Excel spreadsheets have become the norm in the world of business. It’s an application that has withstood the test of time and is as reliable, and familiar, as ever. Since its introduction into the marketplace in 1985, it has been quickly recognized as one of the most important applications when it comes to organizing and presenting data. From personal budgets to highly involved corporate presentations and formulas, Excel is generally the “go-to” choice for millions of people and businesses around the country and globe.
However, you might be surprised to find that the Excel spreadsheet does have its limitations, especially in the world of commercial real estate. As businesses and lease portfolios develop and become more detailed, spreadsheets might not be the most effective choice for your growing business. Let’s look at a few signs that suggest your lease accounting needs have outgrown Excel.
More Leases Means More Software Power
If your CRE company is dealing with multiple leases and that number is growing, it’s likely that tracking the details and dates of so many leases is becoming a problem. It can get to a point when working with a spreadsheet becomes more and more time-consuming. The risk of missing important details or user-error issues in calculations can make it all quickly unmanageable.
This is when industry-specific software makes a real difference. CRE-based applications are specifically designed to automate key processes, such as critical-date reminders, reduce the potential for errors while also ensuring compliance with industry standards and providing better visibility into your lease management obligations.
Leases are Becoming More Complex
While CRE professionals have become somewhat used to new complex lease terms that include variable payment and renewal options, it still calls for a robust application to step up and make it all flow seamlessly. You might be surprised to learn, if you have not already, that Excel struggles a bit when it comes to complex changes and alterations in lease terms and conditions. The more complex the lease, the more you need a program that is specifically designed with your business in mind.
Trouble with Complying with ASC 842 and IFRS 16?
In the world of the CRE professional these accounting standards are golden and must be acknowledged. They require tracking more details and information for each lease. This means your in-house software must be able to keep up with these complex calculations. Excel is not as efficient in tracking issues such as lease liabilities and ROU (right of use) assets. If you’re starting to realize Excel’s limitations here then it’s time to invest in a more robust application.
Excel’s Limitations with Visibility and Reporting
Real-time reporting is essential in the CRE business. You and your team will need real-time access to your reports. Your team will need to know right away if a tenant is not compliant or not in line with the lease agreement. Excel does not provide automated reporting and insights and this can make it difficult to know what you need to know and when you need to know it.
Also, more up-to-date CRE software applications allow for a tenant-cloud portal. This means that tenants can access this portal online and submit lease payments in real-time. Obviously, this very convenient element is well beyond Excel’s reach.
Challenges with Collaboration
When your CRE business is firing on all cylinders, you need your software to always be available and in real-time to your accounting and legal teams. This means the preference is for a centralized application that can be accessible across multiple platforms at once. This collaboration can be problematic with Excel.
As an example, changes are often made to budgets and lease arrangements throughout the year. Version control issues can develop if the entire team is not properly in sync with who changed what and when. If the wrong version is at hand this could mean that a CRE professional or business can be operating based on dated or incorrect data.
Excel is not designed to provide this kind of integration. Excel files are typically not centralized and this can lead to confusion and inefficiencies in the short and long term.
Detecting Errors in the Formula
An accurate spreadsheet relies on user accountability. This means that formulas must be accurately placed across every cell of the spreadsheet. Excel is not designed to detect user error. Therefore, in the instance of an error, it can take some time to track down where the user-constructed formula failed.
How Many Excel Experts are on Your Team?
Some might compare Excel to learning how to play the blues. It can be easy to learn but almost impossible to master. Do you have Excel masters on your team? Chances are you have one or two. Maybe you just have the one Excel genius. Then the question becomes: What happens when that employee moves onward?
Excel is a complicated program when asked to stretch beyond core functions and while it’s easy to use for most, the preference is to have an industry-specific program that is simple and easy for your entire team to absorb and master.
Different Tenants, Different Rules
Not all commercial leases are made the same. Obviously, variables will exist from property-to-property and even from tenant-to-tenant. You need to make sure that you have an application that ensures individual tenant lease details are reliably established and presented on the page.
This means your in-house software needs to be familiar with industry-specific terms, combinations and potential permutations to a standard lease agreement. Excel does not allow for these possibilities without taking up a lot of time and user-input.
Are You Ready to Step Up Your CRE Game?
These days, CRE lease management calls for new muscle. Excel can only do so much and isn’t focused on lease abstracting or other niche needs. Demo one of the industry’s most exciting applications or contact us today.
