Guide to Selecting the Right Lease Management Software
Last Updated on August 17, 2024 by Morgan Beard
Technology has streamlined many facets of business operations. Powerful and innovative enterprise software allows you to get work done faster and more accurately. Lease management software has converted real estate professionals and accounting teams into an efficiency powerhouse. Still, for some it’s hard to imagine what lease accounting and lease administration would be like without spreadsheets. Leasing management software is one tool that is helping tenants level up their leasing processes.
One facet of lease management that has changed significantly is lease accounting. New standards like ASC 842 and IFRS 16 have more requirements and regulations that bring operating leases onto the corporate balance sheet. If there was ever a time for lease accounting to step into the spotlight, it’s now. Fortunately, several software vendors have answered the call and created lease management software packages to power the entire lease lifecycle for real estate and equipment leases..
Some careful consideration is a good idea before committing to lease management software. With many good options available today, choosing the right software vendor and product is not an easy decision. It’s worth taking the time to pinpoint your company’s specific needs. You’ll then be better prepared to find the product that optimizes your lease accounting process.
Here’s what you need to know before selecting the right lease management software for your business.
Why You Need Lease Management Software
As part of a finance or real estate team, you understand as well as anyone that businesses don’t hand out money. Even though everyone understands at a high level that software can increase productivity and give your team new capabilities, you still need to justify the expense.
Explain why you need lease management software to help get your company leadership on board. The best way to go about this is to highlight the financial risk and complexity of managing your organization’s second largest expense in a manually updated spreadsheet that is prone to error. With multiple locations under your organizations leasing purview, the demand for real-time data, financial performance, and document storage is high.
Without a dedicated lease management system, you’re looking at a bunch of spreadsheets with manual data entry as a means to track lease contracts, assets, capital projects, and more. That is a time-consuming process, especially with complex leases. Performing calculations required by ASC 842, like your lease liability and right-of-use asset (ROU), in spreadsheets is at risk of a miscalculation and audit failure. From that spreadsheet, your leasing data is then manually entered into accounting software or ERP systems.
When you rely on manual processes, mistakes and inaccurate information are more likely to creep into your books. Typos, incorrect formulas, and simple human errors are eliminated when you work with software designed around the intricacies of lease accounting. Effective tenant communications starts with an administration software that provides full transparency into your financial requirements, renewal deadlines, with customizable reporting that powers a commercial real estate operators day-to-day.
The Importance of Lease Document Management
Spreadsheets and calculations aren’t the only things to worry about either. Contracts, embedded leases lease abstracts, as well as any number of reports are all a part of the lease management lifecycle. With a lease management software, all data and documents are stored on a centralized platform, housing all relevant data.
Compliance is also difficult to manage with spreadsheets and documents spread all across the company. FASB’s ASC 842 property lease guidelines require data sharing between real estate teams and any auditors involved in the process. If you’re managing these contracts manually, that means finding these documents on your hard drive or various file servers, creating PDFs, and emailing them out.
Implementing new lease accounting standards is hard enough. Making sure your organization is in compliance with hundreds of pages of requirements is very difficult without a comprehensive lease accounting solution.
By explaining the ROI of lease management software, you gain company buy-in. This helps secure the budget and support you need for a successful implementation.
Identify Your Lease Management Requirements
Once you’ve got the go-ahead to look for lease management software, it’s time to decide which features you need. The product you end up selecting should meet all of your key business and stakeholder requirements.
To understand what those requirements are, take a long look at your current lease management process. Make a list of your current pain points and where you need more efficiency.
Next, you should make a list of essential features you expect from the software. At the top of this list should be compliance with ASC 842 and collaborative workflows with your real estate department. Other important features include contract management, asset maintenance tracking, and custom reporting capabilities.
It might help to create a scorecard that prioritizes the features and functionality that are most important to you and your finance team.
You’ll likely stick with the lease accounting software you choose for a good long while. Ensure that your company will get a solid return on its investment by picking software that meets your current and future needs. While you can’t predict when the next big change in lease accounting standards will take place, you can gauge how well a software vendor adapts. This, too, should be quantified on your scorecard.
Look at a software vendor’s history of updating their product for changes in the finance industry. If they have continually adapted their product to new standards and practices, rank them higher on your scorecard.
Don’t Forget Centralized Document Management
Don’t forget the importance of centralized management when laying out your requirements. The ability to not only collect and share documents but to create a record of such activity in a central location will help ensure your compliance with new standards.
Think about the requirement to share data with real estate brokers mentioned above. That’s just one scenario you might run into under the new guidelines. The property management business features an array of internal and external stakeholders. Auditors, consultants, architects, attorneys, facility managers and tenant-rep brokers will have their own document needs.
Now multiply that by a lease portfolio of 50 or more, and you’re looking at hundreds of touchpoints. The ideal lease management software solution will facilitate and encourage stakeholder collaboration. Imagine having an online portal that makes document access quick and easy: one place to go to find every lease clause, critical date, common area maintenance requirement and rent schedule.
You’ll want a lease management system that logs shared communications and documents — in order to track necessary information pertaining to your lease data.
Download our Lease Management Guide – For Tenants
Lease management is a core function of commercial real estate teams. Especially as commercial tenants navigate brick & mortar expansion or evaluate their office portfolio. Our Ultimate Guide to Lease Management will help you level up your real estate lease administration and business processes.
Download the guide to learn the following components for effective lease management:
- Establish best practices for managing your organization’s lease lifecycle.
- Align on a single-source of truth for real estate, facilities, accounting and construction to all work from and collaborate in.
- Develop policies and procedures for onboarding newly executed leases.
Lease Management Software Functionality To Look For
Now that you know how you need lease management software to meet your current needs, start on your wishlist. An investment in new software should bring you features and functionality that your current software doesn’t have.
You know you will need to meet lease accounting standards compliance and product financial reports. But you may not be aware of what the possibilities are, so here’s a rundown of functionality to look for in the right solution.
Task Management
The complete lease lifecycle is packed with tactical activities. Real estate leases, in particular, require close collaboration on tasks like site selection, negotiations, work order management, and critical date management. Staying aligned with your team collaboratively is just as essential as the accounting work. Look for a task management solution to be included with your lease management software.
Weekly Updates
Task management tools are great but don’t help much if everyone’s not aware of where a particular project is at. Lease administration tools that feature task management will often have collaboration and communication templates and workflows. See if a vendor’s key features include weekly updates sent straight to your inbox. These update emails should outline action items completed and those left to complete, along with important critical dates.
Automation
Software tech stacks are built to work for you, not the other way around. Saving time by automating manual tasks and notifcations is a feature you should insist on when finding your solution. Tracking costs, setting and sending reminders, and transaction management are among the things that software can handle for your team. This can add up to hours saved per employee each week.
Integrations
Moving lease data from one piece of software into your accounting software is something your lease management solution should do seamlessly. Whether your organization uses traditional desktop accounting software or a full-fledged ERP application, seamless integrations are a important.
Real estate teams managing lease administrative processes will need their data inputs to translate over to the accounting team. Lease modifications are one example of a change to the terms and conditions of a lease that impacts the underlying asset for the accounting team to calculate on their financial statements.
Also think of other systems you can link together. Accounts payable systems, work orders on real estate assets, and inventory software integrations can all save time. A tech stack fully integrated with your lease management solution gets you closer to a “single source of truth.”
The Cloud
Just a few years ago, cloud applications were bleeding-edge technology. Now they’re the standard. Everyone from the IT department up to the C-suite has something to love about the cloud.
SaaS (Software as a Service) cloud apps mean you don’t have to invest in hardware and the personnel to maintain it. The subscription model is often more affordable than paying for licensing upfront. Security fixes and other important updates are automatically applied in the SaaS model. Add in remote global connectivity, and there’s no reason not to choose a cloud app these days. Managing your leasing processes from anywhere and with anyone becomes a breeze.
Evaluate Lease Management Software Vendors
There are many software vendors with lease management products on the market. Keep in mind that you’re not only buying software — you’re choosing a partner who will help you manage your lease portfolio. A partner who you trust to ensure you meet state regulatory compliance and maintain data security. With this in mind, looking at the vendor’s track record is a good idea.
Here are some ways to evaluate the worthiness of a lease management software vendor.
Industry Experience
Take a look at the vendor’s lease management experience. Are they dedicated to this product, or is it just one of many options they offer? You don’t want a cookie-cutter solution built as an afterthought to their main product. Look on their website for any mention of staff with commercial property experience. Awards and testimonials are often a good sign that the vendor is delivering a product that speaks to real estate and accounting teams.
Product Enhancements
Older lease management software can become obsolete quickly. ASC 842 new lease standards changed the game. And, it certainly won’t be the last time. Can your existing systems keep up? Legacy software providers and company acquisitions often signal a product that lacks in user experience and innovative workflow automation. Your final decision for a software vendor should include system who’s committed to regular product enhancements and feature updates that will ensure you’re always in compliance and keeping up with the latest trends.
Training and Learning Resources
The best software companies don’t sell you their product and let you figure it out. They should offer some sort of onboarding, implementation and training services. Ask the sales rep what help you can expect with the implementation process. Some will offer free online training courses while others will charge a fee for one-on-one onboarding. At a minimum, check out their documentation to get a feel for how easily you can learn the product.
Occupier Has the Complete Lease Management Software Solution
Picking the right lease management solution for your company’s unique needs is no easy task. You need to feel confident that you’re choosing a leasing partner. You want the software to be intuitive and powerful. And you need a solution that can grow with you.
Occupier has the complete lease management software solution for your entire portfolio. And, the only solution that helps commercial tenants manage the entire lease lifecycle — from site selection to critical date management and lease accounting compliance. Our innovative tech stack features: task management, document collaboration, custom reports, analytics, and integrations. All built to facilitate a smarter way to manage your leasing processes.. To see why Occupier is the right choice for your lease management needs, reach out to us today or request a demo.
