With many different IFRS 16 systems on the market, it can be challenging to know which will benefit your company the most.
IFRS 16 is an intricate and complicated standard which means your lease management system needs to be configured to your needs. And the support provided should be by experts in leasing and educated on IFRS 16 to minimise risk.
Below we outline some important points to consider when choosing lease management software.
- Collaborative working capabilities
ERP licensing can be onerous in terms of cost when you are paying on a per-seat basis, especially when you only have one or two people using the IFRS 16 functionality. For your team to work collaboratively, you may have to pay more than you planned for your team to access just the IFRS 16 modules. This might be something to consider if you'll need to allow access for more staff during reporting cycles.
Having a system that charges on a per lease basis means that it can be accessed easily by anyone in your organisation, wherever they are in the world, allowing them to see real-time updates as long as they have internet access.
- Specific to your company
ERP systems are generalist systems supported by generalist people, and it is generally accepted that they are resource-light in the IFRS 16 standard, leading to them only being able to do 70% of the scenarios needed. This means they’re not focused on your needs.
When you are being onboarded, you should learn from local experts who understand the nuances of the local market and the associated accounting treatments in order to configure your environment for your business and get you up and running simply and quickly.
- Localised knowledge from local experts
When your software isn't specialised to your needs, it can be set up to export reporting errors from your data.
When you implement LOIS, you'll be working with locally-based chartered accountants, who can communicate with the different levels within your organisation during an implementation. They can reassure a CFO that they will get their high-level numbers and advise the management accountant that they need to push this button and that button to get their journals out. You’re not dealing with an overseas call centre that will disappear on a customer once implementation is complete.
- Lease accounting capabilities
Many SAAS providers have come from a contract or property management background that is very focused on the contract lifecycle, and they have added the accounting aspect around this. LOIS comes from a lease management background, and a big part of lease management is getting your payments right. Therefore, adding the accounting aspect to the existing software was a natural fit.
LOIS is run by accountants who specialise in leasing; other systems are built by software companies that learnt about leasing and accounting.
- Compliance capabilities
IFRS 16 is a very judgemental standard, meaning it’s not black and white, and you can introduce risk by having uneducated people supporting you. The implementation may have gone OK at transition, but once you get up and running, you find (by not understanding the standard) the judgemental inputs were incorrect, which meant the outputs after go-live was problematic.
LOIS is powered by Quadrent, a leasing company. Therefore, we understand leasing from both sides, and we know the best practices to avoid the compliance risks IFRS 16 can create.
On top of per seat ERP licensing cost, there are often further associated costs of training staff during the implementation phase and keeping them up to speed once implemented and getting IT involved to configure your environment. SAAS products are a light touch on IT; they are hosted in the cloud, so you get your login, and off you go.
With the new standards in place, companies can be wasting valuable time on software that is not 100% fit for purpose. Using generalised software can mean that it doesn't have the capabilities and can be inefficient in the areas that are important to you.
With an expert system, there is no need for detailed accounting consulting on calculations, as it is done for you. Combine this with lease accountants, and there is a real value add in having their support included in the pricing.
Using LOIS makes IFRS 16 100% automated and the data available to your whole team in real-time. Additionally, using our lessor experience combined with your LOIS data, we can help you make even greater savings. Get in touch today if you'd like to find out how.