Of all the lease management software options available in the market currently, NONE were built by accountants. Except LeaseQuery, of course.
Why am I so certain? Because I got demos of almost all of them in my experience as an accountant in a fortune 500 company. I know what I would want in lease management software, and what was out there at the time simply wasn’t it.
Editor's note: here is a streamlined and updated list on top questions to ask lease accounting software vendors
Why is it important that lease management software is actually built by accountants? This one is obvious folks. We at LeaseQuery tell our potential clients that we have been in their shoes before. We know EXACTLY what their problems are. We did not need to rely on “focus groups.” We did not need to hire a “consultant”. One of my proudest moments came when we were giving a demo to a potential clients, and the controller told me:
“George, we get pitched software all the time. Most of them have impressive software, but it does not solve our problem. Others solve the problem, but the software is painful to use. You are the first company to come here with impressive software AND a solution to our problem.”
Ladies and Gentlemen, let me stress that that was a direct quote, and I will never forget it.
So the next time someone gives you a sales pitch on lease management software, ask them some of the following questions, as these are problems that a true lease management professional faces:
1) Can your lease management software account for situations when a lease is modified but the accounting department does not find out about it until months later?
2) How does your lease management software prevent duplicates? That is, if someone in the real estate department starts entering a lease, and someone in the accounting department attempts to enter the exact same lease? How does your system prevent that? If the response is “a unique description” (which is bad), then ask how it differentiates between “Corporate Headquarters” and “Corp HDQ,” which are two “unique” descriptions.
3) Will you have an Accountant available to help during implementation? How many Accountants do you have on staff compared to the number of clients you have to support? Most lease management software companies who are trying to add accounting functionality hire one or two Accountants to support hundreds of clients. This is an accounting transition not just a software purchase so you'll need Accountants who know lease accounting specifically to help.
4) Does your lease management software handle renewals that occur prior to the lease expiration according to GAAP (that is, treat is as a new lease and straight-line the new lease payments plus the previous deferred rent)?
5) How does your lease management software ensure completeness? How does it ensure all leases are captured?
6) Can your lease management software calculate long-term and short term portions of deferred rent? Most software will only give you one balance, without telling you the portion that is long term and that which is short term.
7) Does your lease management software allow for segregation of duties? How does it ensure that all leases are reviewed and approved?
8) Does your lease management software maintain an audit trail? For accountability purposes, does it document who entered the lease, who approved it, who modified it after it was approved and who approved the modification?
9) Does your lease management software correctly handle Tenant Improvement Allowances according to GAAP (by reducing rent expense)?
10) How easy is it to leave? Can we simply take our data and go to another provider if we are not happy? Most software providers make it VERY difficult to leave them. It’s called “vendor lock-in.” They put their tentacles into your entire organization, and you cannot leave them even if you want to.
LeaseQuery is lease accounting software that helps companies manage their leases. Rather than relying on excel spreadsheets, our clients use LeaseQuery to get alerts for critical dates (renewals, etc.), calculate the straight-line amortization of rent and TI allowances per GAAP, provide the required monthly journal entries (for both capital and operating leases) and provide the commitment disclosure reports required in the notes and the MD&A.