By Matt Waters, CPA.
Lease accountants have the power and intelligence to massively impact their organization’s portfolios. But are they doing it? Are their clients or the businesses they work for utilizing their expertise?
Not quite. If your company is looking for growth opportunities, adopting lease accounting software is a great place to start.
Beyond ensuring compliance with lease standards like ASC 842 and IFRS 16, an automated, accurate lease accounting system can unlock valuable insights to optimize real estate portfolios. There’s no time like the present for lease accountants to leverage their software to identify and capitalize on expansion possibilities.
“Accounting is a great way to get in and understand the inner mechanics of what makes a company profitable or not profitable,” said Al Stabile, Vice President, Lease Audit at CBRE on a recent episode of The Lease Alert podcast. “The person that can figure out how to take that accounting knowledge and convert that into actually a profit center is what made this unique. Most accounts, when they work within the lease administration or lease audit group for a company, they’re considered a cost center, even if they save a little bit more than their cost, but what I was able to do is talk about how we can recover significant funds that will actually have a major impact on the bottom line of some organizations.”
Here are five ways to utilize your lease accounting software to impact your bottom line and harness growth potential.
1. Analyze lease data for cost optimization
A well-structured lease accounting system centralizes lease data, making it easier to analyze expenses, renewal dates and rent escalations. The best lease accounting solutions integrate market data and constantly update data for the relevant markets. By reviewing this data, lease accountants can:
- Identify underutilized spaces and renegotiate lease terms.
- Detect cost inefficiencies in lease agreements.
- Optimize lease renewal strategies to reduce expenses.
- Compare and contrast their locations with others in the same markets.
With detailed reporting and analytics, businesses can streamline operations and reinvest savings into growth initiatives.
2. Forecast financial impact of expansion
Growth often requires additional real estate investments. Lease accounting software can provide financial projections by evaluating the impact of new leases, relocations or terminations. By using built-in forecasting tools, businesses can:
- Assess future cash flow implications of leasing new spaces.
- Compare different lease scenarios to determine the most cost-effective option.
- Ensure compliance with financial reporting requirements while expanding.
These insights help leadership make informed expansion decisions based on real-time financial data.
3. Identify strategic locations for expansion
Elite lease accounting software integrates with geographic and market data, helping businesses pinpoint ideal locations for expansion. By evaluating factors such as lease costs, foot traffic and market demand, companies can make strategic decisions on where to open (or close) new offices, stores, or distribution centers.
4. Enhance lease negotiations with data-driven insights
Landlords often have the upper hand in negotiations, but office and retail tenants that use lease accounting software can level the playing field. The software provides:
- Benchmarking data on market lease rates.
- Insights on lease terms that align with company goals.
- Alerts for upcoming renewals to allow proactive negotiations.
By leveraging data-driven insights, businesses can secure favorable terms that support long-term growth in the places they want to be in.
5. Automate compliance and reduce risk
Growth can be hindered by non-compliance with lease accounting regulations. Automated lease accounting software ensures compliance with evolving standards and reduces the risk of financial misstatements and penalties. By maintaining accurate lease records and audit trails, businesses can scale confidently without legal or regulatory setbacks.
What’s next
Almost every single lease has some kind of nuance that needs to be evaluated by count. It’s in partnership with real estate professionals and lease administration professionals, all of those require some level of interpretation and professional judgment.
“Each of us play an important role when it comes to safeguarding the investment community and ensuring that the accounting records are properly reflected in the companies that issue financial statements,” said Tim Kolber, CPA, Managing Director – Accounting and Reporting Advisory Service at Deloitte, on a recent episode of The Lease Alert podcast.
Your lease accounting software is more than just a compliance tool—it’s a strategic asset that can drive growth. By analyzing lease data, forecasting financial impacts, identifying optimal expansion locations, enhancing negotiations and ensuring compliance, businesses can uncover opportunities that lead to sustainable growth. Leveraging these capabilities effectively can transform your real estate strategy and position your company for long-term success.
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Matt Waters is a CPA with 20+ years of lease and energy accounting experience. He serves as the Director of Lease Accounting and Sustainability at CoStar Real Estate Manager and has helped over 1,000 companies streamline lease administration, lease accounting, and ESG reporting. He is a leading expert in lease management and sustainability and has previously shared insights with writers from Bloomberg, Reuters and various trade publications. Matt is a frequent speaker at lease management, real estate, and accounting events such as The CoreNet Global Summit, The NRTA National Conference, BlackLine’s Beyond The Black and more. You can hear more from Matt on his hit podcast – The Lease Alert. Streaming wherever podcasts are available.
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Tags: Accounting, lease accounting
