Lease accounting and lease management designed for the Telecommunications sector
Managing your telecommunications lease portfolio
In our experience, telecommunications lease portfolios are large and complex, consisting of leases, licences, easements, and resource consents across a range of assets, properties and sites.
Lease agreements for assets like cell towers, fibre optic cables, satellite transponders, electrical junctions, and signal amplifiers can be particularly complex.
It’s imperative you manage your portfolios as closely as possible so you can make informed business decisions. With agreements stored in all manner of places, each with different termination dates, renewal options and rates, it can be difficult, if not impossible, to produce accurate, useful, consolidated reports on your fleet, property and asset portfolios.
Introduction of IFRS 16 –
changes to lease accounting
In addition to the regular challenges of lease management, businesses are faced with the introduction of IFRS 16. IFRS 16 is the recent lease accounting standard effective from annual reporting periods beginning on or after 1 January 2019. The change to lease accounting could make leases the most material item on your balance sheet.
The new requirements of IFRS 16 will directly impact the financial performance and value of your company. It is essential to adhere to the IFRS 16 standards in your business and telecommunications operations. We expect that the telecommunications sector will experience an increase in recognised assets and liabilities, more lease expenses recognised in earlier periods of a lease and less in later periods, a shift in lease expense classification and amortisation, and an increase in net debt/EBIT/EBITDA ratios.
Given the complexity involved in the introduction and additional requirements of the ongoing accounting of leases under IFRS 16, we recommend those operating in the telecommunications sector invest in a lease management and lease accounting platform which can help you achieve IFRS 16 compliance. Our software will ensure that your portfolio of leases is up to date with easily actionable notifications that help you meet protocol milestones with confidence.
Nomos One can help
Nomos One is a comprehensive, cloud-based, lease management and lease accounting software solution that is designed to accommodate a large range of leased assets, including those commonly used within the telecommunications sector. This is the lease accounting and management software your business needs to ensure the efficient management of leases, subleases, licences, sublicenses, easements, grants, resource consents and general contracts.
Nomos One offers our clients a number of benefits that will save your business time and effort. Our lease accounting software offers advantageous features for many businesses, including automated calculations, a coherent and straightforward dashboard, event reminders, a user-friendly workflow, custom reports and fields, and the ability to automatically generate lease documents.
Our robustly tested IFRS 16 modules automatically calculate right-of-use assets, lease liabilities, depreciation and interest expenses, and generates the resulting journals accordingly.
What is lease accounting?
Lease accounting is the recognition of the transactions and balances associated with lease contracts and events for a business’ financial reporting. Both lessors and lessees are required to account for lease transactions, though each in different ways. With the introduction of IFRS 16 (AASB 16), lessees are required to recognise a lease liability and a right of use asset, while little has changed for lessors, who continue to differentiate between operating and finance leases.
What is lease accounting software?
Lease accounting software is a tool that empowers enterprises to manage their lease portfolio more effectively. Lease accounting software is designed to centralise information and effectively automate previously manual administrative tasks. Lease accounting software assists businesses in managing their lease and accounting regulations.
The software eliminates the requirement for paper trails, and most quality software will set reminders for the business’ upcoming financial milestones to ensure that critical dates are never overlooked.
What is IFRS 16?
Under IFRS 16, lessees are required to recognise a lease liability for the future expected lease payments as well as a corresponding asset that represents their right to use the leased asset.
The lease liability is based on the present value of the future fixed and in substance fixed lease payments. The liability is an amortising liability whereby interest is accrued and expensed over the life of the lease.
The right-of-use asset is equal to the lease liability at the beginning of the lease liability calculations (subject to any prepayments, initial direct costs incurred, and estimated restoration obligations) and is depreciated on a systematic basis over its useful life.
Who needs lease accounting software?
Essentially, lease accounting software is designed to meet the needs of finance teams, accountants, auditors and property managers.
Lease accounting software solutions may be necessary for anyone who has to manage leasing activities, the financial impacts of leasing, and comply with lease accounting standards. This includes property investors, tenants, leasers, real estate agents, small business owners and accountants.
Both tenants and the lessor can utilise lease accounting software to manage all types of real estate assets. Quality, reliable and advanced lease accounting software has become crucial in recent times for both lessees and lessors to assist towards compliance with ever-evolving lease specific accounting and depreciation standards.
What is the best lease accounting software?
The best lease accounting and lease management software will provide its clients with access to the following features:
Access to an asset portfolio in a centralised location
A customised dashboard
Tailored, consolidated reporting and fields
A simple dashboard
An intuitive, user-friendly platform
Event reminders and milestone notifications
Automation of administrative tasks
Ongoing support for new users