In our daily lives and culture there certainly doesn’t seem to be a shortage of anecdotes on the affects of change. From the not so enlightening but succinct “change is good” to the somewhat less optimistic “change is painful” these short but sweet quips manage to neatly encapsulate how we feel about any kind of deviations from our daily routine.
Add in a dose of a successful business, perhaps a successful Commercial Real Estate endeavor, or a business that relies heavily on building or land leases, and sudden change can definitely throw a wrench in the works. Such is the reality that business owners and those who rent or lease space are encountering when faced with the new FASB Lease Accounting Standards. All is not lost, however. Changes in the way that your leases affect your bottom line don’t have to be painful. With a little preparation, and a solid FASB Lease Standard Compliance Software partner, this change at least can be weathered with little to no financial or emotional storm.
The What of FASB Lease Accounting Changes
Unless you’ve been doing your best imitation of an ostrich with its head in the sand, you’ve probably heard the dull roar that is the discussion of the new FASB Lease Accounting Standards. The Quarem Blog has devoted plenty of posts to the intricacies of these changes, but the basics are worth rehashing as most of us reading will soon be faced with their own task of implementation. By far the biggest change most businesses will face is in the way leases are accounted for on their balance sheet. Instead of previously being written off as a cost of doing business, the entire value of any outstanding lease obligations must now be written off on a company’s debt sheet.
The short synopsis is deceptively simple. Starting in 2019 for most businesses, this will require anyone who rents or leases property or land to account for each and every lease and accurately track its various extensions, expiration dates and renewal clauses. Each of these items will account for the final number that goes into the books every year when a company reports its outstanding assets and liabilities.
The How of FASB Lease Accounting Software
The problem most companies face isn’t in understanding the impact of the new FASB Lease Accounting Standards, it’s in how to easily gather and track the information needed to comply with them. Sure, if you’re a sole proprietor with a small physical goods store your monthly rent on a year-to-year lease with no guaranteed renewal is probably a simple task to account for. But if you’re a business owner who relies on the flexibility of leases to make long term plans for growth across a variety of locations, cities and even states, you may not have easy access to the information needed, much less the ability to decipher the various terms into concrete answers to an accountant’s question.
Enter the benefit of a quality lease standard compliance software from a trusted partner with CRE expertise. Platforms, such as those offered by Quarem, allow clients to easily access key figures at the touch of the button. No more shuffling through endless reams of paper or wondering where you stashed that Redweld full of contract terms, FASB Lease Standard Compliance software can run reports off of a variety of key figures or fields, organizing the data you’ve pre-selected as the need to know information to ensure compliance with critical changes in the law. Software specifically tailored to lease accounting isn’t just for the benefit of a client either. As a CRE owner or manager you realize that your ability to maintain occupancy rates is often only as good as your client facing reputation. A happy customer is a happy long term business relationship, ensuring consistency and continuity of operations.
FASB Lease Standard Compliance Software Bottom Line
Sure, change may be a bit terrifying if it hits you unexpected. The key to navigating life’s hurdles, however, is a plan of action and the right tools in the arsenal to help lighten the burden. FASB Lease Compliance Software, such as the options offered by Quarem can help both clients and CRE professionals navigate the changing landscape of accounting for your leases and properties. Has your interest been piqued? Contact Quarem today and find out how our solutions can be a beacon in the ever-changing landscape of commercial real estate.