Many companies are looking for ways to improve their property lease management strategy. In many cases, “strategy” might not even seem like the right word, as lease management is often relegated to the sidelines, only arising as a cost of doing business when paying bills.
The introduction of new lease accounting standards IFRS 16 and GASB 87 makes lease management a fundamental part of any growth strategy in today’s world. It’s no longer possible to treat lease management as a basic cost of doing business and simply pay the bills.
The scrutiny leases are now subject to means companies need to invest in optimizing their property lease management strategy to prove compliance and foster sustainable growth.
In this blog, we will explore ways to optimize your property lease management strategy, but first, let’s take a quick look at some of the benefits of doing just that.
7 benefits of optimizing your property lease management strategy
- Understand and improve market performance
- Save administrative costs, both time and money
- Ability to tackle losses and issues as they arise
- Better forecasting of future growth
- Adjust leases and services based on market demands
- More ROI opportunities with better reporting
- Achieve global accounting compliance
5 ways to maximize your property lease management strategy
1. Centralize lease data and management tools
One of the easiest ways to maximize property lease management is to house all your leases in a centralized system. A cloud-based, centralized environment allows teams to access lease data anytime, anywhere, reducing bottlenecks and increasing productivity.
Unfortunately, many companies manage their leases in separate systems. Separate systems can lead to disparate data and errors in reporting, as not everyone has access to reports, and processes are not as easy to streamline as in a centralized system. Retrieving data or reports can be a time-consuming process, involving a back and forth of emails. Separate systems lead to an inability to access information in real time and slow down decision making during crucial times.
By centralizing reporting and data management, key stakeholders do not need to wait to get the information they need to make time-sensitive strategic decisions. A centralized system also allows for a clear audit trail, making compliance with ASC 842, IFRS 16 or GASB 87 much more straightforward.
2. Set up controls and processes to ensure reliable financial reports
One of the most significant issues any team will face when it comes to property lease management strategy is establishing standard controls and processes. Procedures must be in place for every stage of the lease life cycle, from documenting to terminating leases.
Standard practices must go beyond the accounting team and include every team involved at any stage of lease maintenance and acquisition. The accounts team needs to be able to trust the data being fed to them by others. So, automating processes where possible and implementing an approvals system will ensure more accurate reporting and forecasting.
Because lease accounting standards tend to change, it may be wisest to select a software solution that automates lease modifications. That way, your team can quickly implement new accounting standards across all leases as they arise.
3. Pay attention to market data
Pay close attention to the leasing market if you want to understand how your strategy is performing. If you’re unaware of market trends or changes in property value over time, you will not stay on top of your company’s potential for growth or spot areas where issues may arise.
For instance, leasing hot spots are subject to change, and desirable locations fluctuate. Knowing the current market data can help you make better decisions about future locations, occupancy costs, and new projects.
It is impossible to analyze your lease portfolio without taking into account the market. Commercial leasing requires a keen eye on the market, so make sure you invest in research and market awareness. Regularly tapping into market data will often create opportunities and give you better insights for future strategizing.
4. Build strategies with a growth mindset
Companies often make the mistake of treating lease management as merely a nuts-and-bolts operation. However, it’s better to look at leases with a growth mindset. Spaces are subject to change, and a strategic approach should consider all possible changes to the property’s value over time.
For instance, it’s essential to consider that you might outgrow a space, so requesting a first refusal right on adjacent properties may be wise. It may also be wise to invest in spaces that are easy to divide or to look for shorter-term tenants if a property is likely to become more valuable due to planned infrastructure changes. For instance, offices in an area where new transport options are planned to open in the next couple of years.
In addition, global expansion can bring with it another set of considerations. Perhaps you’re adept at handling compliance regulations within your own country, but is your company GAAP compliant? You may find yourself struggling to implement ASC 842 or IFRS 16 as you expand, in this situation, a property lease management solution will enable you to meet global accounting standards and gain full visibility of your numbers across all locations.
5. Invest in software to streamline your property lease management strategy
One of the quickest ways to maximize your property lease management is to invest in property lease management software. There are a number of different things to consider when you start researching solutions that will work for you.
For instance, finding software that integrates with your current systems is crucial and so too will be looking for a centralized, cloud-based option. It should also enable you to implement processes and controls, create real-time reports and reliable financial statements. Read this blog for a full list of features that you should look for in your property lease management software.