Irrespective of the size of your organization, if you are leasing commercial space (Office/retail/other non-residential spaces such as warehouse or even Kiosks), you would be having lease agreements for those. Most likely, you will be also having equipment leases pertaining to office equipment that you may have leased. While organizations realize the importance of lease agreements, these agreements are sometimes all over the place, making it really difficult for the organization to stay on top of their lease portfolio. This blog discusses the starting point for lease portfolio management–getting all the lease agreements together.
Start with your purchase orders
Does your organization require a purchase order to be approved before any significant financial transaction? If yes, then all your leases may have purchase orders released for them too. Check with your invoicing/purchase department and see if they can share all lease-related purchase orders with you. This will help you arrive at a count in terms of the number of leases you have, irrespective of the lease type.
Ask your legal team
Leases are legal documents. So, if you have an in-house legal team, chances are, they have a copy of all your leases. Usually, legal departments use contract management platforms to store all contracts and they will be able to get you a copy of all your leases almost instantly through their software.
Check with your accounting department
Your accounting department is bound to have all the information on your leases. Especially with the new FASB and GASB regulations, they have to meet the mandatory lease reporting requirements, which means that they will be having access to all the lease agreements and related documents. Most likely they will be having a copy of your lease agreements in their accounting platform and just like legal, would be able to pull it out for you fairly quickly.
Lease management or lease administration software platforms
Once you have all your lease agreements together, the next step is to ensure that they are stored in a centralized repository, so the lease data is not in silos. The challenge with not having a centralized lease storage repository is that each department or team stores the lease data in the format and location they want it in. This can include accounting platforms, legal document management software, asset management software, invoicing tools and even spreadsheets. Not only is this situation chaotic and prone to errors, it also means that no one throughout the organization has a 360-degree view of the lease agreement. A 360-degree view of of the lease agreement is extremely important as it plays a key role in driving business decisions related to the lease that affect the lease profitability including renewals, terminations and subleasing. Investing in a robust lease management software can help resolve this challenge by offering a single, standardized repository for all lease documents, which can be accessed by all relevant departments throughout the organization. Plus, such lease management software platforms come with multiple dashboard, summary and reporting modules, addressing the lease data needs of different departments effectively.
Lease administration software platforms have the ability to generate alerts and notifications for critical events such as notices, expiration dates, invoice due dates, renewals and other obligations. This helps ensure that you don’t miss any critical dates. Missing critical dates can have serious consequences, such as penalties or even lease termination. Lease administration software platforms help ensure your payment schedules are on-track and accurate. They allow you to effectively manage your lease-related expenses and payments such as regular rental payments, percentage rent calculations, Common Area Maintenance (CAM) charges and reconciliations.
Lease administration software platforms are now also equipped with the required mechanisms to help you meet the FASB/GASB and ASC 48 compliance requirements.
Investing in a good lease administration software platform is a must to stay on top of your lease portfolio. But that isn’t enough. You need to have an experienced lease administration partner who can help you optimize your lease administration software so you get the best ROI.
Considering investing in a lease management system? Check out our post on the Top 10 Lease Administration Software Platforms for 2022, first!
Rebolease.com, powered by RE BackOffice, Inc., is a premier provider of lease abstraction, administration, audit and accounting services. Headquartered in Pittsburgh, PA, we are a global boutique firm, providing high-quality services to top-tier clients across industry verticals, covering every type of lease and on any lease platform. We are proud to be a trusted partner, for 15+ years, to leading retailers, REITs, property owners/managers, and corporate accounts seeking a strategic advantage. All client projects are performed in-house.