IFRS 16 Leases: Compliance burden or business opportunity
IFRS 16 Leases is a complex standard that brings with it numerous challenges – we’ve outlined many of them in our earlier blogs and resources, and given you tips on how to overcome them.
It’s unsurprising that many organisations view IFRS 16 purely as a compliance burden; both in terms of the implementation itself, and the ongoing reporting requirements.
The team at Nomos One challenge you to turn that thinking on its head and to take advantage of the opportunity IFRS 16 presents to transform the management of your lease portfolio, creating efficiencies and reducing risk across your company.
IFRS 16 Opportunity 1: Centralise the storage of your leases
As part of your implementation project, you will (hopefully) have located, reviewed and extracted the relevant data from all of your leases (and contracts that contain embedded leases).
Based on our experience, it’s likely this information was held by a range of teams across your company and that you were faced with inconsistencies in the data including duplicate, inaccurate or missing data.
IFRS 16 presents you with an opportunity to remedy any data integrity issues and then store all of the relevant documentation in one central document repository.
Good, end-to-end lease management and lease accounting software like Nomos One comes with unlimited storage, making it a global source of truth for every team involved in the life-cycle of a lease.
IFRS 16 Opportunity 2: Centralise the management of your leases
Once you’ve onboarded all of your lease information (and any other contracts and agreements you would like to store in Nomos One – it’s also perfect for licences, sub-licences, franchise agreements, easements, grants, resource consents and more) teams that previously operated as silos will be able to collaborate and share reports instantly.
Nomos One allows you to add an unlimited number of users with varying permission settings and access levels. All users will benefit from a clear, simple dashboard summarising your portfolio at a glance, automated event reminders, and bespoke reports and graphs – and your finance team will have access to relevant data without having to actively look for it (and then validate it). You’ll even be able to give your auditor access.
All of your lease administration and lease accounting requirements, whether it’s for properties, office equipment, IT equipment, fleets of vehicles, machinery or other leased assets, can be managed from one, central location, improving the integrity of your data and ensuring a collaborative approach – and because Nomos One is cloud-based software, you can access your portfolio anytime, anywhere.
IFRS 16 Opportunity 3: Reduce payment errors
With so many teams involved with leasing, including finance, legal, property, IT, fleet management and business support, it’s inevitable data will diverge leaving you without an accurate record of payment rates and dates.
Manual systems make it especially easy to miss renewals, variations, CPI rent reviews and expiry dates resulting in both over and underpayments. Some companies even discover they are paying rent on properties they no longer lease.
A fit-for-purpose lease management and lease accounting solution will help to ensure you never miss another lease event again.
IFRS 16 Opportunity 4: Transform the management of your lease portfolio
We recommend you widen the scope of your IFRS 16 implementation project to include the requirements of other lease management stakeholders and that you select a software provider that can deliver efficiencies, cost savings and reduce risk across your company.
Intuitive lease management and lease accounting software will help ensure you keep your portfolio up-to-date and legally sound, and will transform the way your company manages its lease portfolio – freeing up staff from manual, repetitive and time-consuming tasks and allowing them to focus on high-value and business-critical tasks.
These tangible, business-wide benefits, will give more weight to your business case for IFRS 16 compliant software if you put forward the right solution.
Check out Nomos One’s free guide on selecting a lease accounting and lease management software provider and our recent blog on the 7 critical questions you must ask providers. You can check out Nomos One’s lease management, lease accounting or contract management features here or better yet – schedule a personalised demo with one of our IFRS 16 experts.