Lease accounting is a critical yet complex aspect of financial management. For accountants, ensuring compliance with standards like ASC 842, IFRS 16, and GASB 87 and 96 is a non-negotiable part of the job.
However, the traditional, manual approach to managing leases is no longer sustainable when managing large portfolios. It consumes valuable time, increases the risk of errors, and creates inefficiencies that hurt productivity.
If this sounds familiar, you’re not alone. Many accounting professionals are realizing that manual lease accounting methods are holding them back. But the good news is that technology, particularly lease accounting AI software is changing the game, including cutting down the time it takes to do tedious work, like abstracting lease data.
The problem with manual lease accounting
Managing leases manually is not only time-consuming and inefficient but also fraught with risks, making it increasingly difficult for organizations to meet compliance standards with accuracy and confidence.
1. Time-consuming and inefficient
Manually managing leases often involves:
- Entering data line by line from lease agreements into spreadsheets or legacy systems
- Calculating adjustments for variables like lease modifications, terminations, or renewals
- Preparing compliance reports for different accounting standards
These tasks are tedious and time-intensive, especially for firms or organizations managing large lease portfolios. Accountants frequently find themselves buried in repetitive tasks, leaving little time for higher-value work like analysis, forecasting, and client advising.
2. Prone to manual errors
Manual processes are inherently risky:
- Human error: A single misplaced decimal point or overlooked clause can result in financial misstatements or compliance violations.
- Version control issues: Using spreadsheets often leads to confusion about which version is the most up to date.
- Complex calculations: Lease accounting adjustments—such as calculating present value or remeasuring lease liabilities—are highly detailed and error-prone when done manually.
These errors are not just frustrating—they can have serious implications for audits, compliance, and financial reporting.
3. Challenges with compliance
Lease accounting standards like ASC 842, IFRS 16, and GASB 87 and 96 demand rigorous accuracy, including:
- Detailed disclosures: Compliance requires comprehensive reporting that includes lease liabilities, right-of-use assets, and other key data points.
- Precise calculations: Calculating net present values, remeasuring lease liabilities, and making adjustments for lease modifications are labor-intensive and error-prone when done manually.
- Cross-referencing data: Accountants must spend hours ensuring alignment between various data sources to meet reporting standards.
Despite best efforts, manual processes can still result in overlooked details or errors, potentially leading to regulatory penalties and damaged credibility.
The cost of sticking with manual processes
The inefficiencies of manual lease accounting extend beyond wasted time. They also impact:
- Team morale: Accountants overwhelmed by mundane tasks have less job satisfaction, leading to burnout and turnover.
- Client service: For CPA firms, time spent on manual tasks detracts from the ability to provide strategic insights and exceptional service to clients.
- Business growth: Inefficient workflows limit scalability. Growing lease portfolios exacerbate these problems, making it harder to keep up.
The solution: Lease accounting AI software
Lease accounting AI software like NetLease is transforming how accountants manage lease portfolios. By automating routine tasks, identifying potential errors, and enabling real-time data access, NetLease eliminates the pain points of manual lease accounting.
Here’s how NetLease can help:
1. Save time with automated workflows
NetLease automates the lease accounting process, from lease abstraction and data entry to compliance reporting. For example:
- AI-powered data extraction: Lease details can be pulled directly from uploaded documents, eliminating manual entry.
- Automated calculations: NetLease handles complex lease adjustments, remeasurements, and depreciation schedules with precision.
This level of automation enables accountants to process leases in minutes instead of hours, freeing up time for more strategic activities.
2. Reduce errors with intelligent tools
NetLease uses AI to:
- Detect inconsistencies or missing data in uploaded leases.
- Flag potential compliance issues before they become problems.
- Provide audit-ready reports that accountants can trust.
By reducing the risk of human error, NetLease ensures accuracy and confidence in financial reporting.
3. Ensure compliance effortlessly
With NetLease, accountants don’t have to worry about keeping up with ever-changing lease accounting standards. The platform is designed to comply with ASC 842, IFRS 16, and GASB 87 and 96, ensuring that all reports meet regulatory requirements.
4. Upload leases in less than a minute
One of NetLease’s standout features is its ability to upload a lease in under 60 seconds. Here’s how it works:
- Drag-and-drop upload: Upload a lease document directly into the platform.
- Smart data mapping: The system uses AI to extract relevant details and populate fields automatically.
- Error detection: Before finalizing, NetLease flags any discrepancies or missing information for review.
Whether you’re uploading a single lease or using the bulk upload feature for an entire portfolio, the process is seamless and fast. Explore for yourself below how quick and easy uploading a lease to NetLease can be!
Why lease accounting AI software is the right choice for accountants
The days of spending hours on manual lease accounting are over. With lease accounting AI software like NetLease, you can save time, reduce errors, and ensure compliance—all while providing better service to clients or stakeholders.
NetLease was designed to transform the way accountants work. Key benefits include:
- Spend more time on the work that matters: Automating routine tasks allows accountants to focus on advisory services and strategic decision-making.
- Grow your portfolio without growing your workload: Whether managing one lease or hundreds, NetLease adapts to the needs of firms and businesses of all sizes.
- Never miss an update: Teams can access lease data from anywhere, improving communication and efficiency.
- Netgain has your back: From implementation to ongoing use, NetLease provides top-tier customer service and a comprehensive Knowledge Center.
Ready to see how NetLease can revolutionize your workflow? Learn more about our lease accounting AI software, or request a personalized demo to discover how it can fit your needs.
