There are many tools available that can help a business to manage its affairs, from sales to marketing to their accounts department. We shall explore here many of the things a leasing business can do to help itself. This will include investing in Enterprise lease accounting by LeaseAccelerator to manage its leases more effectively and so always be adhering to the required accounting standards concerning leases.
Sales and Marketing
Those involved in leasing will want to advertise their services as much as account for their leases once agreements are set up. Online is a place that can expand the range of a business to new areas. With a finance lease, this is possible because the distance between the lessor and lessee is only important when a piece of equipment is being delivered or collected at the beginning or end of a lease. In-between, with this kind of lease, the lessee will be responsible for any maintenance.
SEO or Search Engine Optimization can be adopted as a marketing strategy that will help a company’s website to appear on the first page of a Google search list. This will help increase the visibility of the leasing business and the assets it must lease out.
Accounting Practices
When accounting for leases, it is important to be aware of the key accounting standards that will apply. Many have been produced solely to apply to those dealing with leases. These accounting standards are to do with recording leases correctly and giving them transparency on the balance sheet. In other words, the finance leases will need to show as a capital item on the balance sheet. That way, managers and investors can see them. This principle is no different, really, from the visibility that we expect from our website in terms of it being seen and instantly understood in terms of what we have to offer lessees.
For reference, the accounting standards to take note of, when accounting for leases, are ASC 842, GASB 87, and IFRS 16. With the latter, IFRS stands for International Finance Reporting Standard. The use of leasing accounting software will make for easy compliance with these. It is simple and fast to use. It will give enterprise compliance that has a global reach. It will even include real estate administration as part of the package.
Software support will be provided where lease accounting software is used. This is staff training in itself. The software will mean that staff can more easily account for the leases and check that they are doing it right. We all need this kind of guidance in leasing, given how complex a field it is. Accounts staff working with leases will need to know more than staff in many other accounts departments.
Other Help
Apart from marketing strategies and good accounting software, staff involved with leases will need to have a good understanding of what is on offer to lease. These leases can be quite specific to a certain industry. Technical knowledge will be important to gain the trust of lessees.
Educational qualifications can help staff to train in these technical areas of expertise and to gain business skills that will help with effective negotiation and the securing of leasing deals.
The accounting side of leasing that will follow a sale will require finance staff to keep a track of leases and the payments that are regularly due. Every lease will have a different payment due date, according to when the arrangement was commenced. They will be regular and so ideal for computer software to automatically keep track of and provide alerts for when payments are needed or overdue.
Learning the accounting standards is a good start to knowing about what is expected in respect of the financial side of leasing. Accounts staff do not just need an accounting qualification in the first instance but will constantly need to keep themselves updated on the latest account standards in respect of leases. For instance, the accounting standard ASC 842 replaced ASC 840 to provide more visibility on the balance sheet in respect of lease assets. This was a change for many accounts staff to know about.
There is much to know, but also much help out there, for businesses involved in leasing. In the main, if you have the accounts department taken care of by lease accounting software then it is half the battle won. We can then more effectively keep track of just what leases we participate in at any one time. This is how we keep good customer relations and end up doing more business with the same lessees. Repeat business and reputations are everything in the leasing business. Otherwise, assets might end up in storage for too long a period to make a leasing business profitable.
Veeramachineni Lalitha
I am Finance Content Writer. I write Personal Finance, banking, investment, and insurance related content for top clients including Kotak Mahindra Bank, Edelweiss, ICICI BANK and IDFC FIRST Bank. My experience details : Linkedin