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How Can Lessees Adapt to the Changing Lease Accounting Standards

The lease accounting standards have changed. Due to this, the leasing environment will also undergo several transformations. Experts at Financial Accounting Standards Board and leading accounting firms anticipate that these new standards will increase the administrative workload for the lessees.

What Are the New Administrative Burdens?

Under the new standards, lessees will be required to develop better policies and processes for gaining more insights into their leases. Here, the heavy equipment finance companies can lend their effective support to the customers. However, it begins with understanding the additional workload caused by the new standards.

The implementation of new lease accounting standards entails several complex procedures. The main challenge lies in the data collection. The lessees need to collect data for more than 100 fields for every lease. It includes details related to expenses, payments, and compliance options.

 As per new standards, the data needs to be collected at the asset level which further increases the workload. Imagine how cumbersome can it become for the larger corporations signing hundreds of leases in a year.

Can Lessors Help the Lessees?

Equipment finance companies can assist their clients in reducing the work burden. They can make it easier to comply with the operational deadlines. The facilitation can be offered in the form of detailed spreadsheets for each asset lease. 

At the same time, they can help the customers to maintain compliance with the new standards. It will depend on a consistent process of sharing lease accounting details for the new contracts through a web portal. The customers can directly download data from this portal to their applications.

In this regard, integration capability between the finance providers and accounting applications can also simplify the procedures. It allows easy reconciliation of the lease data throughout the term.

In the wake of these standards, the equipment finance companies need to re-sell their value proposition in the form of improved cashflows, minimized risks, and effective implementation. They should adapt their leasing strategies to make that happen over a long run.

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