainable Auditability (implementing processes and controls)
• Day 3 – Optimization (revisiting and bridging gaps)

Accommodate business needs with agility

Another positive of lease optimization is that it enables your business to pivot and identify emerging lease needs as your organization grows – or vice versa. Having the ability to access your leases in one centralized location – and report on your portfolio in any way helps you to identify the most effective way to scale your lease portfolio to meet your needs.

This article originally appeared here in Forbes.

As a result of Covid-19 and the changing landscape related to leases, private companies have received more time to prepare for and adopt the new lease accounting standards in their financial reporting. Last year, the Financial Accounting Standards Board (FASB) further delayed the deadline for private companies to comply with the lease accounting standard ASC 842, which brings most of a company’s operating leases onto its balance sheet. This delay has given private companies nearly two additional years to comply with the new lease accounting standard. Because public companies have already gone through this process, there are many lessons that can be derived from their journey to help private companies as they move through their own adoption.

Perhaps the biggest lesson learned from public companies, which we’ve seen through our clients’ experiences, is that adopting the new lease accounting standard takes time, can be quite complex and results in a resource-consuming process, particularly if there is a lack of cross-departmental collaboration. With the ASC 842 deadline for private companies looming, there are several things private organizations can do to set themselves up for success.

Know What Lease Data To Gather And Where To Get It

Public companies learned that gathering and validating data was the most challenging part of the lease accounting compliance journey. Companies with large, diverse lease portfolios found lease contracts — and thus the data within those documents — can be scattered across any number of separate sources. Not only is it tedious to gather contracts and relevant data, but it’s also easy to overlook required information if the individuals abstracting the data don’t have an informed sense of what is required for compliance. Failure to properly capture all the relevant data elements can ultimately diminish the value of a company’s financial reporting. Due to this important — and heavy — lift, and despite the deadline delay, getting an early start is key to a private company’s successful adoption.

It’s worth noting that not all required data elements for effective lease accounting compliance will be found within an organization’s lease agreements. In some cases, only about half of the data will be found within contracts, while the remainder will be contained in other sources and require some level of judgment to establish.

When private companies begin down the road to lease accounting compliance, they should first reflect on what the required data is and where it can be found within their organization. These answers can be overwhelming, but in this case, knowledge is power. This is because there can be as many as 70 distinct data elements, such as lease terms, payment schedules, end-of-term options and incentives, that need to be identified and captured to be compliant with the lease accounting standards. To properly collect, organize and analyze all the required data, private companies should get ahead of the process and start to prepare now.

Use A Centralized Data Repository

Another lesson learned from public companies is the importance of a central lease document and data repository. A 2016 survey by PwC found that 39% of companies manage their lease agreements and related accounting in a decentralized manner. While this approach can work for some, it’s time-consuming and can increase the chance of human error during the data collection process. Public companies that had an organized centralized lease portfolio learned that it saved them time on gathering and analyzing required information, which ultimately saved them money in the long run.

When setting up a centralized lease portfolio, public companies were able to streamline and optimize global reporting processes and track lease data in real time, which has proven benefits for lease accounting compliance. By having all of the necessary lease data at their fingertips, these organizations experienced a faster, more efficient lease compliance process while also uncovering cost savings including overpayments, unreceived lease incentives and reduced full-time equivalent costs, among others. Not to mention, centralizing leases can be instrumental in supporting a company’s audit process.

Put Dedicated Teams In Place

Public companies have also seen the value of having the right people in place:

• Cross-departmental collaboration: Working with other internal teams on data collection creates visibility across an organization, streamlining the process and positioning the accounting team as a stronger partner to their business.
• IT assistance: When opting to leverage a centralized data repository or any other dedicated technology, it is critical to enlist one’s IT department from the outset of the project to ensure a smooth implementation, particularly as it relates to the eventual integration with other systems such as an ERP.
• Dedicated players: Bringing in experienced lease accounting, project management and other expert professionals — whether they’re in-house or outside service providers — can minimize the impact on a company’s other resources.

While every organization’s lease accounting compliance journey is different, many public companies discovered that some of the most daunting tasks with the new leasing standards were only tangentially related to accounting. Rather, the most significant challenges were in the preparation process. Once private companies get their leases in order and dedicate the time and resources required, they are positioned to better achieve compliance and drive a positive impact on their business’s financial reporting and compliance.

This article originally appeared here in Forbes.

In 2020, many companies were forced to make tough decisions regarding their leased commercial spaces. From office closures to consolidations and deferrals, many of these decisions will have long-term impacts beyond the pandemic. To survive and thrive in today’s new norm, these same companies now need to evaluate how these decisions will continue to affect the leasing landscape, and what that means for their future finances and operations.  

Lease Market Considerations for 2021 

Covid-19 had a devastating effect on the real estate market in 2020. As organizations continue to adapt to remote work environments, the trickle-down effects will likely play out over the next few years. Unlike the economic downturn in 2008, the commercial real estate market was in a strong position at the start of 2020 — in fact, it was predicted to grow. However, as tenants struggled to meet their rent obligations, and tenant-landlord tensions and lawsuits ensued, the market quickly took a downward spiral. 

Despite this negative trend, several bright spots signal recovery within commercial real estate. We surveyed several hundred companies across retail, manufacturing, health care, financial services and more to gain critical insight into how the leasing market has changed since the start of the pandemic and to help organizations to make better-informed business decisions for the year ahead.  

Revenue Impact of the Pandemic 

By the end of 2020, nearly three in five respondents to our survey reported a 59% loss of revenue in their business since the start of the Covid-19 outbreak in March 2020. Of those that saw a negative impact on revenue, 80%, fortunately, expect that impact to be short-term. As a result, many organizations are more likely to seek and prioritize opportunities to save money — and leases provide a way for companies to do just that. 

Over the past year, many organizations made changes to space and equipment leases. However, most still need to get creative and find other ways for monetary gain. PPP loans, insurance policies and lawsuits were some ways that businesses across all sectors chose to subsidize their company’s overhead in the short-term, but these options are now carrying over into 2021. 

The Future of Office Space 

To cut additional costs, many have turned to their commercial office leases to identify savings. With the pandemic, there has been a monumental shift in the traditional office space, but most companies are not resolved on what that looks like for their businesses in the future. This year, the industry will need to consider several changes to the office market as they make broader business plans: 

• Remote work: The acceleration of remote work has shifted the office environment, resulting in widespread downsizing and a decreased demand in the market. Despite this change in behavior, there are now new opportunities for organizations looking to retain office space in major cities, such as opting for smaller regional offices or expanding office space to allow for social distancing.
• Coworking: Coworking spaces and other short-term rental options may see a rise in popularity as companies continue to explore ways to stay out of the traditional long-term lease options but still provide a home base to employees.
• Subleasing: In addition to coworking, the sublease market has become larger than it was during the dot-com bubble, providing another flexible lease situation for companies to consider.

Important Lease Clauses In 2021 

Lease clauses offer necessary legal protections for both tenants and landlords. However, the onset of the coronavirus pandemic presented unique challenges, which left attorneys scrambling to identify protections for their clients. Many explored force majeure clauses to save costs, only to find that these clauses do not typically extend to pandemics or other public health crises. 

To date, the biggest impact that Covid-19 has had in the market is that it’s suspended progress on new transactions, and by the end of 2020, global CRE deal volume declined 36% YoY. Tenants have been reluctant to sign new leases and because of this, landlords do not have visibility into the future of their buildings. To add to the lack of certainty, where leases are expiring, others could potentially not be renewed until there is more clarity on their business needs, leading to reduction through attrition in the short-term. As such, new leases should include updated clauses to make new and existing tenants feel comfortable with signing their agreements. Our survey identified the most important lease clauses to consider in today’s environment as flexible termination (34%), specific pandemic force majeure clauses (32%) and shorter lease windows (16%). 

To effectively navigate today’s commercial real estate landscape, it’s important to recognize that some changes brought on by the pandemic — such as remote work environments and reimagined workspaces — are likely here to stay. Companies will need full visibility into lease terms and options for negotiation and payment to better manage their businesses in this new climate. Flexibility ultimately creates a win-win scenario for tenants and landlords alike in 2021 and beyond. 

Lease accounting is a massive, cross-functional effort. It involves various stakeholders and systems that impact (and are impacted by) leases. It is not just an accounting problem – and goes further beyond producing a disclosure report.

The dynamic nature of leases prompts constant adaptation, and organizations need an easy way to manage those changes. The bigger the portfolio, the more complicated it becomes, which is why it is important to determine how you will handle accurate lease information and financials.

There needs to be a reliable way to manage leases throughout the year, given lease changes can result in hundreds, potentially thousands of calculations and permutations. While the market offers a wide selection of solutions, not every tool is one-size fits all. Each lease accounting solution offers its own experience – from implementation to daily usage and beyond.

In this blog, we’ll break down the top differentiating areas and questions you should consider (beyond producing accurate calculations and reports) when evaluating lease accounting software.

Configurability vs. customization

Every business is unique with their own processes and leases that contain specific information. Your lease accounting solution should be flexible to match the way you run your business. Weighing the differences between a custom and configurable solution can save you significant time and money.

• Does the solution require customization for unique business requirements? If so, what are the costs and what is the maintenance associated with customization?
• Does the solution support configurable data fields, groupings and financial categories to match your industry and organization?
• Can the solution generate ad-hoc reports on the fly?

Customer experience

At the end of the day, your lease accounting solution relies on the people using it. Make sure you are properly set up and running with thorough, dedicated customer support from implementation and beyond.

• Does the vendor provide in-house, dedicated implementation support?
• Does the vendor offer ongoing customer support at no additional cost? What are their estimated response time SLAs?
• Does the vendor provide ongoing trainings and helpful tools dedicated to various users?
• Is the vendor committed to continuous product enhancements based on customer needs?

Integrations

Your lease accounting software should be able to handle even the most complex lease administration and accounting scenarios, including data imports and exports to various third-party solutions for a true return on investment.

• Does the software integrate with your existing technology infrastructure, such as your ERP and financial systems?
• Does the software offer flexible options to schedule, monitor, manage and automate data imports and exports between third-party applications?

Ease of use

Lease accounting is complex and requires constant adaptation from a variety of stakeholders. You need an easy way to view, track and manage all updates for full auditability.

• Is the user interface intuitive and easy to use?
• Does the solution support the ability to view changes made by various users?

Security

There is a lot of money – and risk – in most lease portfolios. Make sure you feel confident in your solution’s ability to keep your information safe and generate accurate calculations.

• Are there tools for administering individual and group users for system access, roles and permissions?
• Is the solution and calculations backed by a SOC I Type II audit?

Selecting the right lease accounting solution for your business is critical to your success. Evaluating various tools is a necessary part of the process to ensure you are equipped with what is needed to meet ASC 842, GASB 87 or IFRS 16 compliance.

If you’re in search of an all-encompassing lease accounting management software that ensures you’re achieving and maintaining compliance, Visual Lease is the solution you’ve been looking for. Schedule a demo with our team to see if we’re a match.

A daunting process for many healthcare organizations, lease accounting is a large project that demands cross-functional effort. But with the right preparation, it doesn’t have to be intimidating. 

In this blog, we share an excerpt from a recent presentation featuring two major healthcare organizations, Penn State Health and Montefiore Health System, where they share how they transitioned to ASC 842 and maintained lease accounting compliance throughout the year. 

Featured Speakers:

Joe Fitzgerald, Visual Lease: 

Leases are inherently cross functional. There are many stakeholders involved with leasing, each with their own processes, systems and silos – (such as brokers, procurement, legal operations, accounting, tax, IT, you name it). 

You need to make sure you’re maintaining an accurate audit trail and implementing guardrails so the changes being made by everybody are by the book. 

What are some of Penn State Health’s considerations regarding cross–functional changes that affect accounting? 

James Rogers, Penn State Health: 

A lot of times, we found it’s believed that [lease accounting] is just a finance function. But finance relies heavily on supply chain, real estate and other departments when identifying leases. 

To successfully work cross-functionally, we’ve set in place processes and policies, including ongoing communication between the real estate lease coordinators and finance – built around our Visual Lease solution. 

You really have to take some time determining those policies and procedures because the process flow or the workflow will inevitably change with this new guidance, and you will as a finance department be leaning on this to help you stay compliant. 

Joe Fitzgerald: 

Two words come to mind, they both start with C – cooperation and collaboration. How about at Montefiore? 

Fred Berardinone, Montefiore Health System: 

Exactly, very similar to James. The importance of us leveraging automated lease accounting software was to have a centralized lease management system that we can build workflows according to our policies.  

Similar to James, it’s all really finance’s domain, we would say liaison in this. But once again, this goes back to all the parties involved. 

It’s really building the automation from the front end, from the data abstraction to Visual Lease or whatever software that whoever goes with, and into the general ledger and into accounts payable, and it’s all really getting blessed through least admin and finance.  

So just as James mentioned, it’s really building that workflow, building those policies and procedures, and we still go back and test them, we’ll go back. We had internal audit actually take a look at our policies too, just verify that that’s how the system was working.  

Joe Fitzgerald: 

It sounds like what you both did at the start of the project in terms of working with the other folks has really paid off as you move forward in terms of cooperation and collaboration, that’s great. 

To hear more about how Penn State Health and Montefiore Health System successfully use software to get and maintain audit-ready with lease accounting requirements, check out the full panel session here.

Among the many different calculations used in lease accounting, the incremental borrowing rate may be one of the most misunderstood. The incremental borrowing rate (IBR) is the interest rate a lessee would have to pay to borrow funds to finance an asset similar to the lease’s ROU asset in value, over a similar term and in a similar economic environment. 

And according to FASB ASC 842, lessees are now allowed to use the incremental borrowing rate to determine the discount rate used to measure their leases. 

Let’s take a closer look at when and how to use the incremental borrowing rate in lease accounting. 

When is the incremental borrowing rate used in lease accounting? 

All the latest lease accounting standards, including ASC 842, require lessees to determine a reasonable discount rate for establishing the Net Present Value (NPV) of all their future lease payments. Lessees then use the NPV as the basis for determining the different components of lease schedules, including lease liabilities, ROU assets and amortization. 

However, the accounting board also acknowledges the discount rate is not always easy to determine. In many leases, the rate is not clearly spelled out (explicit) or the information that could be used to determine the (implicit) discount rate may be missing or incomplete. 

For instance, a lease might not specify an interest rate used to calculate the payments or the residual value at the end of the lease might be subject to change. 

Therefore, ASC 842 guidelines allow lessees to use the incremental borrowing rate as an alternative method for determining the discount rate when they don’t have access to all the information (explicit or implicit) used to determine lease payments. 

Why is IBR so important in lease accounting? 

The incremental borrowing rate is used to discount future cash flows to reflect the impact of time on the remaining lease obligation. 

For instance, on a lease with payments of $1,000 a month for five years, the organization’s lease accounting needs to recognize not only current payments but also what will be paid in the future, using the IBR to reflect the timing of individual cash flows. 

Using the IBR as the discount rate has a tremendous impact on an organization’s balance sheet. That is because every piece of data in a lease schedule is generated off the NPV, which is determined by the discount rate — in this case, IBR — and the date and amount of each lease payment. 

How is the incremental borrowing rate determined? 

An organization’s incremental borrowing rate is generally a reflection of its creditworthiness based on two components: 

• The risk-free rate, determined by the current rate on Treasury bills (T-bills) 
• The individual organization’s specific credit rating

The current risk-free rate for different term lengths can be found in trusted sources such as the Treasury Department website or publications such as Bloomberg or the Wall Street Journal.  

Ideally, the IBR should also consider an organization’s current credit rating, including its debt structure and capital. This is especially true with real estate and other high-value leases. 

For instance, a small startup company may pose more of a credit risk and therefore pay a higher IBR on real estate leases compared to a larger and more established company. 

In addition, determining the incremental borrowing rate is often more difficult for a private organization than for a public company. 

How is IBR different for public and private companies? 

Public companies typically know what their IBR is, due to the ongoing financial tracking and reporting required from publicly traded companies. By necessity, these organizations usually know their average cost to capital, borrowing interest rates and other factors that affect their credit. 

Private companies are less likely to know those factors and may not have up-to-date credit information readily available. Instead, they may have to pick a theoretical IBR based on a wide range of issues such as: 

• The interest rate paid the last time they borrowed money 
• How much above the risk-free rate they are likely to pay 
• The type of asset — for example, the interest on financing a vehicle vs. financing a building 
• Whether the asset will depreciate or appreciate 
• The length of time over which payments will be made 
• The organization’s borrowing activity and credit risk 
• Market conditions and borrowing costs 

Therefore, for simplicity, private companies often opt to use the risk-free rate as their IBR — for example, basing the IBR for a five-year lease on the rate at which five-year T-bills are currently trading.  

What is the impact of using the risk-free rate as your IBR? 

Looking up the risk-free rate and using it as an organization’s incremental borrowing rate is certainly easy. However, it will inflate the organization’s liabilities. 

The risk-free rate is always the lowest borrowing rate, minus the inflation expectation. But when factored over time, the lower the interest rate is, the higher the NPV will be. That means the risk-free rate has a larger impact on the balance sheet. 

Therefore, while it is less work to use the risk-free rate, it may not be as advantageous as determining your actual incremental borrowing rate. 

When must the incremental borrowing rate be updated? 

The good news is ASC 842 says once a lease schedule is established, you don’t need to recalculate the discount rate unless you need to remeasure future lease obligations due to changes such as: 

• Renewals or options that add time and payments to a lease 
• Abatements or other modification of existing leases 

For example, if you decide to exercise an option for a new five-year term on an existing lease, you will want to calculate the additional time and payments at a current rate rather than use the rate established at the start of the original lease. 

However, it is important to stay up to date on inflation expectations and market rates, as well as the organization’s current credit standing. That way, if and when lease remeasurements are needed, the organization will be prepared to recalculate its IBR. 

IBR is simpler with lease accounting technology. 

To the extent you can determine the discount rates used to calculate lease payments, you should use those rates in your lease accounting. But when you cannot reasonably determine a discount rate, the incremental borrowing rate is a quick and easy alternative allowed by ASC 842. 

Determining the incremental borrowing rate is a complex issue, and there is no simple formula. However, a lease technology solution like Visual Lease makes it easy to manage and track borrowing rates. 

For instance, the platform’s Borrowing Rate table lets you establish a series of IBRs based on type of asset, organization credit rating, country, currency and the remaining lease term. 

With all the necessary values in one place, you can easily track and modify the data points as needed. In addition, when you create a lease schedule, the Visual Lease platform will automatically select the appropriate rate based on the parameters you set up in the table. 

To learn more, contact us at (888) 876-6500 or request a demo to see Visual Lease in action. 

Table of Contents

• What is a lease term?
• Lease lengths defined under ASC 842
  • Long-term leases under ASC 842
  • Short-term leases under ASC 842
  • Month-to-month leases under ASC 842
• ASC 842 Long-term Lease Accounting
  • Best practices for long-term lease renewals
• ASC 842 Short-term Lease Accounting
  • Short-term lease renewal challenges
• ASC 842 Month-to-Month Lease Accounting

Organizations are increasingly seeking flexible lease options, with short-term leases becoming more popular. Lease accounting standards treat different lease lengths differently. This blog explains the ASC 842 requirements for accounting for long-term, short-term, and month-to-month leases.

What is a lease term?

A lease term refers to the specific duration for which a lease agreement is in effect. It is the period of time during which a tenant has the legal right to occupy and use the leased property, as outlined in the terms and conditions of the lease contract. Lease terms can vary widely depending on the type of property, the landlord’s preferences, and the negotiation between the parties involved. Lease terms are typically stated in months or years, and they establish the start date and the end date of the lease agreement. At the end of the lease term, the parties may choose to renew the lease, negotiate new terms, or vacate the property, as specified in the lease agreement.

Lease lengths defined under ASC 842

For organizations that must comply with ASC 842, long-term, short-term and month-to-month leases are defined as follows.

Long-term leases under ASC 842

Long-term leases are at least one year and one day in duration or longer. Note: Long-term leases are defined the same way across all three major accounting standards (ASC, IFRS and GASB).

Short-term leases under ASC 842

Short-term leases are a duration of one year or less. Note: Under ASC 842, the short-term lease classification is a practical expedient you can choose to apply to an entire asset class. (Read more about the practical expedient for short-term leases below.)

Month-to-month leases under ASC 842

Month-to-month leases are a legal status that varies across different leases and different states. For accounting purposes, the key criteria of these leases are there is no set expiration date and they can be canceled by either party.

ASC 842 Long-term Lease Accounting

Long-term leases have a greater impact on financials, given they remain on the balance sheet for an extended period of time. When making contract renewal decisions for long-term leases, you may find yourself examining their impact on your balance sheet.

Generally, lease renewals involve exercising an option in a current contract or negotiating a new contract. When a contract includes a renewal option, you do not have to exercise it; instead, you can seek to renew the lease with new terms.

For example, you might choose to not exercise an upcoming renewal option on an existing long-term lease with a new five-year term and higher rent than the current market rate. Instead, you could try to negotiate a lower price or a shorter lease term that will limit your commitment to the higher rent.

Lately, more organizations have been negotiating their existing contracts to take advantage of lower market rates and/or shorten their lease term.

Best practices for long-term lease renewals

By starting the lease renewal process early — ideally 9 to 12 months prior to lease expiration — you have enough time to explore alternative leases, see what is happening in the market and know what the best rates are. This puts you in a good position to possibly negotiate a new lease.

This is especially true for real estate leases, which are often long-term. Finding a new location and planning a move takes a lot of time and money. If you wait too long, or too close to the lease expiration, you could end up exercising an option you don’t want or changing to a month-to-month lease because there is too little time to move or to negotiate a new contract.

To avoid this, lease management software like Visual Lease can alert you about upcoming renewal deadlines and other critical dates. This is incredibly useful when planning next steps and making timely decisions.

ASC 842 Short-term Lease Accounting

Under ASC 842, the “short-term” lease designation can be applied to an entire class of leases rather than on a lease-by-lease basis. By electing this practical expedient, short-term leases do not need to be reported on the balance sheet. This and other practical expedients simplify the lease classification process and help organizations more easily adhere to the new lease standard.

That means when you are first classifying and entering your leases into a lease management system, you should decide up front whether all leases of a particular asset class will be designated as short-term leases. For example, you might decide to treat all real estate leases or all equipment leases (or a particular type of equipment, such as copiers) of one year or less as short-term leases.

If you elect to apply the short-term designation, all leases that are one year or less in duration will be handled as short-term leases, with no exceptions. If you choose not to elect the practical expedient, then all leases will be considered long-term regardless of their duration.

Lease management software such as Visual Lease makes it easy to set up fields for different asset classes (such as real estate and equipment) and select which (if any) should be treated as short-term leases. With all your lease information in the system, the Visual Lease platform can then automatically determine which leases meet the short-term lease criteria based on the designated asset classes and contract dates and properly report the expense.

Short-term lease renewal challenges

Just like long-term leases, short-term leases can be renewed by exercising an option or negotiating a new contract. However, exercising an option or extending the length of a short-term lease is tricky because it can affect the “short-term” classification.

As an example: Suppose you have a one-year short-term lease with a renewal option, and you decide 3 months before the end of the current term that you’re going to exercise the option and extend the lease for one more year. With the remaining 3 months of the existing lease term plus the 12 months of the renewal term, you now have extended the contract to 15 months — exceeding the short-term lease criteria of one year (12 months) or less in duration.

In this case, the contract would now be considered a long-term lease, and you would need to identify the lease asset and determine the liability for accounting purposes.

But suppose instead you wait until the very end of a lease term before deciding to renew a short-term lease for another year. In this case, is adding a year to the existing term considered a lease extension, requiring the lease to be reclassified as long term?

Although ASC 842 does not provide explicit guidance for this situation, the feedback from the major auditing firms indicates that the one-year renewal could be treated as a distinct short-term lease. So, theoretically, you could be in a space for multiple years but only commit to one year at a time at the very end of each year, resulting in successive short-term leases.

ASC 842 Month-to-Month Lease Accounting

Sometimes organizations allow existing leases to become month-to-month to delay decisions about long-term commitments. Ideally, an organization would have a minimum number of these leases and manage them strategically — making a conscious decision to go month-to-month for a limited time only.

However, organizations may have month-to-month leases because renewals were not completed on time. Or sometimes the organization does not have a good strategy for replacing month-to-month leases and ends up continuing them “by default” rather than by choice.

Regardless, to maintain accurate lease accounting financial data, you should have an easy way to manage month-to-month leases. With Visual Lease software, you can change the status of a month-to-month lease at any time. Lease management and accounting software lets you easily modify lease information, change the commencement date and add a forecasted expiration date and other data to create a new schedule and calculations for month-to-month tenancy.

Visual Lease also makes it easy to track the dollars associated with a month-to-month lease, including any rent that applies during a holdover as well as straight-line rent expenses. The system can even identify month-to-month leases and show them as short-term lease expenses in disclosure reports.

Use lease lengths to your advantage

By understanding how the different lease terms are defined, you can more simply manage them in a strategic way.

Using a lease management software platform like Visual Lease allows your organization to strategically manage lease terms by:

● Applying consistent treatment to leases according to classification, asset class and any practical expedients that are elected

● Providing tools for creating, tracking, reporting and analyzing lease terms and costs

● Alerting decision makers about critical lease dates and deadlines for exercising lease options and renewals

Learn more about how to account for different lease terms from one of Visual Lease’s in-house experts. Check out our on-demand webinar Managing Short-Term, Long-Term and Month-to-Month Leases (and Everything in Between).

What are rent concessions?

Rent concessions are discounts, incentives, or other benefits provided by landlords to tenants. Landlords sometimes offer rent concessions to entice tenants to sign a new lease — or concessions may come up as part of lease negotiations. For instance, due to the impact COVID-19 had on businesses, many companies asked for concessions from their landlords in 2020 to ease costs related to real estate leases. 

Under the lease accounting standards, any lease concession must be captured and accounted for on the balance sheet. While FASB and IFRS offer some flexibility in how to account for rent concessions, including abatements and deferrals, their unpredictable nature presents an ongoing challenge to lease accounting and compliance.  

In this blog, we identify some common lease concessions and offer some helpful advice for handling them. 

What are some common rent concessions?

Common types of rent concessions include abatements, deferrals, short pays, impairments and early terminations. 

What is rent abatement?

An abatement is a temporary decrease in the rental rate. When this option is elected, a landlord and tenant often negotiate a short-term abatement so that the payment reduction applies for a defined period, such as three or six months. 

Therefore, a rent abatement typically changes the total amount of rent the tenant will pay over the full lease term. 

What is a lease deferral? 

A deferral is a temporary reduction in rent that requires repayment of the balance later. This does not change the total amount of the payments the tenant will make but defers the timing of the payments. 

Landlords may be more willing to work with tenants on a rent deferral than an abatement. However, they may agree to an abatement in exchange for some trade-off of rights and obligations, such as extending the lease term.

What are short payments? 

A short pay is a partial payment. A landlord might agree to accept a short pay until the tenant can repay the remaining amount of the lease payments.  

A short or partial payment results in a liability. In addition, since a short pay is considered a late payment (even if it is paid on time), it may be subject to late fees unless both parties agree otherwise. 

What is a lease impairment? 

An impairment is when the current value of a leased asset (such as real estate, vehicles, or equipment) is lower than the balance due according to the lease. The result is the impairment of the ROU asset, which may require a different amortization calculation for operating leases. 

From the lease holder’s point of view, assets may be impaired if the demand for those assets decreases or if rental rates drop significantly.

What are early terminations? 

An early termination is when a tenant decides to end a lease before its expiration date. But unless a lease includes an early termination clause, companies face serious repercussions when they terminate a commercial lease early. 

For instance, if a company decides to terminate a lease early, it may still have to pay some or all the rent due through the end of the lease term. In addition, the landlord might sue for monetary damages. 

Even if a lease does include an early termination clause, it generally imposes a termination fee and may include some restrictions or other reimbursements to the landlord. 

(Learn more about the costs of early terminations and other lease obligations.)

What are best practices for handling rent concessions?

Treat similar leases the same way. 

Both FASB and IASB allow you to choose to treat all lease concessions as either variable payments or a lease modification. This means you can treat similar leases the same way. (Read the FASB Q&A on lease concessions here.)  

In other words, you do not have to comb through the terms of every contract to determine whether it meets the guidance for a lease modification or a variable payment treatment. This is a practical expedient that saves time and simplifies decision-making.  

There are two important things to keep in mind:  

• You should disclose that you elected to treat similar leases the same way, as well as the treatment you chose to apply to lease concessions — variable payment vs. lease modification. (See more on disclosures below.) 
• If a deferral, abatement or other concession requires you to exercise a renewal option that results in a significant change, you may have to account for the concession as a modification. 

There is some flexibility in lease abatement accounting. 

Both FASB and IASB allow you to treat rent abatements as either existing lease obligations or as negotiated modifications to the lease terms. However, if the lease concession materially increases the landlord’s rights or the tenant’s obligations, it must be treated as a modification.  

• If an abatement is considered a variable lease payment, no remeasurement is required and the abatement flows through to any disclosure reporting.  
• If an abatement is considered a negotiated modification, a remeasurement should be run when the abatement term is agreed on and continue through the rest of the lease term. 

For example, a large manufacturing company that reports under IFRS 16 handled a three-month rent abatement by reducing its short-term and long-term liabilities for those months while still showing activity from a balancing perspective. From a P&L perspective, the company showed the benefit of no rent expense for those three months.

Accounting for Rent abatement under ASC 840 and ASC 842

ASC 840

Under ASC 840, lease abatement is treated as a reduction in the cost of the lease over the lease term. The following are some examples of how lease abatement is accounted for under ASC 840:

If a company receives a rent abatement for the first 6 months of a 10-year lease, the rent abatement is treated as a reduction in the cost of the lease. The cost of the lease is reduced by $300,000 (6 months * $50,000 per month). The rent expense is reduced by $50,000 per month over the remaining 9 years of the lease.

ASC 842

Under ASC 842, lease abatement is treated as a lease modification. Lease modifications are changes to the terms of a lease that are made after the lease has been entered into. Lease modifications can be either beneficial or onerous to the lessee.

If a lease abatement is beneficial to the lessee, it is recognized as a reduction in the lease liability over the lease term. If a lease abatement is onerous to the lessee, it is recognized as a lease liability over the lease term.

For example: 

If a company receives a rent abatement for the first 6 months of a 10-year lease, the rent abatement is treated as a beneficial lease modification. The lease liability is reduced by $300,000 (6 months * $50,000 per month). The rent expense is reduced by $50,000 per month over the remaining 9 years of the lease.

Financial statement impact of rent abatement and rent-free periods under ASC 840

The financial statement impact of lease abatement under ASC 840 can vary depending on the specific terms of the lease and the amount of the lease abatement. However, in general, lease abatement can have the following financial statement impacts:

• Reduced cost of goods sold: If the lease abatement is treated as a reduction in the cost of the lease, it will reduce the cost of goods sold on the income statement. This can improve the company’s gross profit margin and net income.
• Reduced rent expense: If the lease abatement is treated as a reduction in rent expense, it will reduce the rent expense on the income statement. This can also improve the company’s gross profit margin and net income.
• Increased right-of-use asset: If the lease abatement is treated as a lease modification, it will increase the right-of-use asset on the balance sheet. This can have a negative impact on the company’s debt-to-equity ratio and financial leverage.
• Reduced lease liability: If the lease abatement is treated as a beneficial lease modification, it will reduce the lease liability on the balance sheet. This can have a positive impact on the company’s debt-to-equity ratio and financial leverage.

Financial statement impact of lease abatement under ASC 842

The financial statement impact of lease abatement under ASC 842 can vary depending on the specific terms of the lease and the amount of the lease abatement. However, in general, lease abatement can have the following financial statement impacts:

• Reduced rent expense: If the lease abatement is treated as a reduction in rent expense, it will reduce the rent expense on the income statement. This can improve the company’s gross profit margin and net income.
• Increased right-of-use asset: If the lease abatement is treated as a lease modification, it will increase the right-of-use asset on the balance sheet. This can have a negative impact on the company’s debt-to-equity ratio and financial leverage.
• Reduced lease liability: If the lease abatement is treated as a beneficial lease modification, it will reduce the lease liability on the balance sheet. This can have a positive impact on the company’s debt-to-equity ratio and financial leverage.

Think ahead when planning for deferred lease payments. 

With a lease deferral, your organization needs to consider a number of variables and make decisions based on how it will impact your company’s P&L statement.  

• If you choose to report a deferral as a variable expense, you will book the benefit of the lease concession today and the expense of the repayment at a future point in time.  
• If you choose to treat the deferral as a lease modification, the immediate impact will be less, but the expense will be spread out and extend into future periods. 

For some companies, it might make sense to push the expense of deferred rent off to next year rather than inflate payments for FY2020. For instance, suppose a company that received a 3-month rent deferral in 2020 wants to defer payment as far into 2021 as possible. If the company treated the deferral as a variable payment, it would have to recognize the rent expense in 2020 even if the payments are made in 2021. 

Be sure to provide disclosures. 

As with much of lease accounting under the new standards, there are a lot of decisions to make. Providing lease accounting disclosures will help auditors and understand your financial statements, including:  

•  Any abatements, deferrals or other lease concessions received 
• Whether all leases (or similar leases) are treated the same way 
• Which practical expedients were chosen 

By providing disclosures, you can clarify decisions you’ve made and demonstrate that you have treated lease concessions consistently. 

Look ahead for ongoing compliance 

During a Visual Lease webinar, a quick survey of the attendees showed roughly half received some sort of rent concession. These and any other companies that receive lease concessions must account for and disclose those concessions if they are going to maintain FASB and IFRS compliance.  

As you plan for lease accounting, keep these key takeaways in mind: 

• You can take advantage of a practical expedient that allows you to treat similar lease concessions the same way. 
• Look ahead to plan whether you should book expenses now or later, and choose a lease concession treatment accordingly (variable payment vs. lease modification). 
• Provide disclosures to clarify your accounting decisions and demonstrate that you’ve applied lease treatment options consistently. 

There are several reasons for this:

Leases are complex, constantly evolving agreements with high-stakes terms often buried in the contracts. Managing leases can be difficult due to data silos and distributed responsibilities across operations, real estate and accounting teams. This means there’s a lot of room for crossed wires, missed deadlines and costly mistakes.

Lease accounting compliance brought the pressing need for lease portfolio management to light. When FASB announced ASC 842, several solutions flooded the market to solve this problem. However, not all of them could.

Technology that attempts to do it all (lease administration, business intelligence, accounts payable, etc.) generally does not. Often, efficiencies promised within all-in-one solutions are lost to mediocre functionality and execution. This is especially true in a software category as new as lease accounting.

The stakes are too high to take chances. Companies require specialized lease administration and accounting tools, and they need those tools to seamlessly integrate into their processes and technology stacks at each stage of the lease lifecycle.

How to Optimize the Lease Lifecycle

From sourcing to contract negotiation to termination, there’s a lot that goes into the lifecycle of the lease – and each stage is dependent on the last.

• Procurement decisions are better when you have informed analytics on asset utility.
• Lease accounting reports are better when you have all your lease management information centralized and accessible.
• It’s easier to manage your leases when you can easily reference important clauses and deadlines embedded in contracts.

There are countless software and service providers dedicated to streamlining every stage of a lease. But they can only maintain accuracy if data flows between them securely, automatically and asynchronously.

With the right solution for each facet of your business and a secure, flexible tech stack, companies can leverage their leased properties and equipment as strategic financial assets vs. overhead expenses.

Integrations are the key to connect those solutions, drive efficiency and unlock insights and financial opportunity.

Introducing the Integrations Hub, a powerful new way to automate workflows, unlock insights and achieve end-to-end compliance across your lease portfolio and your business.

The Integrations Hub offers flexible, open platform access to any third-party application. Users can simply schedule, monitor, manage and automate data imports and exports to and from Visual Lease at any time. (Think of it as a lease lifecycle electrical socket, allowing you to supercharge your tech stack with a simple plug-in.)

Given the complexity and often customized configurations in accounting technology, a one-size-fits-all API isn’t enough. We believe there is no such thing as a silver bullet integration – whether it’s built by us or anyone else.

With the Integrations Hub you’ve got more options to leverage your lease data, including:

• Low-maintenance Managed File Transfers for schedule automated data imports and exports
• An accessible Developer Portal with a comprehensive REST API Library enabling customized, real-time data connectors. With just a few lines of code, a developer can access accurate data along with powerful and complex processes in a repeatable way.
• Track every transfer in real-time with the integrations hub Dashboard to cat ensure data integrity and auditability.

It’s all backed by the industry’s most informed and experienced professional services team.

Imagine the possibilities:

• Align every line in your general ledger by connecting journal entries from Visual Lease or tracking payment information in accounts payable.
• Convert currencies across continents by plugging in currency rate tables to Visual Lease for always-accurate calculations, no matter the location.
• Inform Business Intelligence by surfacing the right data at the right time in the system and format where it’s most helpful.

The technology team at Newmark was instrumental in helping us build and test this new technology, and they’re already using the Integrations Hub to leverage lease data across their tech stack.

Newmark is a Visual Lease customer and a leading commercial real estate firm that provides a fully integrated platform of services to prominent multinational corporations and institutional investors across the globe.

The technology team at Newmark was instrumental in helping us build and test this new technology, and they’re already using the Integrations Hub to connect lease data to their Business Intelligence tool, NavigatorCRE.

According to Carla Hinson, Newmark’s Executive Managing Director, Global Technology, this opens up possibilities.

At our live launch event, Hinson sat down with Bobby Paulus, Visual Lease’s Director of Strategic Alliances, to talk through her experience getting Newmark’s integrations set up, the value they’re are already experiencing and what’s next on their roadmap. To listen to the full conversation, watch the event recording.

If you’re ready to supercharge your tech stack– and integrate your lease data across systems, we’re excited to help you get you plugged in. Check out this page on our website for more information.

How to Abstract, Manage and Report on Lease Data 

When FASB issued its update to the lease accounting standard, the main goal was to increase the transparency and comparability of financial reporting.  

Unfortunately, there are many complex decisions and actions required to successfully achieve compliance. You’ll want to make sure to provide yourself with enough time and resources to get it done right. 

Fortunately, you’re not alone – and hundreds of public and private companies have already gone through this process. With proper insight into common potential obstacles, you can more clearly navigate through the process and achieve success. 

While there is certainly no shortage of difficult tasks to achieve compliance, we’ve narrowed down the top 4 common lease accounting challenges experienced by public companies – and how to solve them.  

Challenge 1: Centralizing all leases in one place   

A crucial first step in the transition to ASC 842 is to identify all leases held by an organization and enter the pertinent information in one location. 

To do so, you will need to start by gathering each lease within your organization, including any leases that may be part of a contract, such as an embedded lease. This effort requires careful analysis and judgment – and typically involves extensive coordination across departments and business units to ensure all leases are included.  

Often a time-consuming and cumbersome exercise, it is crucial to provide your organization with ample time to complete this step. (For help with your project timeline, request a customized milestone planner to outline when to begin).  

Once all the leases within your company have been identified, you’ll need to import important lease information into a centralized location to help you view all your leases in one place and access lease information at any time. 

This step often contains a high volume of labor-intensive work. Extracting lease data (also known as abstracting) from complicated contracts is a complex task that will need to be done for every lease – and any time your company signs new leases and modifies existing lease contracts.  

Depending on the size of your company and resources available, you may need to assess whether it is better to perform this this task in-house or with external professional abstracting resources.

Challenge 2: Identifying technology that does more than calculate  

Your chosen lease accounting technology is just as critical to the lease accounting standard transition and will greatly impact your ongoing ASC 842 compliance.  

While some solutions may sound similar on paper, only a select few are able to provide you with the proper tools to ensure your company’s lease information is accurate at the get-go, and remains up-to-date over time with minimal effort. 

If you are in the market for a system, don’t settle for any solution that promises to produce accounting calculations. You’ll need to make sure it also makes it easy to facilitate ongoing, long-term compliance by properly tracking lease updates. 

From the start, look for a tool that can deliver the following: 

• System Integration Capabilities: Lease accounting data should be able to easily integrate into necessary third-party applications to further automate of journal entries, financial disclosures and accounts payable information. Previously, many companies did not pay attention to integrating their leases within their accounts payable system, but with the advent of the new standard, your business may benefit from re-examining its payment processes through a solution that facilitates integration between accounts payable and the lease information. 

• Lease Management Features: Ensure up-to-date lease information with a tool that makes it easy to track and manage leases on an ongoing basis. With lease information that is searchable and available at a glance, your business can stay on top of payments, renewals and options, as well as compliance requirements. 

• Modern Software Updates: Don’t get stuck using a system that doesn’t prioritize developing new features and capabilities. To keep up with the most current trends in lease accounting, you’ll want to make sure your chosen system is dedicated to helping you achieve your goals and saving you time by releasing new innovative features and functionality. 

Save yourself the trouble and inefficiencies of a tool that under–promises its ability to deliver what you need – and more importantly, consider the long-term impact of lease accounting software to avoid having to start all over again after you’ve already done the hard work of preparing for the lease accounting deadline. 

Challenge 3: Making critical decisions that impact business financials 

In the early stages of transitioning to ASC 842, there are a number of essential, albeit challenging decisions that companies are responsible for, which impact overall lease accounting and reports. 

• Applying the ASC 842 Guidance: When transitioning to the new standard, companies can elect one of two approaches to apply the guidance: 

• • Most commonly, you can retrospectively apply the guidance at the beginning of the period of adoption through a cumulative-effect adjustment, known as the modified retrospective approach. In this approach, you no longer are responsible for capturing leases you no longer hold. However, this option presents its own challenges, requiring all lease data to be current and up to date. 

• • Uncommonly, you can retrospectively apply the guidance to each prior reporting period presented in your financial statements along with the cumulative effect of the initial application, to the earliest period presented. In this approach, you are restating prior periods as the standard had applied to them, which presents an enormous challenge to recalculate and apply the current standard to leases you no longer hold. 

• Determining Discount Rates: Companies need to exercise judgment when determining their discount rates. The elected discount rate can have a substantial impact on your balance sheet. 

• • For lessees, if the discount rate is clearly stated within a lease – called an explicit rate – the lessee is required to use that. However, it is rare for a lease to include this – and nearly impossible to calculate without it. To do so, the lessor would need the lessor’s financial information to determine this discount rate. 

• • If that rate cannot be easily determined, companies can use the incremental borrowing rate (IBR). The IBR is the rate you would have to pay or borrow on a collateralized basis over a similar term. While this is a more common option to select, it also presents its own challenges. IBRs are often easier for big companies, but more difficult for private companies. However, it’s common for private companies to pick a risk–free rate.  

• Payments and Allocations: When calculating lease liability, companies must decide whether to consider renewal periods and termination periods, which ultimately impact the length of liability (and financial obligation) in financial reports.  

• • You may also choose to allocate lease payments between lease components and non-lease components, depending on what practical expedients (see below) your company has elected.  

• Policy Elections: When choosing policy elections, it’s important to consider the current policies and types of lease contracts.  

• • Selecting policy elections help to determine the broader impact, rather than just the immediate impact on your financials.  

• Disclosure Requirements: While the new standard includes quantitative and qualitative disclosure requirements, companies are responsible for more than the minimum reports documented in the guidelines. 

• • Company management needs to consider the disclosure requirements within existing lease contracts and plan how to gather the relevant disclosure information. Organizations must be able to explain the changes made within their balance sheet period–over–period – and may do so through a roll-forward report. 

• Practical Expedients: FASB allows certain practical expedients to facilitate transition accounting and general lease accounting.  

• • You should select the practical expedients carefully after considering your current accounting policies and the broader impact of these practical expedients.  
  • You may need to choose some of these elections as a package, as described in ASC 842 Practical Expedients and Transition Requirements.  

Challenge 4: Meeting ongoing auditing, risk management and tax accounting needs 

Early coordination with auditing, risk management and tax functions of your company is another important element of planning that commonly presents challenges for companies while adopting ASC 842. 

• Auditing – This standard is brand new – and there’s flexibility in the guidelines, which leaves some areas open to interpretation. Meet with your auditors early in the adoption process to help substantiate your decisions – which will only save you time when it comes for the time of the audit. This helps ensure that any questions about system controls are addressed prior to transition to ASC 842, including: 
• • The overall control environment surrounding leases 
  • Automated versus manual controls 
  • System implementation requirements 
• Risk Management – There are now higher stakes to having an accurate balance sheet with up-to-date lease information. Therefore, effective risk management includes a high level of interaction between lease accounting and administration to keep accurate lease financials and ensure payments are made on time. To do this properly, a selected lease accounting system should include the ability to identify and maintain leases. 

• Tax Accounting – While tax accounting is often separate and distinct from financial accounting, recognition of deferred taxes may be a component of lease accounting. So, confer with your tax expert to make sure the general ledger and the lease accounting system properly consider deferred taxes. 

Although there are various decisions ahead that require careful consideration for the lease accounting deadline, there are many resources available to help. Hundreds of public and private companies have already navigated the various requirements – and achieved success, which you can learn from.  

By arming yourself with as much information as you can ahead of time, you too can be prepared to reach lease accounting compliance. Furthermore, a lease accounting system can provide you with an automated, easy transition to the new guidance – and result in significant savings for your business that you may have previously overlooked to help control, reduce or negotiate lease costs. 

Hundreds of private organizations have begun their journey towards lease accounting compliance. Although, many of them underestimate the amount of effort involved with preparation. In particular, assembling a team of internal resources – and identifying their responsibilities – is one of the most important steps to a successful implementation.

In this blog, we explore 3 critical ways your lease accounting and management team can help you achieve success – and why you should get started now.

1) Lease inventory demands cross-departmental effort.

Identifying all leases held by an organization is a complex and time-consuming task that the accounting team cannot do alone.

To gather a full scope of all leases, accounting must engage with different areas of the business, including real estate and finance. You may also find it necessary to also include representatives from lease administration, C-level management, legal, procurement and IT.

Real estate or facilities teams are an efficient way to identify a company’s property leases. If a business has multiple locations, this may involve tracking down records from many different sites.

Additionally, departments such as procurement, IT and legal are essential to search through records for equipment leases and other contracts classified as leases under the new standards. For example, procurement might use a spreadsheet or other tool to track assets such as office machines, IT equipment or vehicle fleets.

By involving the necessary personnel early in the lease identification process, companies can feel confident that their lease inventory is thorough and accurate.

Learn more: How to Assemble Your Readiness Team

2) Lease information affects a variety of business decisions.

A company’s chosen lease accounting technology affects more than just the accounting team. Centralizing lease information into one system can transform efficiencies and financial savings beyond lease accounting compliance.

Therefore, when evaluating a lease accounting system, you will want to have a clear understanding of who will need to access lease information. The chosen solution should make it easy for them to make updates, run reports and export any data they may need. Thus, it may be necessary to include those representatives during the evaluation of the solution.

For instance, any employees responsible for ongoing tracking and management of leased assets — including making changes and adding any new leases — should be identified to verify the system is intuitive and easy to use, and therefore will help them keep lease data accurate and up to date.

You may want to also include various departments, including IT, to evaluate how lease technology can support your organization beyond just accounting compliance, including accounts payable, accounts receivable and other data-driven decisions. IT is integral to this process, to ensure the solution can properly meet your requirements for integration with various third-party systems.

Furthermore, involving executives, real estate/facilities staff, and others in the preparation process can make sure the chosen solution meets their needs beyond accounting and compliance requirements.

3) Teamwork is essential to lease accounting compliance.

It clearly takes more than the accounting team to transition to the new lease accounting standards and achieve compliance.

By identifying the roles and responsibilities of internal stakeholders early in the process, the compliance team can create a plan of action that ensures accountability throughout lease accounting implementation.

A team approach improves the efficiency, thoroughness and accuracy of data abstraction, which ultimately helps to ensure the company will meet compliance requirements on time and on budget.

Together, the transition team can make informed decisions that will make long-term impacts on the company’s lease investments.

Long-term benefits for lease accounting and for the business

Once a company successfully transitions to the new lease accounting standards, the identified team can continue to use lease technology to share information and make decisions that impact both financial reporting and business performance — empowering the company to both maintain ongoing compliance and maximize the return on leased asset investments.

To create a plan for assembling your stakeholder team and other steps of lease accounting  implementation and compliance, use the Lease Accounting Milestone Planner.

The start of the new year means planning for what you need to accomplish in 2020. For accounting teams in private companies, there’s a big task on your plate this year: getting ready to comply with the new lease accounting standard, ASC 842.

Last July, private companies got a reprieve when the Federal Accounting Standards Board (FASB) made the decision to extend the deadline for compliance to January 2021. Chances are, that was welcome news since you were likely immersed in preparing for adopting the revenue recognition standard. Now that’s done, and you have less than 12 months to prepare for becoming compliant with ASC 842.

How are you going to utilize the upcoming year to become ready in time? Based on helping hundreds of public and private organizations through this process, you are going to need every bit of the months ahead. This process has repeatedly shown to take longer than companies expect, and the impact is much greater than originally anticipated.

That’s why we’ve put together a lease accounting guide for 2020. With these 5 steps, you can better plan your compliance project, establish a timeline for the year, and effectively accomplish your goals across the upcoming months as the deadline approaches.

This lease accounting guide is organized into 5 steps that encompass the major tasks and milestones required for ASC 842 compliance.

1. Schedule the months ahead.

With a complex project involving many stakeholders, it’s easy to get confused about what needs to be done – and when. Building a plan and a roadmap will guide you toward your goals.

In the early months of 2020, start by developing a plan that documents exactly what you need to accomplish, the resources you will need, and the timelines for meeting each milestone. It’s smart to set a deadline ahead of your final deadline, in case of unexpected delays or setbacks.

Part of developing that plan is making accounting decisions that will impact the scope of your effort. For example, what practical expedients do you plan to take? You’ll need to think through the pros and cons of saving time vs. the potential negative financial impact of electing certain expedients.
It’s critical to make these decisions early on, since your choices will impact the lease data points that your team will need to collect for every lease in your portfolio.

2. Determine who will be involved in the project.

This step does not need to take place subsequent of other steps. In fact, you may already have an idea of who to involve in your lease accounting project. If not, preparing for the lease accounting changes must involve additional stakeholders within your organization (along with your accounting team).

Any departments that may be responsible for leases within your lease portfolio, such as facilities, procurement, IT, and legal can help with gathering lease information. There will be users of any new technology you implement for tracking and reporting on lease data. And there will be whoever is responsible for changing their ongoing practices related to lease management in order to maintain compliance with the new lease accounting standard.

Many organizations will also benefit from involving an accounting advisory partner early in their compliance project, to help evaluate the potential impact to financial statements and make accounting decisions accordingly.

It’s smart to get your stakeholders involved from the outset, identify their roles and responsibilities with the project, and begin to work together on creating and implementing the remaining steps in your compliance project.

Learn more: FASB Lease Accounting Changes: How to Assemble Your Readiness Team

3. Conduct a lease inventory and compile data points.

The most time-consuming part of the process, you will want to get started on this as early as you can in 2020. Once you know what lease data you’ll need for lease accounting calculations, make an inventory of all your leases and extract the relevant data for each one.

You will need the help from the various teams who work with your organization’s leases. They can help find any lease documents that may be more difficult to find – whether they are tucked away in drawers, or existing in various spreadsheets and databases.

To do this step, you can also take advantage of lease abstraction services, which provides you with the added benefit of working with people who understand lease contracts.

No matter who is doing the work, having a streamlined process will make sure everyone knows what to do with the lease data as they collect it.

As you compile data from a variety of sources, you’ll need to reconcile lists, look for duplicates and investigate discrepancies. It will save a lot of time later if you make sure you’re working with data that’s complete and accurate BEFORE you begin the implementation of your lease accounting software.

IMPORTANT: According to the new standards, it’s not only the typical property and equipment leases that must be brought into the balance sheet. You must also examine all your contracts for embedded leases, or portions of contracts that meet the definition of a lease and must be reported on.

Learn more:
5 Tips for Smooth Lease Data Collection in Preparation for ASC 842
Embedded Leases Accounting: Do Your Contracts Contain Leases?

4. Implement lease accounting software.

Lease accounting software is a necessary part of successfully achieving compliance with ASC 842. The effort and the risks of managing all your lease data without it are simply too great.

The process and amount of time advised by lease accounting software providers for implementation may vary, but you will want to ensure you leave enough time for your organization to work with the provider you select, so your information is accurate and organized in a way that works for you.

This year, you should plan to begin implementation as soon as possible. It’s never too early to begin – and you will be very wise to not push this off until the very last minute, which could expose you to risking achieving compliance by the deadline.

A Deloitte poll from June 2019 found that only a quarter of public companies report that their lease accounting implementation projects are complete. Since the deadline for public companies passed in January of 2019, that indicates a lot of failures.

This is particularly concerning. At Visual Lease, we have not one failed implementation. Our dedicated team is committed to the success of your organization.

Working with a trusted implementation partner is a large part of achieving success and can make all the difference in meeting your deadline. However, you also need to be sure you are giving you and your partner enough time to work through the implementation.

5. Adjust policies and procedures.

Lease accounting compliance is not a one-and-done exercise, but a new way of working with leases that will impact your business for the long-term. Adopting ASC 842 is a big change to not only accounting. There will be a ripple effect that will require changes to many internal policies and operating procedures related to leased assets. For example:

• Leases can change during the course of a lease term. Variable payment amounts increase or decrease. Leases get renewed. Additional space is added to a lease contract. Specific underlying assets (such as computers or vehicles) may be removed from an umbrella contract. When these changes occur, the staff members involved with the change must alert the accounting team, because they will now impact your financial statements.
• Prior to ASC 842, few organizations had standards and controls around lease management and leasing decisions. Now leases have a much bigger impact on finances. So it’s important to put standards in place to ensure the best financial outcome for the company.

While you’re working toward gathering data and preparing to report under the new standards, take steps to create new practices and controls and train everyone involved, ideally before you go live with your new system.

Learn more: How and Why to Improve Lease Management Practices

The bottom line: don’t delay these crucial steps before the 2021 deadline. Everyday you delay starting your ASC 842 compliance effort, you’re increasing the chance that you won’t be ready in time to meet the deadline for reporting under the new standard.
There is only so much time you have this year. By following the steps above, you can be on your way to being prepared for implementation.

Need help? We’ve been through this process hundreds of times. We’re happy to talk through your questions.

When companies think about purchasing lease accounting and lease administration software, many make the mistake of considering these tools as a cost of doing business. The mistake is understandable, because the decision to invest in these tools is often driven by the need to get compliant with the new lease accounting standards. Organizations are focused on this goal without understanding what else they stand to gain, and the potential for a significant return on investment. 

If you’re not actively looking for that ROI, you might miss the chance to recoup your investment, plus a lot more. By taking full advantage of the full capabilities of lease management software, you can save much more money than you spend. 

Here’s how.

PROBLEM: Paying more than you owe for leases

If you’re not tracking all the details of your carefully-negotiated leases, you’re almost certainly paying for things you shouldn’t. By properly managing leases and auditing lease payments, companies have uncovered millions of dollars in hidden waste and overpayments, such as:

• Making extra payments. Many property leases will include a free month’s rent at some point during the lease. Even though it’s clearly stated in the contract, chances are the landlord will bill you anyway. If you’re not checking payments against contract terms, you are paying more than you owe. 
• Continuing to pay for expired leases. Even worse, we see companies continuing to make automatic payments on leases that expired or were canceled. That happens when you’re not checking the lease end date before making the payment.
• Paying for things that are the lessor’s responsibility. Maintenance and repairs are often needed on leased assets. For real estate, you’ll need HVAC, plumbing, and electrical work. For vehicles, you’ll need oil changes, tires, and repair work. Computer equipment and copiers need maintenance and software updates. If you automatically pay for these services without checking the contracts, you might be paying for things that the lessor is responsible for.
• Paying an inflated share of CAM expenses.  In a leased building, shared operational charges (also known as common area maintenance or CAM expenses) get divided among the tenants of the building. For example, you pay a CAM charge covering utilities, landscaping, and cleaning based on the percentage of usable space you occupy in the building. But what happens when that percentage changes? You might think to reevaluate your CAM expense if you give up some space, but what if the landlord added a new wing or otherwise added more usable space to the building? That reduces your percentage of space and should change your CAM charges. 
• Paying for things you didn’t get. In the process of negotiating lease terms, especially for property leases, it’s common for a landlord or agent to throw in the initial cleaning, new carpet or a paint job. However, these “freebies” often don’t end up being free, because you get charged after the fact. If you’re not tracking what you are obligated to pay, no one questions the bill and you pay for something you shouldn’t.   
• Paying inflated rent increases. Real estate leases often include yearly rent increases. These escalations might be based on a percentage, a percentage of sales, or complicated formulas based on market factors. If you’re not checking rent increases to make sure the amount agrees with the lease contract and is calculated correctly, you could be paying too much for many leases in your portfolio. Even worse, the wasted expense gets compounded every year with new rent increases.

The point is, if you are not tracking all the terms of your lease contracts and regularly validating payments against those terms, you’re definitely paying more than you owe.

SOLUTION: CAM audits catch lease payment mistakes

If you’re guilty of overlooking many of these lease payment mistakes, you’re not alone. Before ASC 842 came along, few organizations were tracking the details of lease contracts and the accuracy of payments. However, now that leased assets are on the balance sheet, and making a much bigger impact on financial reporting, that’s changing quickly. Those mistakes are coming to light and getting noticed by financial leadership as well as auditors. 

Don’t wait for your CFO to question your leasing expenses and uncover payment errors. Your lease accounting and lease administration software can help you uncover lease payment errors by flagging payments that don’t match your contracts with CAM audits. Armed with that information, you can correct the situation with your lessors and recover overpayments. Plus, moving forward you can proactively validate every payment so you never pay too much again.

PROBLEM: Missing lease renewal deadlines

Many lease contracts include renewal options that allow you to renew at a favorable rate as long as you notify the lessor by a specified date. If you miss that date and fail to notify the lessor of your intention to renew, you lose the chance to get that locked-in rate. At that point, you’re forced to pay market rate to renew the lease. If you have made that mistake before, you know that one instance can cost you millions.

SOLUTION: Critical date alerts prevent costly errors

Your lease software can track all the deadlines and notification dates for exercising options (not just renewals, but options to cancel or purchase). You can set up customizable alerts to let key staff members know when deadlines are approaching so they can take action in time. 

This brings up an important point: you need to track ALL the details of your lease contracts to get these cost-cutting benefits. If you’re only tracking the minimum data needed for accounting calculations, you’re missing out on the true value of lease management software. 

PROBLEM: Poor lease vs. buy decisions

Speaking of purchase options, basing a lease vs. buy decision on incomplete and inaccurate payment data can lead to poor choices. You could decide to purchase assets that would cost less to lease, and vice versa. 

SOLUTION: Lease data analytics deliver reliable intelligence

When you’re deciding if it makes sense to exercise a purchase clause within a lease, you need accurate data about the costs associated with the lease. When ALL your lease data is centralized within a lease accounting and administration platform, you can create reports that show every payment and every cost associated with that lease. Armed with that reliable data, you can compare the cost of continuing to lease with the cost of exercising the purchase option.

PROBLEM: Scattered lease data

When lease data lives in multiple, unconnected systems throughout your organization, there’s no easy way for everyone to access complete, up-to-date information about your leases. Without that complete picture of all your lease-related expenses, it’s easy to make poor financial decisions.

SOLUTION: An integrated, single source of truth

With leases now having a much bigger impact on your company’s financial picture, your financial leaders need visibility into lease data. The various teams that work with leases, such as Real Estate, IT, and Legal, also need access to all the details associated with leases. A complete lease platform provides a single source of truth that integrates with your other enterprise systems, including your ERP, facilities and asset management systems, contract management tools, and analytics platforms.

Your lease platforms provides more value when it can help to drive better decisions related to leases across your organization.

For private companies faced with adopting ASC 842 and/ or IFRS 16 this year, there are many complex lease accounting decisions to make. These decisions impact not only your compliance project, but ultimately your balance sheet, financial reporting, and ability to pass audits.

How will you make those decisions, especially if you’re not an expert on the new standards?

Many companies will benefit from advisory expertise to guide them. Here’s why.

Private Companies Are Underestimating the Complexity of Lease Accounting

For private companies who do not have massive global lease portfolios, adopting the new lease accounting standard (FASB ASC 842) might appear to be a simple exercise. We are seeing many who assume they can purchase software, load in some data, click a button, and achieve compliance.

The reality is, even with a smaller lease portfolio, adopting the new standard is complicated. Simply adopting software and putting data into it does not make you compliant.

For one thing, software can only perform calculations and create journal entries from the data you put in. If you’re missing data, or your payment entries are not properly broken out, what you get out of the system will be incomplete and inaccurate.

Getting compliant with the new standard requires making accounting decisions that have big implications for your financial reporting. Those decisions impact what data you will put into your lease accounting system, and in what format. We’re talking about decisions about practical expedients, discount rates, and other factors that impact your calculations and reporting.

If you’re not an expert on the new standard, it may be tempting to rely on advice from your software vendor to help you make those decisions. Keep reading to learn why that’s a mistake.

Why Trust Accounting Advisers for Advice About Accounting Decisions?

When it comes to adopting the new lease standards, there are gray areas that may force you to make decisions about how you want to handle your lease accounting. When it’s time for an audit, you’ll need to justify your decisions. That’s why you need to carefully consider who you rely on to help you make them.

Here’s an example. We worked with a large public energy firm that has many thousands of leased port-a-johns in its portfolio. According to ASC 842, any lease longer than 12 months needs to be included on the balance sheet, and therefore in lease accounting calculations. Even though these leases were longer than 12 months, they comprised less than 1% of the firm’s total lease disclosure dollar amount.

The head of financial reporting decided that these leases were not significant enough to include in lease accounting calculations. He felt that making the effort to collect all the data and perform complex calculations didn’t make sense, given that the result would make little impact on the financial statements.

When this company faces an audit, they will need to defend that position to an auditor. If you’re in that position, how will you do it? Here’s what won’t fly: telling an auditor your lease accounting vendor said it was okay. It’s very likely the auditor will be concerned about a conflict of interest with advice from a software vendor, even if they are experts.

If you have carefully studied the standards, you may be comfortable relying on your own expertise. Otherwise, citing advice from recognized experts from major accounting firms is the safest way to make sure your decisions are sound (and justifiable to an auditor).

7 More Reasons to Get an Accounting Advisory

If you’re on the fence about whether it’s worth getting help from an accounting advisory partner, consider that they can help you with much more than decisions about what to include in your calculations. Here are just a few areas where an advisory partner can ease the burden of getting ready to adopt the new lease accounting standard.

Technical accounting. Advisory partners can steer you through the process of making the important up-front accounting decisions about practical expedients, discount rates, and other gray areas.

Tax implications. Your lease accounting decisions can have significant tax implications. Advisers can help you work through that and be prepared.

Centralizing lease data. An adviser can help with the complex and time consuming process of gathering distributed data into a central location for importing into your lease accounting system.

Data validation & analysis. You’ll need to understand exactly what data points to collect for each lease, and validate the completeness and accuracy of your data. An advisor can expedite your data collection efforts and help you avoid mistakes.

Vendor selection. An adviser can help you define software requirements based on your specific needs and priorities, and recommend appropriate tools.

Policies and process control. Getting compliant is only the beginning of adopting the lease accounting standards! Going forward, you’ll need new policies and procedures for approving lease financials and getting the data into your accounting systems. Advisers can help you design new controls.

Change management. Once everything is ready, companies will need to manage the change process with communication and training. Advisors can help put that into place.

We Are Committed to Your Success

Like many lease accounting software providers, Visual Lease has technical accountants and CPAs on staff. However, we’ve made it a policy not to make accounting decisions for our customers. Not because we can’t give good advice, but because advice from a software vendor will not satisfy an auditor. It’s just too risky for our customers.

We want you to be successful in adopting the new lease standard, with complete and accurate reports that don’t draw flags from an auditor. That’s why we highly recommend doing your due diligence and getting credible and reliable advice from advisory experts.

Learn more from these related articles:

FASB Lease Accounting Changes: How to Assemble Your Readiness Team

Lease Accounting Implementation for Private Companies: 5 Pitfalls to Avoid

If you’re a private firm just beginning to prepare for compliance with the new lease accounting standards (FASB ASC 842 and IFRS 16), consider yourself extremely fortunate. While you certainly face a big challenge ahead in 2019, you have the advantage of learning from the pitfalls that many public companies made with lease accounting implementation in 2018.

Last year, Visual Lease worked with hundreds of global public companies going through lease accounting implementation. In this article, we’ll explain the missteps and oversights we saw that resulted in wasted time and effort, caused project delays, and opened up these firms to significant risk of inaccurate financial reporting. We’ll also share advice to help private firms avoid these pitfalls and experience a smoother (and less stressful) transition.

Costly lease accounting implementation pitfalls by public firms (and how private firms can avoid them)

1. Underestimating the time and resources required

Ask anyone who spent 2018 helping public companies through lease accounting implementation projects, and they will all tell you the same thing: many firms underestimated the time and the resources needed to get it done. So they waited too long to get started. And they failed to engage the help they needed early enough. We actually had a company come to us only 4 weeks prior to their January 1, 2019 implementation deadline! We were able to help, but needless to say it was a difficult period for them that stretched right up until their first quarterly reporting date in March.

Before accounting teams fully understand the scale and the scope of transitioning to FASB ASC 842 and/or IFRS 16, they often assume it will be a simple matter to gather data, do a few calculations, and produce journal entries. In reality, there are many more accounting complexities, logistical issues, and technical details than you may expect. If you wait too long to start or fail to plan for adequate resources, you can easily be blindsided by unexpected issues and wind up not being ready in time to meet the compliance deadline.

Read this for details you might not know about lease accounting implementation: Lease Accounting Compliance Deadline: Will You Be Ready?

2. Choosing the wrong implementation team

Because lease accounting implementation is a complex project with high stakes and many stakeholders, we highly recommend having an experienced project manager spearhead your effort. That person could be someone from your own internal project management team, an outside consultant, or even a representative from your accounting advisory firm.

When it comes to putting together the rest of the team, don’t go too big or too small. With a team of 15 people, you’ll face analysis paralysis and take too long to make decisions. However, if you leave out key stakeholders, you run the risk of making mistakes that are costly and time consuming to fix later.

For example, it’s essential to include representatives from Real Estate and others who manage your leases. These lease experts can make sure you are collecting important data that you’ll need for performing calculations and journal entries. For example, we worked with one company that came to us thinking they had all their data ready for importing. However, they missed an important component: they had no commencement dates for their property leases. That happened because they collected payment information with no input from the Real Estate team.

Read this to learn more about putting together your team: FASB Lease Accounting Changes: How to Assemble Your Readiness Team

3. Configuring your lease database too soon

It’s certainly smart to engage your lease accounting technology vendor early in the process. However, software implementation starts with gathering your requirements and building a database. If you have not yet made accounting decisions and begun to gather your lease data, you might not be ready to configure your database just yet.

Your vendor will ask questions during this process that you might not be ready to answer. If you guess wrong, you could make errors that mean re-work later.

The most efficient strategy (both for optimizing time and choosing the right software) is to make accounting decisions and gather data while you’re shopping for technology.

4. Making accounting decisions too late

We have seen too many companies jump into data collection before making the important accounting decisions that affect exactly which data points are needed for lease accounting calculations.

Practical expedients are a good example. The practical expedients you elect to take have an impact on how your data needs to be structured and broken down. We saw a company that had centralized all their lease payment data only to realize that due to a practical expedient they needed to break lump sum rents down into lease and non-lease components. That caused considerable re-work very late in the process, eating up the time they had planned for testing (more on testing to come).

Discount rates are also frequently overlooked. Some firms decide to use the same rate across the board for all leases, while others use a complex table of rates for different types of calculations. To avoid time consuming re-work and costly delays, It’s important to make those decisions BEFORE running your lease accounting calculations and producing journal entries.

5. Failing to validate your data

When it comes to testing, many firms focus on validating the mathematical calculations produced by their lease accounting software. Of course we don’t recommend skipping this due diligence, but remember that software vendors, global public companies, and major accounting firms have already completed this process thousands of times over in 2018, and the platforms do work. Here’s the part you must focus on: making sure your lease data is complete and accurate.

Under the previous standards, more than 80% of leases were operating leases with little impact on the books. Under ASC 842 and IFRS 16, the impact is much greater. Now you will have both an asset and a liability on your balance sheet for nearly all leases. If your data is wrong, the accuracy of your financial reports is compromised. We don’t need to tell you how serious the consequences can be when that happens. You could end up violating a debt governance. Reporting errors often require time-consuming investigation and adjustments to fix. That’s why transitioning to the new standards requires a higher level of lease data accuracy than ever before.

Are you sure you have a complete set of payment data from all leases? Are start and end dates valid? Have you included lease amendments?

Here’s what we’ve seen: companies are assuming all their calculations are correct until they run their first set of live reports shortly before the end of the first quarter. Then they realize the numbers are way off as compared to the actual expenses for that time period.

We recommend developing models and testing with your actual lease data to uncover anything that you might have missed. If you find inconsistencies, you need to dig into what’s missing or incorrect in your data.

How can you avoid this last-minute panic?

• Include all lease stakeholders in the process so you capture accurate and complete data from the outset.
• Start collecting data now and get it your lease accounting database as early as possible.
• Plan for plenty of time for data validation.

For most corporate attorneys, FASB ASC 842 compliance is an accounting exercise that is only vaguely on their radar (if at all). Here is why that is as a major mistake: there are significant ASC 842 legal implications that put companies, as well as their officers and boards, at risk.

Visual Lease is a lease accounting solution that was developed by attorneys & accountants, so we are hyper-focused on avoiding the potentially disastrous consequences of lease accounting mistakes. At virtually all the companies we talk to every day, the FASB ASC 842 compliance effort is driven by accounting and SEC compliance teams with very little input from the legal department. In our view, this is worrying, to say the least.

In this article, we will explain some of the important ASC 842 legal implications, what corporate attorneys need to know about lease accounting, and how they should be protecting the company by getting involved in FASB ASC 842 compliance efforts.

Why corporate attorneys must understand lease accounting and ASC 842 legal implications.

Let’s begin with a quick explanation of the significance of FASB lease accounting compliance for the company.

ASC 842 is FASB’s new accounting standard for leases, which is slated to take effect in January 2019 for public companies and a year later for private companies.

While leases are significant commercial agreements and important operationally (especially real estate leases), until now leases were not important for accounting. That is because lease payments do not appear on the balance sheet under the current accounting standard.

That is all changing under the new ASC 842 standard. Leases must now be brought onto the balance sheet, so they are visible to auditors. Lease agreements now impact the company’s financial reporting and are subject to Sarbanes-Oxley.

Anything less than an unqualified approval from a financial auditor has major consequences for your organization. When it is time for a financial audit, you must be sure all your numbers are correct. In addition, you must be able to show that you followed all the right processes to validate the data used in your financial calculations.

Our advice to corporate attorneys? Do not let your accounting team do this without your input.

As legal counsel, your job is to protect the company, its officers and board members from exposure and even personal liability due to improper financial reporting. That is why it is essential for corporate attorneys to understand the ASC 842 legal implications and to provide guidance for the lease accounting process.

Here is what you need to know.

3 things corporate attorneys need to know about lease accounting

#1 How to identify a lease

There are ASC 842 legal implications for contracts that do not look like leases. For accounting purposes, certain types of agreements may count as a lease, even if the word “lease” never appears.

For example, embedded leases may be found in service contracts or other agreements that target specific physical assets that are exclusive to your company. Examples include a corporate box at a sports stadium, racks at a data center facility, or vehicles used by a transportation service. Your company needs to identify every such agreement and determine whether or not it contains a lease. If it does, the lease component must be extracted for lease accounting reporting.

As it stands now, accounting is making judgments about contracts without the expertise attorneys have in understanding contract language. That is why legal must know the ASC 842 legal implications and get involved in evaluating contracts and advising accounting about what should be considered a lease.

Learn more: Embedded Leases Accounting: Do Your Contracts Contain Leases?

#2 How to validate lease data and data collection plans

To protect your organization, legal must work together with accounting to make sure that lease information is accurately captured, summarized, and reported on. If you do not, you run the risk that auditors will not give and unqualified opinion and certify that your books are kept in accordance with GAAP.

To mitigate that risk, corporate attorneys should oversee (or at least approve) the data collection and validation process for lease accounting. You will need to understand:

• The types of lease data needed for ASC 842 compliance
• Tactical procedures for obtaining lease data
• How to validate lease data so that lease accounting calculations and financial reports are accurate and complete

Learn more:

Data Collection Tips for ASC 842 Transition & IFRS 16 Compliance
Lease Data Validation Steps for FASB/IFRS Accounting & Reporting

#3 Sources of lease data

Who is providing the lease data that you are feeding into lease accounting systems and using to perform calculations for financial reports? You need to be very careful if it is coming from external service providers.

It is becoming more and more common for large organizations to outsource real estate services. In that case, much of your lease accounting data may be coming from thirty parties. How can you be sure that those service providers are following due diligence and providing accurate information? Legal may want to recommend the following:

• Verification of lease data that comes from third parties (by comparing with original contracts, for example).
• Make sure that contracts with outsourced service providers assign them some liability in case of errors.
• Have outsourced service providers keep data in your own lease accounting system, rather than one that is under their control.

Learn more:

Why Real Estate Brokers Need Lease Accounting Software Solutions

ASC 842 legal implications: the silver lining for the legal team

Guiding your company through the lease accounting compliance process is going to prove time-consuming and complex. However, there is a benefit that your legal team can gain from this effort: a useful tool for managing corporate contracts.

Just about every organization with more than a handful of leases will need to purchase a tool to manage lease data and perform calculations. If you choose the right system, it can prove a significant asset to the legal team along with accounting, real estate and procurement.

Did we mention that Visual Lease was designed by lawyers? Moreover, that we use our own software to track and manage all our contracts (not only leases)?

We would be happy to show you how that works. Schedule a demo today to get started.